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Zimplats numbers for the quarter to June 2014 are impressive in comparison to the same period last year.
There is a huge improvement in its financial performance, and there is tremendous growth in its key data.
The company has great assets in Zimbabwe, and in comparison to South African peers, has generally low costs.
The company has huge potential if we improve on our country’s operating environment. This means Government policy towards the mining sector should be one of partnership.

Because of the mining industry’s cyclical nature and the volatility in earnings caused by fluctuating metal prices focus is on the projected revenues going forward taking into consideration a number of factors like metal price cycles, total resource at mine, political risk assessment and discounting factor.

However, this is not without its problems as it is usually hard to predetermine price cycles which in essence are as a result of demand/supply. However, when we analyse Zimplats outside the political risk is a great company; the company is a strong cash generator as well as big contributor to the fiscus.

While the annual production levels are still insignificant to warrant an investment in a refinery, the company in its current form is an icon.
With a platinum resource of 109,4 million oz and 12,5 million oz in reserves, Zimplats platinum resource dominates the total attributable reserves of Implats, considering that platinum makes up close to 50 percent of the metals mined by the company.

At current levels of production the mine life is over a century. So it would be critical for the company and indeed the country that production levels are increased significantly.

Currently Zimplats holds 42 percent of the total resources of the group, making it the flagship asset of Implats. Breaking it all down, Zimplats holds over 60 percent of the total PGM resource of the Hartley Geological Complex which is the largest PGM bearing complex in Zimbabwe, holding over 80 percent of the known resource in Zimbabwe.

This makes Zimplats worth a lot of money even if we forecast a historically low pricing matrix. Even if we factor in the resource that will be attributable to the indigenisation partners, once that transaction comes to a conclusion, Zimplats will still hold a lot of reserves and resources.

One major challenge though is the incident at Bimha Mine, which will result in a decline in revenue going forward. But we believe that the impact on the valuation will not be significant, as the company had already disclosed the operational risk at Bimha.

The company mines platinum and another nine minerals which happen to naturally occur in the same rocks as platinum. Close to 50 percent of the total volume mined is platinum with the other being the other metals. This works out to about 270 000 ounces of platinum short of the ounces required to set up a refinery.

For the company to bring its production to such numbers, considerable investment is required. It is then very crucial that the Government and the company finalise the IEE issues so that the company can move forward.

The multiplier effect of such an investment as well as investing in a refinery is too great to hold at ransom because of politics. Zimbabwe; its people and their future should come first and politics should take a backs eat.