What Caused Zimplats Holdings Stocks to Shoot Up Today?

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What happened to Zimplats share price?

Shares of Zimplats Holdings Limited [ASX:ZIM] have shot up by 22.55% this week as Implats (owners of Zimplats) increased production by 9.6% since early November. Their productivity levels are expected to rise further in the New Year.

What caused the share price rise?

After following through with their business restructure, which was completed in the last financial year, focus was put on stakeholder interventions to decrease protests. As a result, more space has been opened for work. Palladium production increased by 9.4%, which is a significant rise.

Zimplats’ productivity rates have risen from last year’s 21,200 oz to 23,200 oz throughout 2017. This massive turnout was the result of the company’s Mimosa operation.

Overall, their business restructure and prioritising have resulted in their shares shooting up by a significant amount. Platinum miners already invested $50 million in Zimplats at the start of 2017.

Zimplats received $14 million in the second half of 2017 for export incentive, which is outlined in the company’s 2017 integrated report.

What’s next for Zimplats?

Refined platinum production is expected to increase between $1.51 and $1.56 million in 2018. They aim to increase further production now that they no longer have deal with protests. Zimplats’ revenue have already risen by 9% during the month of June.

Platinum revenue has been increasing for the past few years, as it has soared up from $381 million in 2015 to $398 million in 2016.

Going into the new year, the budget has recently slashed the platinum royalty rate to 2.5% until mid-2019. The budget did not explain why they chose this time frame, however Zimplats can renew the royalty rate every 10 years for two periods, in accordance with the Zimplats’ 2017 integrated report.

The public is still in a state of suspense, as the budget left out what will ultimately happen in 2018. There is just no definitive answer on whether the government is going to continue their mining houses taxation. If the taxation continues, then it would be hard to predict Zimplats’ actions on the matter.

Cheers,

Nathan Frangoulis,

Junior Analyst, Money Morning

PS: Our resource analyst, Jason Stevenson has compiled the top 10 Mining stocks trading on the ASX right now. What do find out which ones will benefit from the resurgence in commodity prices? Click here.

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