The Sunday News
THE country’s second largest platinum mine Mimosa Mine in Zvishavane has lined up major capital projects, among them adding capacity to the existing mill, upgrading the crusher and its mine ventilation system at an estimated capital expenditure of $82 million in the next five years.
This, said the company shareholders, buttresses the company’s commitment to Zimbabwe with a new expansion project expected to sustain Mimosa as a long-life asset for an additional 20 years.
Mimosa Mine is jointly owned 50:50 percent by South African Impala Platinum and Bermuda registered Aquarius Platinum.
In a 2015 Annual report to June 2015 released on Friday, Aquarius Platinum said based on a prefeasibility study that was completed earlier in the year and the bankable feasibility study underway expected to be done by December, the major expansion project will see unit cost decline by six and eight percent from current levels.
“Based on results of the prefeasibility study, the estimated capital requirement is $82 million (100 percent) over five years. This would include additional mill capacity and an upgrade to the crusher, additional fully equipped production teams and a ventilation upgrade,” said Aquarius Platinum.
The company said it was estimating that the expansion project can be executed in two years of its start.
“However, guarantees of fiscal and regulatory stability would be important before the Aquarius board made any decision to commit the capital required,” said the company.
Mimosa Mine is also being expanded, said Aquarius Platinum, with the Mtshingwe block expected to sustain the mine for at least 20 more years.
“Access to the block is being developed via the Wedza shaft and a total of 305m of on-reef development was achieved during the year under review, as planned and on budget.”
Operations at Mimosa have been on the high for the past five years, placing the company among the most lucrative ventures in the country. Revenue and profits have also been on the up with the company recording a five percent year on year increase in revenue while volumes have increased by 18 percent in the last five years.
“Mimosa again reported record production. The mine continued to operate optimally, exceeding design capacity for the fifth consecutive year. The record level of production was largely due to the increase in volumes processed, while the grade mined was steady. The higher volumes together with a marginal increase in recoveries contributed to a 6,6 percent increase in PGMs produced for the year — to give an increase of 18 percent in total over the last five years,” said the company.
Aquarius Platinum added that despite decrease in global metal prices, the continued increase in production and revenue were offsetting the shocks of the price fluctuations. Platinum prices have fallen by an average of 28 percent since July last year. In July average price was $1 500/oz, but stood at less than $1 080/oz by June this year.
Mimosa, two years ago, also retrenched close to 100 workers as part of cost cutting measures and this has started to bear fruit.
“The effect of the retrenchment process of the past two years and the 10 percent decline in the number of employees contributed to a decline in costs. The mining cash cost decreased by eight percent while the cost per PGM ounce produced fell by nine percent.”
Stay-in-business expenditure for the year, said the company, was $27,8 million which was spent mainly on mobile equipment, drill rigs, the conveyor belt extension and down-dip on-reef development into Mtshingwe block.
Production during the year improved 142,81 PGM ounces produced per employee in FY2014 to 168,38 in FY2015.
The company, however, said it has estimated a hit of $4,5 million from the unclarified issue of 15 percent tax export level on unbeneficed platinum.
During last year’s budget presentation, Finance Minister Patrick Chinamasa announced a deferment of the tax to January 2017. However, the Finance Act (No 3) of 2014 which gives legal effect to the budget proposals did not include the deferment of the 15 percent tax on un-beneficiated PGMs.
Platinum mines in Zimbabwe have been saying this effectively meant that the tax was not deferred and hence the 15 percent export levy on un-beneficiated PGMs became law effective 1 January 2015.
“In the absence of the formal deferment in law, and having considered the above the directors believe it is prudent to provide for the impact of this levy. Accordingly an attributable amount of $4,5 million has been accrued for the financial year ended June 2015.”
Aquarius Platinum said it was still working with other platinum miners in the country to assess the viability of a number of in-country smelting and beneficiation alternatives. The Government has instructed platinum mines in the country to come up with proposals on how they intend to beneficiate the platinum they are mining. At the moment most the of platinum is processed in South Africa.
The company said the proposal to render royalties payable by Mimosa non-deductible for income tax purposes was implemented with effect from the year of assessment beginning on 1 January 2014, and therefore impacted Mimosa from the start of the 2014 financial year on 1 July 2013.
“This position has remained in the 2015 national budget. The financial impact of the non-deductibility of royalties was $4,2 million for the financial year to June 2014 and $4,7 million for the financial year ended June 2015.”
Aquarius Platinum also said power challenges that the country is facing has resulted in an eight percent of operational costs dedicated to power. The country is facing power shortages which have resulted in increased load-shedding to both industrial and domestic users.
However, in spite of one or two teething problems, Mimosa Mine’s life looks guaranteed for many more years to come. Apart from PGM minerals, the company announced that its mining lease in Zvishavane had some chrome-bearing seams situated 270m below the PGM Main Sulphide Zone (MSZ) horizon that have not yet been exploited.
Aquarius Platinum also owns other mines in South Africa including the infamous Marikana Mine but unlike in South Africa, noted chief executive officer Mr Nel Chief, Zimbabwe has become a centre of attraction for platinum miners.
“The fact is that platinum ore bodies in Zimbabwe are shallower and relatively more-easily and safely accessed than those in South Africa. And it is these geological and physical advantages that make the country attractive for platinum mining companies – an attractiveness that we recognise and which confirms our investment in the Mimosa Mine.”
