Padenga moves to expunge US$60m debt
Victoria Falls Stock Exchange-listed Padenga Holdings Limited says it is accelerating efforts to retire a debt overhang of roughly US$60 million that has constrained growth and delayed planned diversification into plantation agriculture.
The group accumulated a significant portion of its borrowings — about US$63.3 million at peak — while funding the rehabilitation of Eureka, a gold operation now under Padenga’s mining subsidiary, Dallaglio. Management said the debt load has weighed on strategic initiatives, prompting a renewed focus on deleveraging to restore balance sheet flexibility.
During the year to December 31, 2021, Padenga’s debt-to-equity ratio rose to 80%, up from 49% the prior year. The finance team outlined immediate priorities that include containing cost escalation, maintaining strong liquidity, and reducing group borrowings. The company also indicated it is lobbying for more favorable treatment of export proceeds, noting that foreign-currency surrender requirements have eroded the value of earnings and complicated efforts to resolve debt. Rising global US dollar inflation, alongside elevated fuel and energy prices, is expected to keep cost pressures in focus.
Padenga reprofiled its obligations in 2021, with 47% of the debt moved to longer-dated terms. Management said the group will revisit its plantation agriculture plans once leverage is brought down, with the intent to restart that strategy and move into heavier investment from 2023 onward.
For the 2021 financial year, group revenue rose 10% to US$78.4 million from US$71.6 million, underpinned largely by the mining division after Eureka’s commissioning in October. Despite the top-line growth, Padenga posted a loss before tax of US$6.4 million, with profitability impacted by the value loss on export proceeds and lingering pandemic-related effects on markets and operations.
Looking ahead, the group has earmarked US$29 million in capital expenditure for the current year. Of this, about US$18 million is allocated to expansion at the Pickstone-Peerless underground project, positioning the mine for higher-grade ore feed and improved throughput. Management expects gold prices to remain supportive, with a higher average export retention anticipated versus 2021. Gold output is projected to nearly double in 2022, driven primarily by a full-year contribution from Eureka operating at nameplate capacity.
In the fourth quarter of 2021, Dallaglio approved investment into underground mining at Pickstone-Peerless, targeting first ore to the plant in the second quarter of 2023. This timeline is intended to dovetail with broader deleveraging objectives, aligning production growth with improved balance sheet strength.
On the crocodile farming side, Padenga has implemented farm-level initiatives aimed at enhancing skin quality to align with evolving market standards. Early trials have delivered positive results, and these processes are being rolled out across operations in the current financial year.
Overall, Padenga’s strategy is centered on three pillars: strengthening the balance sheet by retiring debt, optimizing operating costs amid inflationary pressures, and selectively investing in high-return mining projects. Success on these fronts is expected to unlock the deferred plantation agriculture plan and support a more diversified earnings profile over the medium term.
