Zimplats says new US$260m mine ahead of schedule, full-year earnings up

Zimplats Zimbabwe
Development at Mupani Mine: Zimplats expects full production by 2025

Zimplats says the US$264 million development of Mupani mine, which will replace two of its older mines, is ahead of schedule and the new operation is projected to reach full production in 2025.

The platinum producer spent US$28.1 million on Mupani during the year to June, bringing total spend on the project to US$67 million so far.

“Development of Mupani Mine, a replacement mine for Rukodzi and Ngwarati mines, which deplete in FY2021 and FY2025 respectively, is progressing well and ahead of schedule. The mine is scheduled to reach full production of 2.2 million tonnes per annum in August 2025 at an estimated total project cost of US$264 million,” Zimplats says in its latest a production report.

Mupani is expected to have a life-of-mine of 34 years, and increase Zimplats’ resource by three million ounces.

Zimplats used US$115million on capital expenditure during the year, lower than the US$135.3million invested in the last financial year. Of this capex, US$82.4-million was on stay-in-business projects.

Profitability

Profit after tax for the year increased to US$144.9 million from US$2.6 million in FY2018, after a deferred tax charge of US$95.4 million was recognised in FY2018 arising from the change in the income tax rate of 15.45% applicable under the special mining lease tax regime to 25.75% applicable under the ordinary mining lease tax regime.

Zimplats also benefited from an export incentive of US$36.4million, compared with an export incentive of US$13.6 million for the prior year, and the recognition of a US$9.6million refund from the Zimbabwe Revenue Authority.

Zimplats production

In terms of production, Zimplats had a solid year on both mining and milling.

Underground tonnage rose 9%, mostly on output from Bimha mine, which operated at design capacity in the year. Bimha, which accounted for half of Zimplats production, collapsed in 2014, cutting some 70 000 of pgm output. The company has had to invest more than US$100 million to re-develop the mine while it switched to open cast to recover output.

In terms of grade, it was a mixed picture. The 4E head grade, at 3.23 g/t, came in below last year’s grade, due to grade dilution at Ngwarati and Rukodzi mines. The two mines are almost mined out and workings are now pushing the boundaries of the mine footprint. However, this grade decline was offset by the replacement of low-grade South Pit mine ore with higher-grade underground ore.

Platinum production eased marginally to 269 903 oz from 270 717 oz, mainly as a result of the decline in milled ore. 4E metal production increased to 549 320 oz from the prior year’s 546 915 oz, due to an increase in gold output to 32 555 oz from 29 207 oz in the last financial year.

Ore milled decreased by 1% to 6.5 million tonnes, due to lower milling rates at the Selous Metallurgical Complex (SMC) concentrator. To fix this, Zimplats is installing a high-pressure grinding rolls plant at the SMC to address the impact of the change in ore particle size distribution on milling rates. Zimplats expected to commission the new plant in the first quarter of FY2020.

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