Platinum producer Zimplats will not declare a dividend for the year ended 30 June 2020 to preserve cash and maintain liquidity in the face of the economic uncertainty posed by the COVID-19 pandemic, the company has reported in its financials for the period.
Zimplats said that it considered it prudent not to declare under the current circumstances.
The group’s operations were not affected by the COVID-19 pandemic though as all the mines and the processing plants continued operating throughout the year with no confirmed cases within the workforce.
In the comparative year which ended 30 June 2019, the company declared a dividend amounting to US$45 million (equating to US$0.42 per ordinary share).
Revenue increased by 38% to US$868.9 million from US$631 million in FY2019 mainly due to the increase in average prices of rhodium, palladium, gold and nickel.
Gross profit margin improved to 45% from 30% in FY2019 mainly due to the improvement in metal prices.
Profit before income tax for the year increased to US$374.2 million from US$205.3 million in FY2019. Income tax expense for the year increased to US$112.4 million from US$60.5 million in FY2019 mainly driven by the increase in taxable profit.
Resultantly, profit after tax for the year increased to US$261.8 million from US$144.9 million in FY2019.
Net cash inflow from operating activities increased to US$258.4 million from US$241.5 million in FY2019. The group paid the dividends of US$45 million (FY2019: US$85 million) and repaid bank borrowings of US$42.5million (FY2019: US$42.5 million).
At year end, Zimplats had bank borrowings amounting to US$7.2 million (FY2019: US$42.5 million) and a cash balance of US$135.8 million (FY2019: US$67 million).
Mining and milling operations performed produced 7.2 million tonnes (FY2019: 6.7 million tonnes) and 6.8 million tonnes (FY2019: 6.5 million tonnes) respectively.
“Ore mined and milled increased by 7% and 5%, respectively, from the previous year benefiting from ore from Mupani Mine and fleet productivity enhancement initiatives that began towards the end of FY2019 which have now been rolled out to all the underground mines,” Zimplats reported.
The concentrator plants throughput was better than the previous year due to higher running time and milling rate.
Zimplats spent a total of US$104.2 million on capital projects (stay in business, replacement mines and expansion projects) compared to US$115 million spent in FY2019.
A total of US$69 million (FY2019: US$82.5 million) was spent on stay-in-business projects during the year. This includes expenditure on Bimha Mine redevelopment and the furnace rebuild and improvements project.
The Bimha Mine redevelopment is progressing according to plan, Zimplats reported.
The south underground crusher and the ore-conveyance system were commissioned in December 2019 and the company aims to complete the outstanding underground workshops in the north and south sections in December 2020, which will complete the full scope of the project.
During the year, US$15 million was spent on this redevelopment project, bringing the total project expenditure to US$98.8 million as of 30 June 2020 compared to a total project budget of US$101 million.
The furnace rebuild and improvements project which commenced in FY2019 was completed and commissioned in the first half of FY2020. A total of US$7.1 million was spent in FY2020 bringing the total expenditure to US$20.4 million.
A total of US$16.4 million (FY2019: US$18.6 million) was spent on the replacement of trackless mining machinery including ancillary support equipment, in line with the current replacement philosophy.
Zimplats spent US$33.6 million on replacement mines during the year, 20% higher than the US$28.1 million spent in FY2019. Development of Mupani Mine, a replacement mine for Rukodzi and Ngwarati mines which deplete in FY2022 and FY2024 respectively, was reported to be progressing well and on schedule.
A total of US$32.1 million was spent on this project during the year, taking the overall project cost to US$99.5 million as at 30 June 2020. Zimplats expects the mine to reach full production of 2.2Mtpa in July 2024 at an estimated total project cost of US$264 million.
“The revised Phase 2 expansion project is now substantially complete”.
A total of US$1 million was spent on the Mupfuti Mine stockpile cover during the year bringing the project total expenditure to US$463 million against an authorised budget of US$492 million.