Godfrey Marawanyika Harare
THE FOUNDER of Zimbabwe’s largest gold mining group has said he would decide by March whether to expand Metallon Corporation into a pan-African bullion company that would trade in London.
“It’s going to depend on how many assets we can assemble so that when we list we go on to the main board in London,” said Mzi Khumalo, who is also the company’s chief executive.
“We have assets in the Democratic Republic of the Congo that we intend to develop. We are in the final throes of securing assets in Tanzania. In March next year, we will have a definitive answer.”
This is not the first time Khumalo has proposed an initial public offering (IPO) of the company he created in 2002. In 2007, Metallon delayed an IPO planned for 2008 because of a lack of equipment and foreign exchange, and power cuts that reduced output.
Khumalo, who bought the Zimbabwean gold mining assets of Lonmin in 2002 to build up Metallon, considered listing stock in Zimbabwe and in London in 2010, as well as on the JSE in 2005. Differences with Zimbabwe’s central bank halted plans for the Johannesburg listing, he said.
The company had to close its five mines for two years from 2007 because it had not been paid for gold sold to the central bank.
Metallon forecast 500 000 ounces of gold production a year by 2019, Khumalo said. “We have a plan that has been worked out and engineered.”
He was previously the chairman of JCI, South Africa’s first black-owned mining group before its assets were sold.
Metallon produced 82 000 ounces last year and estimates this will rise to 100 000 ounces this year. At its peak in 2006, output was 156 000 ounces.
“In the next three years, we should have invested $500 million [R5.5 billion],” Khumalo said. “By that time, we should be quite significant in terms of production.”
Average production costs across Metallon’s four operating mines were $900 an ounce and as little as $600 an ounce at its flagship How mine, said Christopher Kamkazingeni, the mine’s acting general manager. The operation is in Umzingwane, 470km southwest of Harare.
The average all-in sustaining costs at the world’s nine biggest gold producers were $967 an ounce in the second quarter of this year, according to a Bloomberg Intelligence report published on October 15. – Bloomberg