Zimplats reported a sharp 56% drop in final metal output for Q3 FY2026 due to smelter downtime, while operating cash costs per ounce rose nearly 30%. Major projects remain on track despite the operational hiccup.
- Final metal production down 56% quarter-on-quarter
- Operating cash costs per 6E ounce up 29%
- Mined volumes steady with 17% year-on-year growth
- Major capital projects progressing mostly on budget
- One lost-time injury recorded with corrective actions
Smelter Maintenance Hits Metal Output Hard
Zimplats Holdings Limited (ASX:ZIM) faced a significant production setback in the March 2026 quarter, with final 6E metal output plunging 56% from the prior quarter to 76,340 ounces. The steep decline stems from scheduled maintenance on the smelter in February, which interrupted matte tapping operations. Although tapping resumed in March, the company is carrying concentrate stocks of approximately 63,000 ounces 6E that it expects to process by the end of the fiscal year, suggesting a potential rebound in coming quarters.
Mining and Milling Show Mixed Signals
Mining volumes were relatively stable, dipping just 1% from the December quarter to 2.094 million tonnes but improving 17% year-on-year, buoyed by higher open-pit output and better underground fleet performance. However, the 6E head grade declined marginally by 1% quarter-on-quarter and 2% year-on-year, attributed to increased open-pit throughput and internal dilution during geological re-establishment. Milling volumes fell 6% sequentially due to mill relines but rose 15% year-on-year, reflecting stronger ore generation. Concentrator recoveries held steady, and metal in concentrate production was down 6% quarter-on-quarter but 18% higher than the previous year, highlighting operational resilience despite the smelter issues.
This contrasts with the previous quarter's gains, where Zimplats had reported a 15% year-on-year rise in mined volumes and a reduction in cash costs per ounce, as detailed in their 15% year-on-year rise in mined volumes update earlier this year.
Rising Costs Pressure Margins
Operating costs edged down 2% quarter-on-quarter, reflecting the lower mining and milling activity, but surged 22% compared to the prior year, driven by higher open-pit production costs, export commissions, labour, and maintenance expenses. The cash cost per 6E ounce soared 29% from the previous quarter to US$1,299, reversing the cost improvements reported in earlier periods. Transfers to closing stocks amounted to US$67.1 million due to concentrate accumulation, impacting cash flow metrics.
These cost dynamics mark a shift from the prior quarter's trend where cash costs had decreased despite rising total expenses, as noted in the Zimplats Boosts Production and Cuts Costs report.
Major Projects Advance Despite Operational Challenges
Zimplats continues to make steady progress on its key capital projects. The Mupani mine development is on track for full-scale production of 3.6 million tonnes per annum by FY2029, with cumulative spending of US$360 million against a US$386 million budget. The smelter expansion and SO₂ abatement project also advances as planned, with US$468 million spent to date versus a US$544 million budget.
The 45MW Phase 2A solar project is progressing toward completion in H1 FY2027, aiming to more than double installed solar capacity to 80MW. Meanwhile, the tailings storage facility expansion at the Selous Metallurgical Complex is underway, securing operations through FY2049. The base metal refinery refurbishment has seen US$36 million spent against a US$190 million budget, indicating a longer timeline for completion.
These developments build on the company’s prior capital expenditure trajectory, which had supported a strong rebound in profitability and production in earlier quarters, as covered in the Zimplats’ Profit Soars 2,100% analysis.
Safety and Exploration Updates
Safety remains a focus, with one lost-time injury recorded during the quarter. The company completed investigations and implemented corrective actions, maintaining a commitment to zero-harm operations. Exploration drilling targeted reserve upgrades and decline development at Bimha and Mupani, completing 24 holes totaling 7,074 metres, supporting future mine planning.
Bottom Line?
Zimplats faces a near-term production dip and rising costs from smelter maintenance, but project progress and concentrate stockpiles suggest a potential recovery later in FY2026.
Questions in the middle?
- How quickly will Zimplats convert concentrate stockpiles into final metal output?
- Will rising operating costs persist beyond smelter maintenance impacts?
- How might project timelines and budgets hold up amid operational pressures?