Zimbabwe’s gold cheap to mine – Metallon
Metallon Corporation is banking on the lowcost nature of its gold operations in Zimbabwe and new CEO Ken Mekani says the group has set its eyes on upping production in the mineral-rich southern African country.
Zimbabwe has vast mineral riches that span gold, platinum, nickel, chrome, coal and diamonds. These have attracted high-profile resource investors such as Anglo Platinum, Impala Platinum, Mwana Africa and Rio Tinto.
In fact, owner Mzi Khumalo has previously said his company could expand into platinum mining in Zimbabwe.
Metallon owns five gold properties in Zimbabwe in addition to exploration projects in the Democratic Republic of Congo (DRC) and is planning to list on London’s Alternative Investment Market, a development that sources and insiders say is set to reduce Khumalo’s interest in the company significantly.
Its flagship mine in Zimbabwe produced 55 000 ounces of the precious yellow metal in 2014 and Mekani says it will produce nearly 61 000 ounces this year, lauding it as a quality property.
Of the five mines in Zimbabwe, four are operational, although reports say the other one, Arcturus, has not performed well amid speculation Metallon may be forced to halt operations or spin it off.
Mekani said in an interview: “The How mine is a quality underground gold mining operation with high gold grades of about five grams per ton … [it] is fairly shallow with plenty of upside potential, with additional mining targets, tailings retreatment and highly prospective exploration targets.
“How mine is also one of the lowest-cost mines in Africa – with C1 cash costs of $541 (R6 633) per ounce and allin-sustaining costs of $562 per ounce in 2014 and is cash generative at the current gold price of about $1 200.”
The company has so far invested $6 million “towards the Mazowe Sands Retreatment Project, the Mazowe and Shamva slimes dams, Arcturus capital development and Redwing resumption”.
The Redwing mine was closed over the past few years owing to flooding, but the company said the property would resume operations before the end of this year.
And like all the other mining companies, Metallon has to pay a premium for guaranteed power supplies. Zimbabwe is battling power woes that have halved productivity in the country’s economy, although miners pay a premium tariff of 12 cents per kilowatt hour.
The company said: “There is a general energy-supply deficit throughout the southern African region and Metallon hopes a longterm sustainable plan will be found in order for these power issues to be resolved.”
Having produced 90 000 ounces from Zimbabwe in 2014, Metallon has set a target of 150 000 ounces this year and it said it was well on course to achieve this.
Mekani said the company would this year focus more on reducing costs at its mines in Zimbabwe and undertake further exploration.
The Chamber of Mines of Zimbabwe said exploration had been on the back burner in Zimbabwe, with government failing to process exclusive prospecting order applications during the first quarter of this year.
Exploration activities by Metallon would be targeted at “expanding our reserves and resources and production profile”, explained Mekani. “Exploration activities at our mining assets are focused on extending existing ore bodies and identifying new ore bodies, both at existing and undeveloped sites,” he added.
Beyond Zimbabwe, the company planned to pursue exploration in Tanzania and the DRC.
Mekani said Metallon had secured four exploration properties in the Maniema province, near Bukavu in the DRC. Additionally, it was in the process of “securing mineral rights located within the Lake Victoria gold fields” in Tanzania.
Despite the bullish outlook and focus on growing output adopted by Metallon, other gold investors are worried about putting money into Zimbabwe. They complain that the operating and regulatory environment is not certain and highlight that the government should fix its high-risk perception as an investment destination.
“Metallon is keen to work with other mining companies and government to improve the global reputation of Zimbabwe and encourage foreign direct investment and capital inflows into the country,” said Mekani.