Tawanda Karombo Harare
ACQUISITIONS will form part of ambitious growth plans by Mzi Khumalo’s Metallon Gold in Zimbabwe, as the leading producer of the precious metal eyes a significant production ramp-up in the mineral-rich southern African country.
Zimbabwe is a major gold producer but operators in the country have complained about the operating environment in which they have to battle power outages.
The country was this year eyeing 15 tons, but industry players say this may no longer be achievable as the Finance Minister Patrick Chinamasa has projected negative growth for the sector.
Zimbabwe has mineral deposits that are not far from the surface compared with South Africa and a labour force that is not as problematic as in its neighbour across the Limpopo.
This has seen gold producers such as Metallon Gold, Falgold, Mwana Africa and Caledonia Mining Corporation, stick to their operations in the country and put in place programmes to boost production.
For Metallon Gold, growth in Zimbabwe would principally come from acquisitions and production ramp up in the next five years, its new chief executive officer, Ken Mekani, said at a mining conference that opened in Harare yesterday.
“Our plan really is that in the next five years, Metallon should produce at least half a million ounces a year. Wherever possible we are going to do mergers and acquisitions if an opportunity fits our strategic vision,” he said.
Mekani also admitted that some of the group’s operating units in the country were not performing well. Two new projects were planned, he added, laying the foundation for an ambitious growth strategy for the company.
Metallon Gold owns five gold producing properties in Zimbabwe, of which four are operational, making it one of the country’s major bullion producers. Its fifth mine, Redwing, will be re-opened in June.
The company is planning to ramp up production this year to about 100 000 ounces, significantly up from the 82 000 ounces produced last year. The 100 000 ounces that has been projected for this year is expected to be maintained in the next five years.
Toronto-listed Caledonia Mining Corporation said on Tuesday that it had identified new areas to mine. This is expected to stabilise the company’s production in the current year and help it meet its targets in the future, after projecting 45 000 ounces of gold for the current operating year.
“Exploration at Blanket [Mine in Matabeleland South] has identified additional gold mineralisation at the 750-metre level and at the Mascot and GG satellite properties,” chief executive Stefan Hyden said.
Zimbabwe’s gold industry received a major show of confidence from the government last month when Chinamasa announced a cut in the royalty payable on the precious metal from 7 percent to 5 percent.
However, industry players say that they want further reductions in other mine fees, which are hurting their bottom lines.
Chamber of Mines of Zimbabwe president Alex Mhembere said at the conference that the industry had the potential to produce about 28 tons a year by 2018.