Operational Review

 

Zimplats

 

Business summary

  • Three shallow mechanised underground mines
  • Concentrator and smelter plants at Selous Metallurgical Complex (SMC) (77km north of Ngezi)
  • Concentrator plant at Ngezi
  • Reserves: 10.4 million attributable ounces of platinum
  • Resources: (including reserves) 93.6 million attributable ounces of platinum
  • Production: 182 100 ounces of platinum in matte
  • Employees and contractors: 5 367
  • Key sustainability issues: SO2 emissions  

 

 

Material sustainability review

SAFETY

Zimplats achieved a world-class safety performance for the year under review.

ENVIRONMENTAL

Sulphur dioxide emissions are a key environmental issue for Zimplats, with overall direct SO2 emissions for the year at 12 100 tonnes (FY2010: 12 449). The Phase 1 expansion of the operation in 2009, resulted in a doubling of sulphur emissions over the period. SO2 emissions per day during FY2011 totalled 33.2 tonnes, this represents a 3% decrease on the prior year (FY2010: 34.1 tonnes per day).

Zimplats is currently undertaking a prefeasibility study to evaluate the installation of SO2 abatement equipment at Selous Metallurgical Complex (SMC). This equipment will ensure that the operation, as a minimum, does not increase its SO2 emissions from current levels during the Phase 2 expansion. The prefeasibility on this project is expected to be completed in FY2012.


Operational review

The operation delivered an exceptional performance, which marked the first year of full production following the commissioning of the Phase 1 expansion in FY2010.

Tonnes milled increased by 3% to 4.22 million with both the Ngwarati and Rukodzi Mines (Portals 1 and 2) operating at full production at 1.26 and 1.34 million tonnes respectively. Bimha Mine (Portal 4) continued its ramp up with tonnes milled increasing by 75% to 1.62 million. Full throughput at Bimha Mine of 164 000 tonnes per month was achieved in May 2011. Good grade control was maintained across the three mines with mill grade unchanged at 3.56g/t 6E. Concentrator recoveries rose by 1% to 82.4% due to an improved performance at the Ngezi unit. The combined effect was a 5% increase in platinum production in matte to 182 100 ounces.

Unit costs rose by 16% to US$1 171 per platinum ounce in matte due to a combination of internal inflation, the strong Rand and higher maintenance costs at the Ngezi concentrator. Internal inflation at 7% was driven by significant increases in labour, consumables, explosives, fuel and underground support costs. The strength of the Rand continues to have an adverse effect on South African sourced inputs. Maintenance costs at the Ngezi concentrator rose mainly as a result of the concentrator operating for a significant part of FY2010 on commissioning spares and consumables lowering expenditure during that period. Capital expenditure increased by 29% to $119 million as a result of the commencement of the Phase 2 expansion.

Outlook

The Phase 2 expansion commenced in August last year, and the project, which will be funded from internal cash flows and bank loans, is estimated to cost in the region of US$460 million. It entails the development of a new two million tonne underground portal, Mupfuti Mine (Portal 3), an additionally sized concentrator module and associated infrastructure. Mupfuti Mine is scheduled to commence production in FY2013. The new concentrator unit is expected to be commissioned in April 2013 and reach full nameplate capacity in FY2014. A run-of-mine ore stockpile is currently being built to ensure steady-state capacity at the concentrator as Mupfuti Mine ramps up to full production.

Both headgrade and overall metallurgical recoveries are expected to remain around the current levels of 3.56g/t 6E and 80%, respectively. Based on the Phase 2 expansion refined platinum production will increase by 90 000 ounces to 270 000 ounces per annum. Capital expenditure is estimated at approximately US$770 million over the next five years. US$400 million of the total capital budget will be expended on the Phase 2 expansion, the majority of which will be incurred over the next two years.

The next step in our growth plans is the Phase 3 expansion which is currently the focus of a feasibility study.

 

Zimplats – key statistics  

      FY2011   FY2010  
REVENUE   (Rm)  3 709   3 052  
Platinum      2 004   1 767  
Palladium      692   405  
Rhodium      211   252  
Nickel      465   366  
Other      337   262  
COST OF SALES    (1 576)  (1 481) 
Mining operations      (870)  (806) 
Processing operations      (446)  (373) 
Depreciation      (239)  (184) 
Change in inventory      (21)  (118) 
GROSS PROFIT    2 133   1 571  
Intercompany adjustment*      (81)  (412) 
Adjusted gross profit      2 052   1 159  
Other operating expenses      (203)  (145) 
Royalty expense     (113)  (69) 
PROFIT FROM OPERATIONS IN IMPLATS GROUP   1 736   945  
Gross margin   (%)  57.5   51.5  
SALES VOLUMES IN MATTE      
Platinum   (000oz)  182.2   171.5  
Palladium     148.9   139.8  
Rhodium     16.3   15.1  
Nickel   (t)  3 481   3 131  
PRICES ACHIEVED IN MATTE       
Platinum   ($/oz)  1 564   1 364  
Palladium      661   384  
Rhodium      1 841   2 204  
Nickel   ($/t)  18 997   15 466  
EXCHANGE RATE ACHIEVED (R/$)  7.03   7.56  
PRODUCTION        
Tonnes milled ex-mine   (000t)  4 223   4 095  
Headgrade (6E)  (g/t)  3.56   3.56  
Platinum in matte   (000oz)  182.1   173.9  
Palladium in matte     148.1   140.2  
Rhodium in matte     16.8   15.5  
Nickel in matte   (t)  3 519   3 103  
PGM in matte   (000oz)  388.8   368.9  
TOTAL COST (Rm)  1 519   1 324  
  ($m)  216   175  
Share-based compensation   (Rm)  20   –  
– per tonne milled**   (R/t)  355   323  
   ($/t)  50   43  
– per PGM ounce in matte**   (R/oz)  3 855   3 589  
     ($/oz)  548   475  
– per platinum ounce in matte**   (R/oz)  8 232   7 614  
   ($/oz)  1 171   1 007  
– net of revenue received for other metals**   (R/oz)  (1 131)  224  
   ($/oz)  (161)  30  
– per platinum ounce in matte   (R/oz)  8 342   7 614  
   ($/oz)  1 186   1 007  
CAPITAL EXPENDITURE (Rm)  840   698  
   ($m)  119   92  
LABOUR INCLUDING CAPITAL AS AT 30 JUNE (number)  5 367   3 680  
Own employees     2 757   2 418  
Contractors     2 610   1 262  
Centares per panel man per month   (m2/man)  42.0   43.0  
* Adjustment note: The adjustment relates to sales from Zimplats to the Implats Group which at year-end were still in the pipeline.
** Excluding share-based compensation.