Zimplats says survival under threat

Zimbabwe’s biggest platinum mine, Zimplats, on Tuesday warned its survival was under threat and expected significant losses due to the fall of metals on the international market.

“Shareholders are advised that due to the significant fall in metal prices since mid-July, your company’s short-term viability and survival are under serious threat,” Alex Mhembere, Zimplats CEO said in a statement to shareholders.

“Shareholders are further advised that despite the cost-saving and cash-preservation measures being implemented, it is forecast that your company will record a significant loss and cash shortfall for the half-year to December 31 2008.”

Mhembere added that unless there was a “significant ... dramatic recovery in metal prices, the same would apply for the year to June 2009”.

He said due to the “volatile market conditions”, Zimplats was not able to generate sufficient cash to meet its ongoing operational, needs as well as the requirements for the Ngezi Phase 1 expansion project, which was now at a critical stage.

Mhembere did not, however, warn of any possible job losses at the mine, which is listed on the Australian Stock Exchange.

Last month, the country’s biggest gold mine shut down five mines across the country, resulting in 5 000 people losing jobs as a result of failure by the state to pay for yellow metal delivery.

The yellow metal has traditionally been one of Zimbabwe’s main foreign-currency earners, but the mining sector has been crippled in recent months by power cuts and shortages of foreign currency needed to maintain equipment.—AFP

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