Unki Mine reports record platinum output in H1 2019

Zimbabwe platinum unki
Unki mine: PGM prices under pressure

Anglo American Platinum (Amplats) says better efficiencies and higher recoveries in the first half of the year resulted in record platinum output at Unki Mine in Zimbabwe.

In its latest production report for the first half of 2019, out on Monday, Amplats reports total PGM production was 95,800 PGM ounces, up 3% from 92,600 in the comparable period last year.

“The increase is due to improved underground mining efficiencies, as well as improved concentrator throughput, mill run-time and higher recoveries,” Amplats says.

In terms of financials, Unki increased its EBITDA by 15% to R488 million from R424 million in the prior period, which led to an EBITDA margin of 27%. This was flat on the prior year, when excluding the once-off benefit in H1 2018 of the sale of Treasury Bills.

While costs are rising for business, Unki managed to restrain its own costs. The All-in sustaining costs – a measure used by mines that includes operating costs, all sustaining capex, net of all revenue – was $456 per platinum ounce sold compared to $491 over the same period last year.

Tonnes milled 992 tonnes was up from 938 tonnes last year.

Commenting on the latest report, Amplats CFO Craig Miller says there has been no currency disruption for Unki after new exchange rate reforms announced during the half.

Unki on currency and power

The currency measures, under which authorities dropped the 1:1 parity and partially floated the exchange rate, had both positives and negatives for Amplats, Miller says. When the company translates a part of its dollar earnings into the local RTGS currency, market related rates were being achieved as opposed to under the previous one-to-one rate.

But there is some cause for caution too, according to Miller. “However, we do see the impact on inflation coming through, not necessarily into our accounts, but it is something we’ll monitor particularly as it relates to the wages of our employees.”

Unki has not suffered disruption in the ongoing power crisis, Miller says, as it has an arrangement that allows it to buy its electricity directly. However, Amplats has plans to set up solar power at Unki.

In May, Unki commissioned a US$62 million smelter, which now processes platinum matte for Amplats’s base metals refineries. Amplats, at the commissioning ceremony attended by President Emmerson Mnangagwa, said Zimbabwe needed to relax local ownership laws further and forex retention regulations to back investors.