The Herald (Harare)

31 July 2014

Zimbabwe: Zimplats to Spend U.S. $690 Million On Refinery

Zimplats plans to have its base metal refinery, situated at its Selous Metallurgical Complex, operational within the next two years, chief executive Mr Alex Mhembere said yesterday. The country's biggest platinum company will spend about $190 million to rehabilitate and expand the refinery's installed capacity from 90 000 ounces per annum to 270 000 ounces.

Mr Mhembere said the company would use a combination of internal resources and possibly funding from the shareholders. He ruled out the possibility of borrowing the funds.

He said rehabilitation would consume about $100 million while expansion of the plant's circuits to accommodate its annual output of 270 000oz would push the budget to $190 million.

"That (precious metal refinery) is what we will look at when the base metal refinery has been commissioned," he said.

He said the firm would first seek to operationalise the BMR and latter turn it into precious metal refinery at a cost of $500 million.

Beneficiating the platinum to matte enables producers to realise 88,5 percent of potential revenue, at BMR stage they get 89,7 percent, rising to 90 percent at precious metal stage.

Currently, Zimbabwe exports matte and concentrate for further processing in South Africa and Government believes significant benefits could be realised it refined and value added locally.

However, Zimbabwe will need to have sufficient power to operate the platinum refineries with Mr Mhembere confident that even if projects to expand output at Kariba and Hwange do not materialise the facilities will still kick in using imported power.

The additional $500 million investment will be used to increase the capacity of the SMC refinery and also put up more furnaces to accommodate material from other local miners.

Chief operating officer Mr Stanley Segula said Zimplats was working with fellow miner RioZim to rehabilitate and expand its Empress Nickel Refinery to process by-products from the BMR.

Zimbabwe has three producing platinum mines namely Zimplats, Mimosa and Unki with an annual output capacity of 420 000oz and is the world's second largest known deposits after South Africa.

Mwana Africa Plc subsidiary Bindura Nickel Corporation is also weighing the possibility of modifying and turning its smelter and refinery and into a platinum group metals refinery.

Meanwhile, South African platinum mining giant Implats' subsidiary's profit for the quarter to June 2014 jumped 39 percent to $50 million as revenue rose 21 percent to $167 million.

However, the platinum miner said production could dip nearly 10 percent in the 2015 financial year due to a ground fault that affected about 50 percent of the area at one of its mines.

Chief financial officer Mr Stewart Mangoma said revenue and profit for the quarter increased on the back growth in 4E metals, 4E gross revenue per ounce and a jump in nickel prices.

Profit was 164 percent above performance for the same quarter last year while revenue bettered that period by 21 percent.

Tonnes mined increased by 10 percent from the previous quarter mainly due to production ramp-up at Mupfuti Mine and improved productivity at the other mines under Zimplats.

Head grade at 3,27g/t was one percent better than the previous quarter reflecting improved grade control at the mines.

Tonnes milled increased by 8 percent from the previous quarter largely due to increased ore supply, resulting in the metal 4E metals in concentrate produced increasing by 9 percent.

Zimplats said metal recovery rate (4E) at 81,5 percent was marginally lower than the 81,8 percent realised in the last quarter.

Metal (4E) in converter matte increased from 118,150 ounces to 135,696 ounces mainly due to the increase in ore milled.

Zimplats said, in addition, the smelter ran consistently in the quarter which cleared some excess inventory still in the system.

Cash cost per ounce (4E) was 15 percent lower than the previous quarter due largely to higher metal production at its mines.

Its local spend (excluding payments to government and related institutions) increased by 25 percent to US$63 million.

Total payments to Government, direct and indirect taxes, at US$19 million were lower than the previous quarter at US$20 million.

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