Zimbabwe’s largest platinum producer Zimplats recorded a 36,1% slump in production volumes to 415,72kg in August as rising inflation, coupled with power cuts and foreign currency shortages, took a toll on the extractive sector, it has been revealed.
Zimplats’ production in the first eight months was pegged at 5 230,584kg.
The Impala Platinum Holdings (Implats) subsidiary retained US$150,9 million and US$98 million respectively from platinum sales.
Figures, however, indicated that Zimplats was getting a lot of value from other metals that form part of the platinum group of metals (PGMs), particularly palladium and rhodium sales.
Zimplats recently put its US$23 million refinery project on hold citing lack of a clear government road map on the mineral beneficiation policy.
“The SMC Base Metal Refinery refurbishment project remains on hold pending finalisation of the national beneficiation road map.
“The project total expenditure as at 30 June 2019 was US$23,6 million,” the company said in statement accompanying its year-ended June 30 results.
The Australian Stock Exchange (ASX)-listed miner was upbeat about the future despite the economic challenges facing Zimbabwe. Its shareholders continue to inject more capital into the company.
“The group spent a total of US$115 million in the full year-ended 30 June up from US$135,3 million spent on capital projects (stay in business, replacement mines and expansion projects) during the year compared to US$135,3 million spent in 2018,” the company added.
Zimplats said it had successfully navigated Zimbabwe’s turbulent currency market because most of its revenues were in foreign currency.
“Revenue is generated from sales of platinum group metals. We traced, on a sample basis, payments received in US$ to the relevant bank statements, noting no material exceptions,” the company said.
“We considered factors impacting the operating subsidiary’s access to foreign currency by inspecting relevant exchange control regulations and underlying agreements and obtained an understanding of the underlying terms and conditions.
“We found management’s conclusions to be reasonable.
“We inspected the expenditure disclosed for the operating subsidiary and noted that the operating subsidiary transacted using a combination of United States dollars, bond notes and real time gross settlement (RTGS).
“(We looked at) underlying agreements and noted that all long-term debt and borrowings were denominated in US$.”
Zimplats said the scrapping of the Indigenisation and Empowerment Regulations was expected to attract more players into the mining sector.