Zimbabwe Platinum Mining Limited (Zimplats) profit after tax declined by 39% to $122 million due to lower revenues and higher tariffs in the first six months of the year, latest figures have shown.
The platinum company’s profit after tax was down from $200 million in the same period last year.
Zimplats chief executive officer Alex Mhembere said the year had been difficult for the mining industry globally and the mining company had not been spared.
“We are operating in a depressed market characterised by depressed metal process and surplus in supply.
“We are also faced with cash funding challenges and company closures as we have seen in South Africa,” Mhembere said.
“Cost of sales incurred in the period increased to 60% due to power tariff increase instituted in September 2011 and weakening of the South African rand against the dollar.
“In addition, increased royalties based on the Finance Act as opposed to the security market line rate resulted in further margin compression.”
The company revenues declined by 10% to $473 million from $527 million during the same period last year due to weaker metal prices, while pre-tax profit was 36% to $151 million.
Zimplats produced a total of 187 100 ounces of platinum in the period under review, indicating a 3% decline from 182 000 ounces last year. Mine ore increased by 8% to 4, 59 million tonnes from
4, 24 million tonnes.
Capital expenditure for the mining company were at $269 million due to the Ngezi Phase 2 project, while net borrowings were up to $66 million from $26 million. Zimplats expects to increase its production to 270 000 ounces per annum through the expansion of Phase 2 and the focus would be on development of the underground mine with full production expected by March 2015.
Phase two entails completion of 512 houses, construction of 30 000 megalitres island dam and concentrator and related infrastructure due to be commissioned in April 2013.
“Completion date for the project is due FY15, but could be delayed due to cash constraints and weaker base metal commodity prices,” Mhembere added.
The platinum company recorded a decline in revenue for the second quarter of the year to $114 million despite a rise in output on the back of depressed metal prices.
Operating costs in the second quarter were 17% above the previous quarter, in line with higher sales volume.