12 February 2013

Zimbabwe: Mimosa Production Up Four Percent, but . . .

ZIMBABWE'S second largest platinum miner, Mimosa Mining Company's half-year production to December 31, 2012 rose 4 percent from the corresponding period a year earlier to 1,23 million tonnes, but revenue declined due to depressed metal prices.

Turnover fell 13 percent to US$127 million, Aquarius Platinum - a majority shareholder in Mimosa - said last week.

Platinum firms have struggled to maintain profitability as prices remain subdued due to reduced demand from carmakers, the leading consumers of the white metal used in catalytic converters.

Aquarius, the world's fourth largest platinum producer, said profitability at its mines was US$22 million, compared with US$29 million a year earlier, due to tough operating conditions at its South African mines and lower platinum prices.

Mimosa's PGM production increased by 5 percent to 109 093 ounces.

The company operated at capacity, although some production disruptions were caused in the latter months of the period by power outages and electrical breakdowns.

Capital expenditure for the period amounted to US$18 million. Expenditure was mainly incurred in mobile equipment, drill rigs and LHD conveyor belt extension.

An agreement for the sale of a 51 percent stake in Mimosa between the Government and the former controlling shareholders was reached last year.

The parties concluded a term sheet which provides Mimosa Investments which is jointly owned by Aquarius and Impala Platinum, extending a 10-year US$550 million loan to indigenous parties to facilitate the transaction.

This loan will bear an annual interest of 9 percent and will be settled through the waiver of the right to receive 90 percent of dividends due to the indigenous parties.

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