Padenga reports US$12.7 million loss in future defining FY21 first half

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Padenga poured US$50 million to revive Eureka Gold Mine as the firm looks to consolidate its positioning in the mining sector.
  • Loss driven by low ore grade and high strip ratio at Pickstone mine and below target sales volumes from crocodile operations
  • Mining operations contributed 72% of the US$21.2m total revenue
  • No dividend payout for the period
  • Confident on outlook

HARARE – VFEX-listed gold miner with well-established operations in crocodile meat and skins business, Padenga Holdings reported a loss before tax of US12.7 million for the six months ended 30 June 2021 (H1’FY21), 237% below the profit of US$9.3 million reported in the same period last year.

According to the Group’s financial statements, this half-year loss was largely driven by a low ore grade and high strip ratio at the mining division’s Pickstone Peerless mine and below target sales volumes for the Zimbabwe crocodile operation.

The first half-year period was an eventful year for Padenga where it made future defining moves. One of those is the migration from the Zimbabwe Stock Exchange (ZSE) to list on the Victoria Falls Stock Exchange (VFEX) as it seeks to benefit from incentives announced by the Ministry of Finance.

Padenga which traditionally has been identified as a crocodile breeding firm is further consolidating its grip in the mining sector. The Group committed US$50 million into rehabilitating Eureka Gold Mine during the period under review.

The mine is tipped to be a key contributor to the country’s overall gold production which complements the government’s vision to achieve a US$12 billion mining economy by 2023. Gold and platinum group metals extraction will be key to achieve the feet.

Padenga recorded a turnover of US$21.2 million in the period under review, 6% below US$22.5 million recorded in the comparable period in the prior year.

Significantly, the mining business contributed 72% of the total revenue amounting to US$15.2 million from the sale of 270kgs of gold.

Meanwhile, the Zimbabwean crocodile operation contributed 23% at US$4.8 million whilst the Texas operation’s contribution amounted to 5% of turnover at US$1.2 million, down from US$2.3 million recorded in the same period last year.

Poised for growth

Encouragingly for Padenga, Eureka Mine which started production in July this year is yet to reach full production which the Group targets to achieve 100% of its milling capacity by year-end.

Eureka is identified to be one of the most advanced and efficient mine processing plants in Zimbabwe.

Production challenges were faced at Breckbridge’s Pickstone Peerless Mine including flooding of the mine pit during the heavy rains in the first quarter of the year plus the consequences of inappropriate mining methods. Consequentially, the mine missed its gold production target for the period by 57kgs.

“Management has fully reviewed its operations and is working on a remedial programme,” the Group said.

The Group said that it will continue to supply the market with premium quality skins in constant volumes in the near term from the Zimbabwe operations supported by firm demand in the market.

“The alligator operation however will be scaled back until market conditions for the species improve and realistic prices and demand return,” the Group said.

The Board of directors chose not to pay a dividend due to losses experienced in the period, however, the Group remains optimistic about future prospects.

“We remain confident in our strong fundamentals and we will continue to focus on preserving value while managing the risks triggered by volatile external environment,” it said.

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