1 August 2014

Zimbabwe: Zimplats Plans U.S.$700 Million Refinery to Meet Govt Target

ZIMBABWE'S largest platinum producer Zimbabwe Platinum Mines (Zimplats) plans to spend a combined US$690 million on base metal refinery plants as part of efforts to meet government's directive that all miners process their ore locally by end of 2015.

At an analyst briefing for the fourth quarter ended 30 July 2014 on Wednesday, Zimplats CEO Alex Mhembere said the company would abandon initial plans to only set up large and modern smelters valued at more than US$1 billion to meet government's timelines.

He said the beneficiation project will run in two phases with the first phase costing US$190 million mostly for refurbishing an old plant left by Broken Hill Proprietory (BHP).

The second phase will cost US$500 million and includes expansion of the capacity created at phase one. Both stages are only for base metal refinery, Mhembere said.

The first phase, Mhembere said, will be funded from internal resources, including shareholder funds.

"We had wanted to go for a Greenfield project much bigger than the refinery plant left by BHP and with modern technology, but we have to modify the plant and integrate processes with BNC (Bindura Nickel Corporation) and ENR (Empress Nickel Refinery)," Mhembere said.

The BHP refinery has capacity to process 93 000 ounces of concentrate per year whereas Zimplats produces 270 000 ounces each year.

Mhembere said BNC and ENR would help increase processing capacity although their smelters handle low sulphur concentrates which are different from platinum group of metals concentrates.

Power supply remains a challenge with Zimplats' plans based on the possibility of electricity imports.

Mhembere said the company had lost 50% production at its largest underground mine, Bimha Mine portal 4, which collapsed last month. He said two out of the four teams that worked at Bimha Mine have been redeployed and are producing at full capacity to minimise loses.

However the two remaining teams will lose in terms of productivity as they would be running at 65%, parallel to a rehabilitation process of the collapsed mine that is expected to take at least 50 months.

Mhembere said the production loss for Bimha mine is expected to be 9,5% in 2015 and would be reduced to 3% in ensuing years.

Zimplats reported an after tax profit of US$29,8 million up 41% from the previous quarter ended March 2014.

Gross revenues per ounce went up 6% from the previous quarter while the gross profit margins increased 11%.

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