ZIMPLATS has reported an 88 percent drop in after tax profit for the six months to December compared to the same period last year on weakening volumes and depressed prices.
In response to government pressure for the platinum industry to set up local refinery infrastructure, the company said work on its $134 million project to refurbish its mothballed Selous base metal refinery, which started in July 2014, is on course for completion by June 2016.
A 12 percent decline in revenue to $234 million following the ground collapse at Zimplats’ largest underground mine, Bimha, ate into earnings.
Total operating costs, excluding a $22,9 million Bimha write-off, decreased by seven percent to $206.3 million mainly owing to lower production.
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, the company said.
Pre-tax profit was $4.7 million, 90 percent lower than $45.6 million achieved in the same period last year, while net profit at $3.9 million was 88 percent lower than same period last year of US$32.2 million, largely due to lower sales volumes and metal prices coupled with the Bimha write-off.
The platinum price was down four percent in the period under review from $1,424 registered in the comparative period last year despite decreasing production costs.
The collapse within a section of the underground working area of Bimha Mine triggered by the accelerated deterioration of ground conditions associated with the Mutambara Shear led to its precautionary closure in August 2014, 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 during the half year ended 31 December 2014.
An insurance claim is in the process of being finalised for associated plant and equipment, and any compensation received will offset the impact of the write-off, the company said.
The company said rehabilitation of the closed open pit mine is progressing well with 60 percent of the pit now rehabilitated.
Tonnes milled decreased by 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, the company said.Advertisement
At the end of the half year, Zimplats had bank borrowings of $105 million, with a maturity date of December 2017 and a cash balance of $97,1 million.