Zimplats’ critical Ngezi platinum expansion in the balance
Zimplats’ Ngezi expansion project in Zimbabwe appears to be in the balance as the company has run out of funds to complete the project that is critical to its future in the country. The company has set out to raise money from institutional investors abroad in order to complete the expansion that would make its platinum mining here profitable at current lower platinum group metals prices. Meanwhile, majority owner Implats said today that Zimplats’ current production of 95,000 platinum ounces per year continued uninterrupted. Spokesperson Bob Tait stressed it was only the expansion that was under threat as lower metals prices meant it could no longer be funded through the company’s cashflow.He said that although times were tough for capital raisings, the project was a robust one that would transform Zimplats to one of the lowest cost producers in the platinum industry.The company has stressed that a completed expansion would enable it to operate profitably even at current metal prices and said it was therefore critical that the project was indeed completed. The Ngezi operation is located on the Hartley Geological Complex on the Zimbabwean Great Dyke south-west of Harare.The expansion project was already at an advanced stage with the construction of two concentrators set to be completed in the first quarter of next year. The Ngezi expansion project (phase 1) is supposed to take Zimplats to production of 160 000 platinum ounces by 2010."In the short to medium term and with the Ngezi Phase 1 Expansion project completed during 2009 the company will position itself in the lower quartile on the producer cost curve. Management is therefore confident that the company will have the capacity to service the increased debt," Zimplats said.Asked whether there was yet a glimmer of hope for platinum group metals (PGM) prices, Tait said he was of the opinion that next year would be a difficult one.Zimplats currently operates both an opencast and underground mine at Ngezi. It announced the approval of the Ngezi Expansion phase 1 project that is replacing opencast mining with underground mining in 2006.The $340m project is the start of the company’s long-term expansion plans in Zimbabwe and involves the development of two new underground mines and the construction of a new 1.5m tonne per year concentrator.