Padenga defers dividend to contain borrowings

11 May, 2022 - 00:05 0 Views
Padenga defers dividend  to contain borrowings Gold volumes at the Dallaglio Group are projected to increase by 25 percent in 2022

The Herald

Tapiwanashe Mangwiro Senior Business Reporter

Padenga Holdings did not declare a dividend in the 2021 financial year as the Victoria Falls Stock Exchange listed crocodile skins and gold producer chose to retain the funds to contain its borrowings, the company said in its 2021 financial statement.

The firm said interest expenses increased by 49,93 percent to US$10 million last year. This was due to increased borrowings for the rehabilitation of the Eureka Gold Mine, which helped to drive revenues growth in 2021.

In the short to immediate term, the company said it resolved to focus on reducing borrowings to address the issue of high interest charges.

The company invested US$20 million last year into its gold mining operation, which gave it control of two gold mining units which after rehabilitation and expansion are both poised to contribute significantly to the Group’s revenue and profits.

“The Eureka Gold Mine, which was commissioned during the last quarter of 2021 will contribute significantly to volume growth, having commenced production in the second half of last year. At Pickstone Peerless Mine, revised production methods are being implemented to fully restore the operation to profitability.

“Gold volumes for the Dallaglio Group are therefore anticipated to increase 25 percent during 2022 with a concomitant 20 percent reduction in the all-in sustaining costs per ounce produced. This will increase margins and enhance profitability.”

The group generated cash amounting to US$15,5 million from operating activities for the year up from US$6,6 million the prior year. The increase in cash inflow was achieved on the back of increased efficiencies in working capital management

During the period under review, the firm’s revenue totalled US$78,47 million, which was a 10 percent increase over the US$71, 6 million recorded in the prior year.

Mining division — Dallaglio Investments led the revenue contributions to the group, at 66 percent from 57 percent 2020, largely driven by increased production and firming international prices.

The Zimbabwe crocodile operations contributed 31 percent of revenue total, from 38 percent in the same period in 2020.

The Texas alligator operation’s, US, contribution was down to 3 percent from 5 percent in 2020 as depressed consumer spending dominated the period due to lockdowns from Covid-19 threats.

Growing stockpiles of crocodile skins were marked down due to lack of demand for their size and quality in the international luxury market.

“The alligator skins market remains depressed and oversupplied. Given the current volume of unsold stock skins of this species in the market and that of live alligators on farms, we anticipate this situation to persist for a minimum of four to five years,” the company said.

Moving forward, as pandemic effects become less pronounced and the global economy moderates positively, the company said it anticipated improved performance of the crocodile division.

Recovering disposable incomes and the opening of global supply chains are expected to support the rebound in business activity.

The entity has already made advances into penetrating the Asian market and could result in further profit generation.

Market watchers believe the skins business has upward potential as it grows in line with the broader luxury goods market.

Whilst the quality of skins Padenga produced in 2021 improved significantly, low demand and low sales volumes resulted in below par financials in this unit.

“The solid Group revenue performance was largely driven by the exceptional contribution from the mining operations. This followed the on-time commissioning of the new Eureka Gold Mine in Guruve in October 2021. The Eureka Gold Mine achieved its plant nameplate capacity seven weeks earlier than forecast on November 25, 2021” the group said.

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