Crocodile breeder, Padenga Holdings Limited, is banking on its recently acquired mining operations, Dallaglio, to boost its earnings at a time the crocodilian business is affected by COVID 19.
Padenga expanded its businesses into gold mining in a move expected to diversify risk and boost its export earnings.
Production at one of the mines – Pickstone Peerless – is expected to exceed prior year.
“This, coupled with increased gold spot prices, means that the gold mining subsidiary will help the group ride the difficult trading conditions in the crocodilian business,” said chairman Thembinkosi Sibanda in a trading update for the third quarter to September 30, 2020.
Already, indications are that the group’s consolidation of mining operations enhanced revenue performance for the quarter offsetting difficulties caused by COVID 19 to its crocodile skins business.
A trading update for the quarter reveals that revenue went up 221 percent with the mining operations accounting for 70 percent of that.
During the nine months to September, Dallaglio’s gold sales volumes went up 20 percent to 544,2 kg from 452,8 kg in the prior comparable period as gold spot price firmed 27 percent to US$1 735 year to date.
On the other hand, the crocodile and alligator businesses were negatively impacted by COVID 19 pandemic with no meaningful turnover being recorded since April 2020. Revenue from skin sales was 5 percent below prior period.
“The COVID 19 pandemic continued to pose an ongoing threat to business continuity as it impacted traditional markets in those countries that the business trades skins into.
“However, with the easing of lockdowns the two main retailers of high-end leather goods both reported improved sales volumes across all product categories in Q3 in their trading updates.
“COVID related lockdowns prevented the scheduled skin sales gradings during Q2 and Q3 from occurring,” said Sibanda.
The Zimbabwe crococodile operation recorded a 42 percent decline in skin sales volumes to 8 286 skins compared to 14 321 skins recorded in the comparable period.
According to the group, 22 796 crocodiles had been harvested by end of the quarter under review and the skins were awaiting sales grading to be convened when international travel resumed.
A total of 18 629 skins were graded following lifting of travel restrictions in October with 6 260 of those already shipped in that same month while the remainder are scheduled for shipping this month.
Demand for crocodile meat remained depressed during the quarter and the group is looking at growing local market to absorb product until international export market returns.
Skin volumes at United States operation – Tallow Creek Ranch – rose 29 percent to 16 916 compared to 13 130 recorded in the same quarter in the prior year.
According to the group the total harvest to date for 2020 is 14 015 skins and total harvest for the year is expected to reach 18 149 skins.
The market for watchband skins according to the group remains weak due to oversupply and reduced demand in the subsector of the economy.
While depressed demand for alligator skins is expected to negatively impact volumes and prices, the group is now adjusting production to exact sizes and numbers that customers still in the market requires.
The group will also focus on sustainable long term growth strategies across all businesses while ensuring premium and defect free skins for its market.
Meanwhile, the group anticipates release of its half year financials to June 30, 2020 by end of this month following delays necessitated to consolidate financials for the 50,01 percent investment in Dallaglio.