Currency trouble: Zimdollar weakness shaves 32% off Zimplats’ HY on profit

Low prices slow things down at Zimplats (pic: Scotty Photos)

Zimplats has posted a 32% year-on-year decrease in net profit to US$170.68 million for the six months ended December 2021, hurt by exchange losses.

The company recorded net foreign currency exchange losses of US$21.8 million, arising mainly from Zimbabwe dollar-denominated monetary assets owing to the depreciation of the local currency.

Revenue of US$585-million was 13% lower year-on-year largely owing to negative revenue from movements in commodity prices arising from pipeline sales following the decrease in average metal prices compared with the second half of the previous financial year.

Cost of sales, at US$294.9 million, was marginally lower than the previous year’s US$297.4 million.

Consequently, the gross profit margin was 50%, compared with 56% in the prior comparable period.

Zimplats generated net cash inflows from operating activities of US$261.3 million.

A dividend of US$120 million has been declared for the interim period.

Meanwhile, tonnes of ore mined decreased by 5% year-on-year to 3.5-million tonnes, mainly because of production disruptions at the Mupfuti mine during a changeover of the trackless mining equipment service provider. The changeover has now been completed.

Tonnes milled was unchanged from the prior interim period’s 3.4-million tonnes.

Platinum, palladium, rhodium, gold, ruthenium and iridium (6E) mill head grade, at 2.42 g/t, was 2% lower than the prior comparable period owing to a higher contribution of ore from lower-grade mines.

6E production decreased by 2% to 282 829 oz, driven by the drop in 6E head grade.

In terms of Zimplats’ capital investment programmes, the redevelopment of Bimha mine was completed within budget at US$99.8-million.

The upgrade of the Mupani mine is on schedule, with earthworks for the dome and load out station complete.

Upgrading of Bimha is progressing well, targeting 3.1-million tonnes yearly in the first quarter of full-year 2024.

Meanwhile, a bankable feasibility study for the refurbishment of the mothballed base metal refinery at SMC is ongoing, targeting completion by the end of the financial year.

Further, a bankable feasibility study for a proposed 185 MW solar project has been completed and an independent power producer’s licence issued by the regulator.

Zimplats anticipates a sustainably good operating environmental and continued enforcement of Covid-19 protocols moving forward.

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