Zimplats on track in rolling out expansion programmes

Platinum group-metals (PGMs) giant, Zimplats’ Chief Executive Officer Mr Alexander Mhembere has said the entity spent US$304,3 million on capital projects in the year ended 31 June, an increase from the US$270,3 million in the prior year.

Despite the financial year having been negatively impacted by low metal prices, collaborative effort ensured the company remained profitable and on track in rolling out its expansion programme, he added.

The increase is aligned with the company’s expansion and environmental, social and governance (ESG) drive.

The projects undertaken include the replacement of depleting mines, the establishment of a new concentrator, refurbishment of the mothballed BMR, construction of a 35 megawatts solar plant at Selous Metallurgical Complex , construction of a 38 megawatts solar plant, as well as an SO2 abatement plant.

“This expenditure is part of a broader US$1,8 billion capital investment strategy that will be implemented over a ten-year period,” said Mr Mhembere in the Integrated Annual Report which covers the financial year from 1 July 2022 to 30 June 2023.

According to the report, the total expenditure on expansion projects increased by 16 percent from US$83,7 million in FY2022 to US$97,1 million in FY2023, primarily due to spending on the smelter expansion and SO2 abatement plant, Ngezi Third Concentrator plant and the BMR refurbishment projects.

“A total of US$61,8 million was spent on the smelter expansion and SO2 abatement plant project during the year, bringing the total expenditure, as at 30 June 2023, to US$80,4 million.

“The new furnace will increase smelting capacity from 135 000 tonnes of concentrate (equivalent to 538 000oz 6E in converter matte) to 380 000 tonnes of concentrate (equivalent to 1.09 million 6E oz in converter matte).”

The report states that the 38 MW solar plant is targeted for commissioning in the final quarter of FY2024.

The Ngezi Third Concentrator plant was successfully commissioned in September 2022 and has ramped up to a nameplate capacity of 0.9 million tonnes annually.

A total of US$23,6 million was spent on the Ngezi Third Concentrator plant during the year, bringing the expenditure to date as at 30 June 2023 to US$103 million.

In the period under review, a total of US$114,6 million up from US$107,5 million in the corresponding years was spent on stay-in-business projects consisting mainly of the replacement of TMM, a portion of the SO2 abatement plant required to control current emissions, SMC tailings dam extension, employee housing development at Turf, and routine asset replacements.

The first phase of the 35-megawatt solar plant project is progressing well and is on course to commence commercial production in FY2024.

The plant is expected to generate an average of 86 GW hours per year over a 25-year period.

On mine replacement, US$92,6 million was spent, 17 percent higher than the US$79 million spent in FY2022.

Mr Mhembere noted that there was a significant decrease in metal prices in the period under review with gross revenue per 6E ounce declining by 20 percent from US$1 996 in FY2022 to US$1 595 in the current year.

The development resulted in revenue for the year declining by 23 percent from US$1,2 billion in FY2022 to US$962 million.

“Further, revenues were affected by a three percent fall in 6E ounces sold from 623 000 last year to 603 000 during the year. Cost of sales increased by 10 percent from US$594,3 million in FY2022 to US$651,9 million in FY2023, mainly due to inflation and an increase in the employee headcount.

“ This was partly offset by the reduction in revenue-indexed expenses, which respond to metal prices. As a result, gross profit margin declined by 20 percentage points to 32 percent in FY2023 from 52 percent in FY2022.”
Operating cash cost per 6E ounce for the year at US$837, increased by 15 percent from US$724 reported in FY2022, driven mainly by inflation (7 percent), a 42 percent power tariff increase in October 2022, a six percent increase in working cost employee headcount and two percent decrease in 6E head grade.

Profit before tax for the year at US$286,8 million was 52 percent below the US$593,6 million reported in FY2022, primarily due to softened metal prices.

The income tax expense for the year fell by 66 percent to US$81,3 million from US$240,0 million in FY2022 in line with profitability. As a result, the entity said profit after tax for the year declined to US $205.5 million from US$353,6 million in FY2022.

Net cash generated from operating activities decreased from US$510,1 million to US$461,9 million in FY2023, again, primarily due to softened metal prices.

The Company paid dividends of US$220 million up from US$205 million in the prior year and closed the year with a cash balance of US$253,6 million.-chronicles