Declining world metal prices have forced Zimbabwe’s largest platinum producer, Zimplats, to shelve plans to extend operations at its open cast mine by another 18 months after posting an operating loss of US$16 million in the quarter ending September.
In a statement accompanying its quarterly results, the company said open pit mining would stop at the end of this month.
“Due to the continued fall in metal prices, discussions to extend the open cast mining operations by another 18 months were discontinued. Open pit mining will therefore cease in November 2008. Management is exploring options to increase underground ore production so as to take immediate advantage of processing capacity that will become available when the Ngezi concentrator is commissioned in April 2009,” said the statement.
Revenues fell by 83 percent to US$15 million from US$93 million in the June Quarter and the company attributed this to reduced sales caused by the shutdown of the smelter after a fire in July.
During the three-week shutdown the company stockpiled concentrates whose processing was supposed to be completed at the end of last month.
Zimplats, which has been posting profits since the beginning of the year, made an operating loss of US$16, 636 million as prices of the platinum metal group slumped to their lowest this year on the world market after record highs.
Platinum prices during the quarter averaged US$1 551 per ounce compared to US$2 044 the previous quarter.
Prices of palladium, rhodium, gold, copper and nickel which are produced in the platinum refining process also fell affecting Zimplats earnings.
The company warned shareholders that there could be a continued negative impact on its operations if metal prices remained at present levels. As of yesterday, platinum was trading at around US$860 an ounce.
It said it was embarking on cost-cutting measures to mitigate the effects of falling metal prices.
“Apart from closing the open pit operations, and in consequence of the recent dramatic decline in metal prices, the company is reviewing its operating cost structure and planned capital expenditure programme with a view to minimising debt and conserving cash while the expansion project is being completed.”
The company said the Ngezi Phase I expansion project, though within budget, was two months behind schedule.
Zimplats is the larger of the two platinum mines in the country. The other is Mimosa in Zvishavane. Work is underway to bring the third, Unki in Shurugwi, on stream.
The company, which is listed on the Australian Securities Exchange, is majority-owned by South African-based Impala Platinum, with an 87 percent shareholding.
