Johannesburg - South Africa’s gold sector has been described as being in terminal decline, but this has not deterred junior miner Igolide Mining from entering into a partnership to produce the precious metal with a promise of creating 400 new jobs.
Igolide Mining, which is 100 percent owned by black youth, women and a community-owned company, earlier this month signed an agreement to acquire a 30 percent stake in Vantage Goldfields’ Lily and Barbrook Mines in Barberton, Mpumalanga.
Tsepo Seema, 30, and Mtho Xulu, 29, who are the executive directors of Igolide, believe there is hope for the industry.
They serve as chairman and chief executive of the Southern African Development Community (SADC) Youth In Mining, an advocacy organisation aimed at helping youth access opportunities in mining.
Xulu said the company was negotiating with the Industrial Development Corporation to acquire funding for the project.
“The problem in the gold sector is not the commodity, we have the mineral, but the problem is relationships. Parties cannot seem to agree to work together to take the industry forward,” Xulu said yesterday.
Igolide is to pay R180 million for the deal that will see youth having 75 percent ownership, women 15 percent and the community 10 percent of Vantage, which is valued at around R1 billion.
Local gold mines employ some 131 000 mineworkers and the country’s ranking has dropped from being the top producer of the precious metal in 2007 to being number seven as reserves decline.
Labour disruptions are not the only challenge facing the gold sector. Rapidly declining spot prices, high costs and low productivity also weigh on the industry.
Xulu said he was confident of the investment because of the projected lifespan of 30 years of the current operations. “There is a plan of opening four new operations in the next five years. The quality of the gold and the methods of extraction are also profitable and that gives us more comfort,” he added.
He said the investment that Igolide was putting in would go directly into new technology, which would increase production from 35 000 ounces to 50 000 ounces of gold a year and create 400 new jobs.
There are currently 900 jobs at the Vantage Gold operations.
The management of the mine, which has been there for the past 20 years, would remain past the transaction to ensure continuity. “This will never be another Aurora case,” Xulu added.
Aurora – the directors of which included Khulubuse Zuma, president Jacob Zuma’s nephew, and Zondwa Mandela, Nelson Mandela’s grandson – have been blamed for running down Pamodzi’s liquidated mines Blyvoor and Grootvlei after struggling to get funding.
It will take 12 months to roll out the new technology that will result in better returns of ore, which are projected to be 50 000 ounces.
“Increased productivity will bring revenue that will help to invest in exploration to establish production to lead to 100 000 ounces by 2020,” he added.
His message to the youth who want to enter mining is to make the right partnerships.
“Young people should take themselves seriously. Mining is a long-term commitment and we, as the youth, have to take it to the next level,” said Xulu.
BUSINESS REPORT