Zimplats preferred ZSE listing to indigenisation

Published: 10 June 2013

Zimplats expressed the group's interest to list on the ZSE thus localizing the firm through the bourse so that ordinary Zimbabweans may get the chance to participate, CEO Alexander Mhembere told an analyst briefing yesterday.

"Our view, as Zimplats is that we would have preferred a situation of localizing or indigenising through the Zimbabwe Stock Exchange…and the people would have participated in the process...But there were fears again that some of those shares would be taken by offshore investors … but I believe a mechanism could be put in place to allocate the shares to indigenous people.

"Hopefully we will be able to achieve that someday and be able to localize through the stock exchange," Mhembere added.

"This year things have not been rosy as they were in the previous years.....Revenue for the 9 months to March 2013 went down 4% to $345.8 million from $358.9 million recorded in the prior period."

Looking at the revenue makeup, Mhembere noted that platinum contributed 56.5%, palladium 19.7%, gold 6.6% and the rest shared amongst other sectors.

The group also recorded a 27% decrease in PBT at $85 million from $131 million in the comparative period while cash generated from operations went down 47% to $97.6 million from $182.6 million.

"Gross margins were down 24%...so from that end this has not been a good year for us.. but it has been a fantastic year for us in terms of output and efficiencies…," he said.

Mhembere added that the group contributed close to $115 million to the fiscus as they are slowing down on the capex and increasing on their volumes.

"This shows that although we aren't listed on the Zimbabwe Stock Exchange we do contribute significantly to the economy," noted Mhembere.

Furthermore, he said local procurement has "increased steadily from 12% to 63% of which 31% is indigenous," and YTD monetary value is $178 million for local and $88 million indigenous suppliers.

Mhembere noted that in order for the group to achieve the Base Metal Refinery (BMR) they need to set up Zimbabwe Refining Services.

He also said enough smelting and converting capacity to produce the BMR has to be in place and a minimum production rate of 500 000 Pt oz/ year is required.

Therefore the major hurdles faced by the firm in achieving BMR, as pointed out by Mhembere, include power constraints and increasing cost of operations.

"Financially, to increase Pt production by 170k requires investment as high as $1 billion and to invest in a BMR, a capital requirement of $2.8 billion is also needed," he said.

- zfn