Zimplats swings back to profit

HARARE - Zimbabwe Platinum Holdings (Zimplats), the country's largest
producer of platinum swung back to profit this year after production of
platinum metal group nearly doubled, thanks to firming global metal prices
and an improvement in the country's economy, chief executive Alex Mhembere
said yesterday.

The platinum miner, which is majority controlled by South Africa's Impala
Holdings said after tax profit for the year-end to June this year soared to
$122 million after posting a $25 million loss during the same time last
year, making it the most profitable company operating in Zimbabwe.

The loss during the June 2008 to June 2009 period was at the height of the
country's debilitating economic and political crisis after an election
deadlock between President Robert Mugabe and Prime Minister Morgan
Tsvangirai, who went on to form a unity government last year in February.

"The financial performance mirrored the excellent operational achievement in
the year," Mhembere said in a statement accompanying the results.

The company registered strong growth in turnover, which surged 236 percent
to $404 million, propelled by a surge in sales of the platinum group
metals, which include platinum, gold, rhodium and palladium.

Zimplats exports unrefined platinum group metals to South Africa, which has
the continent's only platinum refinery.

Platinum group metals output rose to 350,000 ounces from 190,532 ounces
after ore production increased significantly and together with improved
metal prices resulted in strong cash generation.

Zimplats managed to shave off 11 percent on the cost of producing an ounce
of platinum from the previous year, benefiting from an increase in
production, the replacement of expensive open pit ore with underground
mining and stringent cost controls.

Zimplats is the largest miner in the country and says it is ready to pump in
a further $500 million to expand its operations but is holding out until
there is clarity on the government's indigenisation policy. That will take
its total investment in Zimbabwe to $1 billion.

The government earlier this year published rules demanding that
foreign-owned companies should cede 51 percent of their shareholding to
locals, a move that scared investors and divided the unity government.

The government later revised the law and two weeks ago named committees to
recommend varying percentages of shareholding foreign-owned companies in the
different sectors of the economy must transfer to locals.

"A significant amount of time has been spent discussing the company's
indigenisation proposals with the relevant government authorities. The
proposals are yet to be accepted by the government," Mhembere said.

Zimplats wants spending in local infrastructure such as roads, schools and
hospitals to be converted into empowerment credits, which would mean it will
not be forced to cede majority shares to blacks.

Mugabe has previously said the government had accepted the principle of
empowerment credits as a vital component of the indigenisation law.

Mhembere said this year Zimplats had spend $10 million on renovating and
building new schools in Mhondoro-Ngezi where it operates and will officially
open a new $30 million electricity substation during the first quarter of
2011.

Zimplats also saw a jump in operating costs for the year to $223 million, up
61 percent from 2009, as a result of ramping up production. - ZimOnline.