Gold upstages farming, now serves as the primary anchor for Padenga

CLOUDINE MATOLA

After producing and delivering more than farming, gold production has for the first time emerged as the cornerstone of Padenga Holdings Limited, a publicly traded diversified group, Business Times can report.

Securities firm, FBC Securities, said  the significant growth in Padenga Holdings’ revenue was driven primarily by increased production and strong performance of Dallaglio Investments, its gold mining subsidiary.

The mining division accounted for a substantial 88% of total revenue in the six months to June 30, 2024.

Apparently, this surge highlights the growing importance of gold mining to Padenga’s overall business.

It comes at a time the crocodile business ‘s contribution to the group’s overall revenue has been declining.

“The notable value being created by Dallaglio to Padenga Holdings’ continued survival, growth and profitability is clear evidence of the remarkable outcome of the Padenga Holdings management’s well calculated diversification initiative,” FBC Securities said.

It continued: “The mining division remained the key driver of financial performance of the group, contributing significantly to its overall profitability and growth during the half-year period.

“This performance neutralized the risk posed by the agribusiness segment which faced market volatility and reduced demand during the period under review.

“The group’s outlook for the second half of 2024 remains cautiously optimistic, especially with the expected improvement in global commodity prices, which should benefit the mining segment.

“However, challenges in the farming business could continue to pressure overall margins. The positive outlook also anchored the Group’s continued investments in upscaling its mines, for example the Pickstone mine phase 2 and a Thickener Project at Eureka mine, as well as the ongoing construction of a waste management treatment plant. • Investors should consider holding or gradually accumulating shares, particularly if they believe in the continued strength of the mining division and management’s ability to navigate cost pressures in the farming business.”

According to Thembinkosi Sibanda , the board chairman of Padenga, which trades its shares on the Victoria Falls Stock Exchange, the surge in gold sales at its mining subsidiary, Dallaglio, was due to better ore grade as well as recovery and higher plant throughput at Pickstone mine.

“Dallaglio sold 1,351kgs of gold in H1 2024 compared to 1,080kgs in H1 2023. This 25% growth was spurred by a combination of better ore grade at Eureka mine, better recovery and higher plant throughput at Pickstone mine,” Sibanda said.

He added: “The Pickstone Underground Project Phase 1 which was completed in August 2023 was officially opened by His Excellency, The President of Zimbabwe Dr ED Mnangagwa on 10 April 2024. The Underground Mine contributed 15% of the group’s gold production in the period under review. This proportion will grow as open pit mining is wound down at Pickstone mine in the second half of 2024,” he said.

Dallagio profit before taxation grew 159% to US$13,60m for the period under review to US$5,25m recorded in the same period last year due to increased revenue.

The Mine’s turnover increased by 40%to US$87,68m for the period under review from US$62,66m prior comparative period due to record high gold prices that prevailed through the first half of 2024 combined with the increase in gold production and sales compared to the same period last year.

Earnings before interest, taxes, depreciation, and amortization, (EBITDA) for Dallaglio grew by 98% to US$23,09m for the six months ended June 30 2024 from US$11,66m in 2023 as a result of increase in turnover partly offset by an increase in costs.

Another research firm, Fincent Capital said:“Overall, the revenue composition highlights Padenga’s increasing reliance on its mining operations as the key revenue and growth driver.”

“The crocodile business, despite being a smaller contributor, showed a modest 2% growth in revenue compared to the same period in the prior year.”

Looking ahead, Padenga’s mining operations are poised for continued growth, with gold prices expected to remain strong, the company is well-positioned to capitalise on favorable market conditions.