Zimbabwe-based platinum group metals miner Zimplats’ revenue for the financial year ended June 30 increased by 38% year-on-year to $868.9-million, mainly owing to an increase in the average prices of rhodium, palladium, gold and nickel.

However, in view of the economic uncertainty posed by the Covid-19 pandemic, ASX-listed Zimplats has considered it prudent not to declare a dividend for the financial year and to preserve cash and maintain liquidity.

The company sold 554 944 oz of platinum, palladium, rhodium, ruthenium, iridium and gold (6E), down 3% on the 573 009 oz of 6E sold in the 2019 financial year. This was mainly as a result of a force majeure notice issued by Impala Platinum (Zimplats' parent company), which resulted in the suspension of sales for more than a month in the final quarter of the financial year.

The force majeure notice was in response to the Covid-19 pandemic induced lockdown in South Africa.

Cost of sales increased by 8% to $480.4-million, mainly owing to the increase in share-based compensation and depreciation expense. The increase in depreciation expense was a result of the change in the estimation method of depreciation for surface and metallurgical assets from units of production to straight line, as well as an increase in the asset base during the period under review.

Zimplats’ gross profit margin improved to 45%, from 30% in the prior financial year, mainly owing to the improvement in metal prices.

Operating cash cost increased by 2%, from $602/oz of 6E to $613/oz of 6E as a result of inflation, while profit before income tax increased to $374.2-million.

Income tax expenses for the year under review increased to $112.4-million, driven by the increase in taxable profit.

Zimplats' profit after tax for the year increased to $261.8-million.

In terms of Covid-19, Zimplats undertook a review of procedures and practices to reduce the possible spread of the virus and capacitated the internal medical facilities to deal with Covid-19 cases at the workplace, including facilities for screening, testing, quarantining, isolating and treatment. The company also undertook risk profiling to identify employees at high risk of severe disease and mitigating measures were implemented.

Zimplats has, as yet, not recorded any Covid-19 positive cases among its employees and contractors.

Regarding capital projects, the group spent $104.2-million on capital projects, including stay-in-business, replacement mines and expansion projects.

A total of $69-million was spent on stay-in-business projects, including expenditure on Bimha mine redevelopment and the furnace rebuild and improvements project.

Zimplats reports that the Bimha mine redevelopment is progressing according to plan, with the south underground crusher and the ore-conveyance system being commissioned in December 2019.

The group aims to complete the outstanding underground workshops in the north and south sections in December this year, which will complete the full scope of the project.

During the financial year under review, $15-million was spent on this redevelopment project, bringing the total project expenditure to $98.8-million as of June 30 compared to a total project budget of $101-million.

The furnace rebuild and improvements project which commenced in the 2019 financial year was completed and commissioned in the first half of the year under review.

A total of $7.1-million was spent in the 2020 financial year, bringing the total expenditure to $20.4-million. A total of $16.4-million was spent on the replacement of trackless mining machinery including ancillary support equipment, in line with the current replacement philosophy.