Rising Costs and Safety Woes Shadow Zimplats’ Profit Surge

Financial Performance Highlights

Zimplats Holdings Limited has delivered a robust set of preliminary financial results for the year ended 30 June 2025. The company reported an 8% increase in revenue to US$826.6 million, buoyed by a 13% rise in metal prices despite a 4% decline in sales volumes. Profit before income tax climbed 77% to US$66.4 million, while net profit after tax surged an impressive 393% to US$40.5 million, reflecting improved margins and operational efficiencies.

However, the board elected not to declare a dividend for the year, signaling a cautious approach amid ongoing operational challenges and capital commitments.

Operational Challenges and Strategic Responses

Operationally, Zimplats faced a 2% drop in mined volumes to 7.7 million tonnes, primarily due to poor availability of the trackless mobile fleet at its underground mines. To mitigate this, the company commissioned a short-term open-pit mining program, with the South Pit contributing 3% of ore volumes. Encouragingly, the overall ore grade improved by 1% to 3.37 grams per tonne, driven by grade improvement strategies and increased contributions from higher-grade flats at the Mupani Mine.

Production dynamics were mixed across mines – Ngwarati Mine resumed pillar reclamation production, while volumes at Mupfuti and Bimha mines declined due to fleet issues. Mupani Mine production rose 36%, aligning with planned fleet build-up. Ore milled decreased 6% to 7.4 million tonnes, consistent with mined ore trends.

Capital Projects and Environmental Initiatives

Capital expenditure fell significantly to US$161 million from US$440 million the prior year, reflecting the commissioning and optimisation phases of major projects such as the smelter expansion and the first phase of the sulfur dioxide abatement plant. The Mupani Mine development, set to replace depleted mines, remains on schedule for full production by H1 FY2029.

Environmental efforts advanced with the commissioning of a 35MW solar plant, the first phase of a planned 185MW solar project, and preparations underway for a 45MW expansion. Water recycling improved to 65%, surpassing targets, and rehabilitation of disturbed land continued steadily. However, emissions of sulfur dioxide and carbon monoxide increased due to expanded smelting and changes in power sources.

Safety and Legal Matters

Safety performance deteriorated with thirteen lost-time injuries recorded, up from three the previous year, though no fatalities occurred. The company reaffirmed its commitment to a zero-harm workplace through enhanced safety initiatives.

On the legal front, Zimplats continues to navigate complex tax disputes with Zimbabwe Revenue Authority. A recent Supreme Court ruling favored the tax authority on a historical matter, but the company had already settled the disputed liabilities on a without prejudice basis, resulting in no financial impact for the year.

Financial Position and Outlook

Zimplats ended the year with a cash balance of US$99.3 million, up from US$78.1 million, after raising US$39 million in debt. Operating cash flow was impacted by lower sales volumes and ongoing capital expenditure. The company’s net tangible asset backing per security rose slightly to US$16.99.

While the company has made strides in operational resilience and environmental sustainability, the absence of a dividend and increased safety incidents may temper investor enthusiasm. The coming years will be pivotal as new mines ramp up and environmental projects expand.