Global metal price slump hits Zimplats, profits down 48 percent

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By the Source on February 3, 2014. No Comments

imbabwe Platinum Mines (Zimplats) on Monday reported a 48 percent drop in operating profit in the quarter to December 31, hit by poor metal prices, lower sales volumes and higher operating costs.

Zimplats, the country’s largest miner, said revenue decreased by 13 percent to about $126 million, from the previous quarter’s $145.5 million. But it was 52 percent higher on the December 2012 figure of $83 million.

Operating costs at $105.4 million were flat on a quarterly basis, but reflected a 61 percent increase on the annualised figure.

Net costs per 4E ounce were one percent higher at $691 compared to the previous quarter but 19 percent lower than the December 2012 figure.

Platinum prices averaged $1,398  in the quarter, falling from $1,456 in the comparative quarter and the 2012 average of $1,600.

The company’s local spend, excluding payments to government and related institutions, increased by 43 percent to $60 million but total payments to government in direct and indirect taxes fell nine percent from $32 million to $29 million compared to previous quarter.

“This was mainly due to the lower revenues recorded in the quarter,” Zimplats said in a quarterly trading update.

Its appeals against the tax penalty and the review of the interest on prior years’ tax liabilities are still pending in the courts but the prior year’s tax liabilities as agreed with the tax authorities have now been fully paid, the firm said.

Zimplats lost a case against Zimra in 2012 over a revised tax invoice of $33, 8 million after the tax authority disallowed its claim to full capital expenditure as a deduction, a practice the company said stemmed from written undertakings it received from government under the mining agreement signed in 2001.

The company is still engaged in talks with government over its empowerment arrangement.

Implats which owns 87 percent of Zimplats, in January last year signed a deal to sell part of its stake to local investors to meet the statutory black ownership target of 51 percent, an agreement it described as ‘non-binding.’