Zimplats constructs third concentrator at cost of US$94 million

Zimplats delivered another strong operational performance and made pleasing progress on the expansion projects under construction. During the year, Implats announced the approval of growth projects at Zimplats. Processing capacity will be expanded through the construction of a third concentrator at a cost of US$94 million.

The initial module of increased milling capacity will be commissioned in FY2023 and will add circa 80 000 ounces 6E to the operation’s annual production capacity. The concentrator will be commissioned with a combination of ore stockpile and run-of-mine feed from the existing portals, including Mupani.

Over a seven-year period, the existing portals at Mupani and Bimha will be expanded, to provide feed to the installed processing capacity once Ngwarati, Rukodzi and Mupfuti come to the end of their production lives.

The mining capex associated with this expansion is estimated at US$204 million and will be spent between FY2022 and FY2028. Concentrates in excess of smelting capacity will be exported for processing at IRS, and studies to increase in-country smelting capacity will be advanced in FY2022.

PERFORMANCE

Milled volumes increased by 1% to 6.82 million tonnes (FY2020: 6.75 million tonnes). 6E milled head grade of 3.44g/t (FY2020: 3.48g/t) declined by 1% and was impacted by higher volumes of stockpiled development ore to mitigate the production impact of the Ngwarati high wall subsidence.

Higher milling rates and lower-grade material adversely impacted process recoveries and 6E metal in concentrate production of 590 000 ounces declined by 1% (FY2020: 597 000 ounces). 6E matte volumes of 579 000 ounces were flat relative to the prior year (FY2020: 580 000 ounces), while 6E sales volumes of 543 000 ounces declined by 2% due to an export administrative delay experienced towards the end of the period. This material was subsequently delivered post the end of the period in early July 2021.

Zimplats achieved gross profit of R11.6 billion (FY2020: R7.0 billion), generated R4.8 billion in free cash flow (FY2020: R2.5 billion) and contributed R4.5 billion in headline earnings (FY2020: R3.4 billion) to the Group.

Total cash costs increased by 6% to US$387 million, with mining inflation compounded by higher mining and smelting costs. Unit costs per tonne milled increased by 6% to US$57 per tonne, while marginally lower matte volumes resulted in unit costs rising by 7% to US$668 per 6E ounce (FY2020: US$627 per 6E ounce).

On a stock-adjusted basis, unit costs increased by 8% to US$661 per 6E ounce in matte (FY2020: US$613 per 6E ounce) impacted by the additional milling of low-grade stockpiles. Covid-related expenditure of US$6 million equated to spend of US$11 per 6E ounce.

Capital expenditure increased by 43% to US$159 million (FY2020: US$111 million) and was 41% higher in rand terms as the Mupani and Bimha expansion projects and the third concentrator plant received board approval and spend on the Mupani Mine replacement project accelerated.

The development of Mupani Mine to replace Rukodzi and Ngwarati mines which deplete in FY2022 and FY2025, respectively, is progressing well and on schedule. The project targets to attain a design capacity of 2.2Mtpa in September 2024, at a total estimated cost of US$264 million. Zimplats has a current LoM in excess of 30 years.

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