Zimbabwean crocodile farmer Padenga Holdings diversified into gold and is now reaping the benefits of stronger prices for the precious metal.
Padenga supplied crocodile skins to global luxury-apparel manufacturers. Over the past few years, it has invested in the acquisition of gold-mining properties in Zimbabwe, coinciding with an uptick in bullion prices.
On Tuesday, Padenga declared a dividend of $0.319 for the half year to the end of June.
This followed the company’s statement that it had “sustained its positive momentum, delivering another strong financial performance” for the half-year period under review.
“This was driven by the mining division, which continued to benefit from a favourable gold-price environment,” said Themba Sibanda, non-executive chairman of Padenga.
It recorded $187.74 million (R3 billion) in total revenue for the half-year period, representing a 44% increase on the prior year. The 44% rise in revenue was attributed to Dallaglio, its mining division, which contributed 97% of group revenue.
Half-year earnings before interest, tax, depreciation and amortisation (EmBITDA) grew by 110% to $100.82m (R1.63bn), reflecting “the benefit of stronger gold prices and a sustained focus on operational efficiency”.
Net interest income amounted to $1.24m (R20m) for the six months under review, compared with a net interest expense of $3.19m in the prior period. This reflected the benefits of debt reduction, lower financing costs and the prudent investment of surplus cash.
Padenga said equity-accounted earnings for the period had surged to $5.9m (R95.5m), compared with $0.8 (R12.95m) in the prior period. It said this financial performance “highlights the value being generated from the group’s strategic joint-venture investment” in mining.
The Dallaglio gold-producing unit grew bullion output by 4% to 1,345 kilograms. Operational performance in the gold division “benefited from stronger mined grades and improved plant recoveries, reflecting the positive impact of ongoing investments in mine development, drilling and operational optimisation”.
During the half year, a total of 12,495 metres of exploration-evaluation drilling was completed. The company is focused on further investment in drilling and geological modelling at the Pickstone mine to expand the resource base, optimise mine planning and drive ongoing improvements in operational efficiency.
The higher earnings for the period were achieved against the backdrop of headwinds within the global economy, as the conflict in the Middle East and energy-market disruptions weighed on economic activity and moderated global-growth expectations.
Gold, however, proved more resilient, with stronger prices, although spot prices fell 7.5% from $4,353 per ounce at the start of the year to $4,026 per ounce by the end of the half-year period under review.
Nonetheless, gold prices remained well above prior-year levels amid continued safe-haven demand in an uncertain global environment.
“This favourable pricing environment continued to underpin the strong performance of the group’s mining division. Locally, the operating environment remained relatively stable during the first half of the year, supported by lower inflation and improved exchange-rate stability,” said Sibanda.
He added that exchange-rate stability in Zimbabwe “enhanced business confidence and provided greater predictability in planning and managing” operating costs.
With Zimbabwean mining groups required to retain only 70% of their export earnings in foreign currency, Padenga continued “to prudently manage its currency” exposures.
THE NATIONAL