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Amplats Zim unit costs decline as output rises

Harare - In its results for the six months to end-June 2017, Anglo American Platinum (Amplats) [JSE:AMS] announced on Monday that production from its Unki mine in Zimbabwe has gone up by 5% on the back of improving grades, while cash costs have declined by as much as 6%.

Amplats said Unki will be one of its remaining core assets after selling off its Rustenburg operations and kickstarting disposal agreements for Pandora, Bokoni and other operations in 2016. The Zimbabwe operation has remained a low cost asset for Amplats, although economic uncertainties in the country have been worrisome for investors.

Full-year production from the Unki mine is now expected to top 75 000 ounces in the full year to December. Anglo has said that for the interim period, Unki production increased by 5% to 38 400 oz.

The higher production has been attributed to a 3% increase in tons milled and a 2% increase in the head grade to 3.48 grams per ton. This has been achieved through better mining reef cut, which helped reduce waste mining and resulted in more higher grade ore being delivered to the concentrator.

Revenue from the Unki mine was slightly down at R1.038bn, compared to the 2016 interim period revenue of R1.103bn.

Zimbabwean platinum mines have been optimising operations and seeking to reduce costs further. At the Unki mine, cash operating costs decreased by 6% to R881m during the half year period under review.

“The decrease was driven primarily by the rand strengthening against the dollar by 14% as Unki is a dollar denominated operation,” Anglo Platinum said.

Zimbabwe uses a basket of foreign currencies hedged against the dollar as legal tender. It has also introduced local bond notes that have equal value to the dollar, although miners and other companies continue to face delays in effecting international payments owing to a prolonged liquidity crisis besetting the country.

Cash operating costs at Unki fell by 12% to R22 848 per platinum ounce, Amplats added. The other platinum mines in Zimbabwe are Mimosa, jointly owned by Impala Platinum and Sibanye Resources, and Zimplats, which is fully controlled by Impala Platinum.

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