Zimplats profit down 88%

Published: 07 June 2015

Zimbabwe's largest platinum producer Zimplats profit after tax slumped by 88 percent to $3,9 million in the half year to December 2014 from $42 million recorded in prior comparable period due to depressed sales and metal prices.

The unit - 87 percent owned by South Africa's Impala Platinum - also attributed the weak performance to disruptions caused by its Bimha mine collapse. Bimha - the largest of Zimplats' four mines - collapsed in July last year, affecting nearly 50 percent of its footprint.

Alex Mhembere, Zimplats chief executive, said the collapse also "resulted in the damage and inaccessibility of certain underground infrastructure and equipment with a net carrying amount of $22,9 million, which has been written-off".

He, however, noted that an insurance claim was in the process of being finalised for associated plant and equipment and any compensation received will offset the impact of the write-off.

During the period under review, revenue decreased by 12 percent to $234 million on the back of lower platinum sales volumes, which declined from 113 876 ounces to 103 092 ounces, and lower metal prices.

Tonnes milled went down 17 percent to 2,48 million tonnes compared to the same period last year owing to ore supply constraints as a result of the precautionary closure of Bimha mine.

"Total operating costs (excluding the Bimha write-off) decreased by seven percent to $206,3 million mainly owing to lower production," Mhembere said, adding that cash operating cost per platinum ounce produced increased by 10 percent to $1,481 due to the impact of lower production volumes on fixed costs.

Bimha was closed as a precautionary measure to safeguard employees and assets last year following the subsidence of ground and continued deterioration of ground conditions in a section of the mine.

Six of the affected eight production fleets at Bimha mine were successfully redeployed in order to offset potential production losses.

Mhembere, however, said productivity from these teams has been impacted by constrained redundancy.

"…studies by internal and external experts were further advanced to fully understand the nature and extent of the ground collapse and structural geological settings," he said, further stating that following a detailed risk assessment, the group's board initiated the re-development of Bimha mine which commenced in December 2014, with two mining fleets deployed to re-establish reef access.

"No significant further ground movements have been observed and management continues to closely monitor the situation," he said.

In an effort to further ameliorate the impact of Bimha's closure,

Zimplats approved the initiation of contract open-pit mining to supplement ore supply to the processing operations.

Production is expected in the fourth quarter of the year ending June 30, 2015.
- dailynews

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