Padenga gold output projected to jump 16pc

Diversified crocodile breeder Padenga Holdings Limited’s expansion of its mining operations future prospects look bright for financial year 2023 and beyond on account of growing gold output.

The Victoria Falls Stock Exchange (VFEX) listed company’s gold production is expected to jump 16 percent to 2 291 kilogrammes, analysts’ projected.

The group expects to complete the first phase of refurbishment of the underground mine at its Pickstone Peerless Mine in Chegutu in August this year.

While no underground mining has started yet at the Eureka gold mine, development is expected to commence in the near term given the resources available at the mine.

“We believe these developments should lead to an uptick in gold output for the group.

“We forecast mining operations to produce circa 2 291kg (73 670oz) of gold for FY23,” said brokerage firm IH Securities.

“Of concern is the high all-in-sustaining-cost, which puts pressure on profitability.”

However, management expects this cost line to average down as production at Pickstone picks up and a higher grade of gold is produced.

The mining operation is expected to continue sustaining the group this financial year and going forward. Already, figures from the group show mining operations lifting total revenues for the business.

During the full year to December 31, 2022, the group’s total revenue for the year increased 68 percent to US$127,89 million compared to US$76,09 million in 2021 with the mining operations contributing bulk of the revenue at 82 percent while the Zimbabwe crocodile’s business contributed 18 percent.

“Improved group revenue performance was predominantly propelled by the first full year contribution from Eureka gold mine in Guruve, which was commissioned in October 2021,” said the group in an update.

As for the crocodile business, the group is currently carrying out rehabilitation of pens, which is central to the skin quality improvement initiatives. Following the shift in consumer taste from big handbags to small handbags, and the upgrade in skin ratings by off-takers, the operations of the business have adjusted to the production of the smaller skin sizes and volumes sold should begin to normalise.

Padenga has also been investing in research and development so as to improve skin quality.

“Hence, we forecast an uptick in skin sales in the current financial year compared to the previous year. Installation of phase three solar array to bring the solar plant operating capacity to a total of 1,2MW began during the last quarter of the financial year and will be completed during the first half of 2023.

“This is expected to alleviate energy costs.

“We expect FY23 revenue for the group to increase by circa 30 percent to US$166,81 million driven by extension of the gold mining operations, high gold prices, and an uptick in skin sales.

“We expect the top line to slightly decrease and normalize in FY24 in line with gold price movements,” said IH Securities.-heald