Dry season for Zimplats shareholders


Zimplats will not pay dividend for the year ended June 30 2020 due to the uncertainty created by the Covid-19 pandemic despite the white metal producer recording an 81% increase in profit after tax to US$261.8m.

The Covid-19 pandemic has resulted in global lockdowns and disruptions in value chains affecting companies.

In its financials for the period, Zimplats said it was forgoing dividend. “In view of the economic uncertainty posed by the Covid-19 pandemic, the Company has considered it prudent not to declare a dividend for the year ended 30 June 2020 to preserve cash and maintain liquidity,” Zimplats said.

In the financial year to June 30, 2019, Zimplats paid a final dividend of US$45m, equating to US$0.42 per share.

Revenue for Zimplats was up 38% to US$868.9m from US$631m in 2019 due to the increase in average prices of rhodium, palladium, gold and nickel. 6E ounces sold decreased by 3% to 554,944 ounces in 2020 from 573 009 ounces in 2019.

This was mainly due to the force majeure notice issued by Impala Platinum Limited which resulted in the suspension of sales for more than a month in the final quarter of the year.

The force majeure notice was in response to the Covid-19 pandemic induced lockdown in South Africa. Cost of sales increased 8% to US$480.4m from US$443.8m in 2019 mainly due to the increase in share-based compensation and depreciation expense.

“The increase in depreciation expense was due to the change in the estimation method of depreciation for surface and metallurgical assets from units of production to straight line as well as an increase in the asset base during the year,” Zimplats said.

Gross profit margin for the period improved to 45% from 30% in 2019 mainly due to the improvement in metal prices. Operating cash cost per 6E ounce increased by 2% from US$602 in 2019 to US$613 in 2020 mainly due to inflation.

Profit before income tax for the year increased to US$374.2m from US$205.3m in 2019. Income tax expense for the year increased to US$112.4m from US$60.5m in 2019 mainly driven by the increase in taxable profit.

Profit after tax for the year increased to US$261.8m from US$144.9m in 2019. The platinum producer said the development of Mupani Mine, a replacement mine for Rukodzi and Ngwarati mines which deplete in 2022 and 2024 respectively, was progressing well and on schedule.

A total of US$32.1m was spent on this project during the year, taking the overall project cost to US$99.5m as at June 30, 2020.

The mine is scheduled to reach full production of 2.2Mtpa in July 2024 at an estimated total project cost of US$264m.

On expansion projects, the revised Phase 2 expansion project is now substantially complete while a total of US$1 million was spent on the Mupfuti Mine stockpile cover during the year bringing the project total expenditure to US$463m against an authorised budget of US$492m.

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