tinerant Resources will partner with a gold exploration/production company. The real interest in the Montezuma licence lies not in what has been done but what has not been done. It seems that systematic exploration has hardly begun with over 1,000 ha unexplored. Itinerant Resources _ Gold and Mineral Explorer focused on Zimbabwe

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Some mining companies are making it in Zim

Metallon, owned by SA mining investor and businessman, Mzi Khumalo, is sitting on some 8 million ounces of gold in Zimbabwe and is currently ramping up capacity utilisation from its four operational mines. 

Article as seen in MineWeb.com

Zimbabwe’s biggest gold producer, Metallon Corporation is engaging external financiers for funds to expand operations, having lined up a new plant and a shaft deepening at two of its lucrative gold properties in the resource-rich but cash-parched nation.

Metallon, owned by SA mining investor and businessman, Mzi Khumalo, is sitting on some 8 million ounces of gold in Zimbabwe and is currently ramping up capacity utilisation from its four operational mines. It has put up its fifth mine, Arcturus for sale, having placed it on care and maintenance in February this year.

Although Zimbabwe is pressuring mining companies to build refineries, give up excess land leases and contribute more to the fiscus, Metallon is adopting a long-term outlook regarding its prospects in Zimbabwe. Another gold miner, Toronto-listed Caledonia Mining Corporation is also revamping production at its Blanket gold mine and is now mining about 750 meters below the surface.

“We are negotiating with financiers right now, and we look forward to commissioning the new plant (at Mazowe mine),” Ken Mekani, chief executive officer of Metallon Gold said in an interview in Harare this week.


Metallon plans to raise output to 500 000 ounces per year in the next five years, with executives at the company saying this will be undertaken using a phased approach. However, this is dependent on the gold miner’s ability to engage financiers in a market dented by negative sentiment.

“In the next five years we have plans to be producing half a million ounces of gold in Zimbabwe but to do that we need to inject $400 million. But in Zimbabwe, it’s difficult for one to access that kind of money and that is why we are speaking to external financiers,” Mekani said.

The plan for this year is 120 000 ounces of gold which is expected to feed into Zimbabwe’s projection of about 24 tonnes this year. Zimbabwe requires that all gold producers market their output through Fidelity Printers, a unit of the central bank.

The company’s plans to invest more money are motivated by a slowly rebounding gold price, which is leading a rally in prices by precious metals. FocusEconomics said this week that analysts it surveyed for consensus forecasts projected the gold price to remain high. “The panel sees gold prices rising moderately in 2017 and averaging USD 1 300 per troy ounce in the final quarter of the year,” FocusEconomics said in its report on gold.

This has buoyed gold producers in Zimbabwe although Falgold, which is listed on the Zimbabwe Stock Exchange (ZSE), has put up its mines for sale. But for Metallon, further investments and a shift in strategy to start focusing on volumes, is the new way to go.

This year alone, the company will spend about $70 million in capital expenditure, according to one official. In 2015, Metallon spent about $15 million of the planned $24 million capital expenditure.

Zimbabwean miners have been finding it difficult to access funding, and other metals producers such as Impala Platinum and Anglo Platinum have had to delay expansion projects because of an environment said to have prompted careful allocation of funding.

“With the projects we have, an amount such as the $15 million we got for 2015 is not enough. For one in Zimbabwe to get a bank that will give you $100 million, for instance, is difficult, you cannot get that kind of money hence engagements with external funders,” added Mekani. Mekani has been chief executive of the country’s biggest gold miner for about a year now, and he reckons being in charge of Metallon has both been “exciting and challenging”.

“The major challenge we faced has been the supply of power for mines. We had an ambitious production plan but last year our production loss was 4 000 ounces. I came in at a point where we had some issues regarding labour relations on the mines, but we have now largely sorted that out,” he told Mineweb.

Electricity accounts for about 15%-20% of costs for the company, he said, adding that labour is the next big cost component. Metallon employs about 700 to 800 workers at each of its four mines, bringing its total labour force to about 4 000 workers, including contractors and head office workers.

And with Zimbabwe facing cash shortages, Mekani says miners in Zimbabwe have to ask employees to open bank accounts when in the past they were paid in cash. Even then, the workers have to deal with cash withdrawal limits of between $100 and $200 per day, including numerous trips to the banks during production hours by the workers.

And if anyone is facing difficulties accessing their income from exports, it is not the Zimbabwean miners, at least for now. The Reserve Bank of Zimbabwe knows full well that mining is the major export earner for the country, alongside tobacco. One mining executive reckons that “you don’t kill the goose that lays the golden eggs” in the struggling economy.

“With the cash shortage, the central bank says 50% goes into Nostro accounts. Mining is now given priority one and so far as we are concerned, sometimes you get delays here and there, but we are getting some of our external payments made,” Mekani said.