Zimplats Posts 57% Revenue Jump and 484% Profit Surge on Operational Gains
Zimplats Holdings reported a strong FY2026 with revenue climbing 57% to US$1.3 billion and profit before tax soaring 484% to US$387.5 million, driven by higher metal prices, increased ore volumes, and improved operational efficiency.
- Revenue rises 57% to US$1.3 billion
- Profit before tax surges 484% to US$387.5 million
- Ore mined and milled increase by 9% and 8%
- Operating costs up 20% but gross margin improves to 34%
- Free cash flow turns positive at US$31 million
Robust Revenue and Profit Growth Amid Rising Metal Prices
Zimplats Holdings Limited (ASX:ZIM) delivered a standout FY2026, with revenue soaring 57% to US$1.3 billion and profit before tax leaping 484% to US$387.5 million. This surge was fuelled by a sharp improvement in gross revenue per ounce of its six-element (6E) platinum group metals basket, which rose to US$2,171 from US$1,349 in FY2025, partially offset by a slight 2% drop in 6E sales volumes.
The company’s earnings per share rocketed to 257 US cents, up from 38 cents the prior year, reflecting the scale of profitability gains. Despite these strong results, Zimplats maintained its conservative capital discipline, declaring no dividend for the year.
Operational Improvements Drive Higher Volumes and Efficiency
Ore mined increased 9% to 8.4 million tonnes, supported by enhanced availability of trackless mobile machinery underground and contributions from the South Pit Mine, which accounted for 6% of ore mined. Milling throughput rose 8% to 8 million tonnes, reflecting both higher ore production and improved processing rates.
Production gains were uneven across mines: Ngwarati Mine rebounded to 0.7 million tonnes following fleet redeployment, Bimha Mine output rose 10%, and Mupani Mine ramped up 20% aligning with development plans. Conversely, Mupfuti Mine declined 6% as operations scaled down ahead of reserve depletion.
Cost Pressures Temper Margins but Profitability Strengthens
Cost of sales climbed 20% to US$860.9 million, driven by salary increases, expanded smelter operations, and elevated maintenance spend including conveyor belt replacements and secondary equipment upkeep. Operating cash costs per 6E ounce rose 23% to US$1,102, yet gross profit margins improved markedly to 34%, up from 13% in FY2025.
Free cash flow after capital expenditure turned positive at US$31 million, a notable recovery from a negative US$17.1 million the prior year. Closing cash balances stood at US$58.3 million following US$69.3 million in borrowings repayments.
Safety Advances and Environmental Initiatives
Zimplats recorded a significant safety improvement with four lost-time injuries, reducing the lost-time injury frequency rate to 0.22 per million man-hours from 0.68. The company attributes this to targeted safety programs focusing on risk management and workforce engagement.
Environmental efforts included recycling 68% of water used, surpassing a 63% target, and rehabilitating 9.6 hectares of open-pit areas along with tailings storage facilities. Carbon emissions remained stable, though sulphur dioxide emissions rose 35% due to higher smelting capacity and concentrate sulphur content.
Capital Projects Progress on Schedule
Capital expenditure eased slightly to US$153 million as key processing projects neared completion and replacement mine spending tapered. The Mupani Mine development remains on track for 3.6 million tonnes per annum by FY2029, with US$364 million spent against a US$386 million budget.
The smelter expansion and sulphur dioxide abatement project advanced steadily, with US$478 million spent to date against a US$544 million budget. Construction of the Phase 2A 45MW solar plant at the Selous Metallurgical Complex is progressing for commissioning in H1 FY2027, aiming to double solar capacity to 80MW.
Ongoing Legal and Tax Matters
Zimplats secured a favourable Supreme Court ruling in a royalty computation dispute with the Zimbabwe Revenue Authority (ZIMRA), though an appeal is pending. The company is also engaged in ongoing tax audits relating to prior periods but has not recognised additional provisions, considering its tax positions supportable.
Bottom Line?
Zimplats’ FY2026 results underscore operational momentum and disciplined capital management, but watch for the impact of ongoing tax audits and the pending royalty appeal.
Questions in the middle?
- How will the closure of the South Pit Mine in FY2027 affect ore grades and profitability?
- What are the potential financial implications if the royalty appeal with ZIMRA is unsuccessful?
- Will rising sulphur dioxide emissions prompt regulatory scrutiny or require further abatement investment?
