HARARE: Zimbabwe’S largest gold producer, Metallon Gold, will this year spend over $20 million on new projects to ramp up production volumes as gold prices on the global market remain unpredictable. Metallon Gold, which is owned by South African mining tycoon Mr Mzi Khumalo, boasts five gold mining operations in Zimbabwe – How Mine, Shamva, Arcturus, Mazowe and Redwing mines.
Metallon chief executive Mr Ken Mekani said the mining group continues to engage financial institutions for capital expenditure funding and is confident that funding at significantly lower cost will be available in the next few weeks.
“Metallon is committed to spending over $20 million on new projects in this financial year. Throughout 2014 and the current 2015 the company has successfully repaid a significant portion of its debt facilities and interest payments. During this volatile gold price environment, our focus remains on the repayment of debt and outstanding creditors and this will continue as production is set to increase over the next 12 months,” said Mr Mekani. He said Metallon is committed to ensuring that outstanding creditors are paid and as such the management team has drawn up a plan for liquidating outstanding creditors.
Metallon’s target is that future payments are made within 45 days of any services rendered. Over the last two years Metallon had reduced bank loans from $24,2 million to $15,6 million, $3,8 million of which was interest repayments.
During the first half of this year, Metallon obtained an additional bank debt facility of $5 million, bringing the total current debt position to $20 million.
Mr Mekani said in this volatile gold price environment, Metallon’s main focus was to maintain a low debt position and negotiate down the current cost of interest repayments. Metallon’s gold production for the second quarter of 2015 was 23 759 ounces while the first half gold production was 48 143 ounces.
The H1 2015 production was 6 percent higher than the previous comparative period which recorded 45 524 ounces. Gold production shortfall and increased costs against the budget for H1 2015 were due to a loss of nine days production in January 2015.
This was following a North Shaft Hoist motor failure and a planned shutdown of underground ore hoisting of 12 days in order to replace the 25 Level loading station infrastructure at How Mine. A decline in production was also caused by a shortfall at Mazowe Mine due to equipment challenges in the crushing and milling plants.
There were 19 days of lost production in April 2015 because of a breakdown at mill number one. The group’s cash costs and all-in-sustaining costs for the first half were $786 and $1 064 per ounce respectively. There has been an improvement of C1 costs from H1 2014 due to increased production and the company expects further cost improvements in the second half of the year.
“We are pleased that gold production in H1 2015 saw a 6 percent increase against the comparative period in 2014, which reflects Metallon’s strategy of ramping up existing operations to full capacity. “Production during the second quarter was below budget mainly due to equipment breakdowns, which have mostly been addressed.
“The commissioning of new projects is slightly behind schedule, however, we look forward to the commencing production at the Mazowe Sands Retreatment Plant and the reopening of Redwing Mine in Q4 2015,” said Mr Mekani. “Such major investment projects will lead to significant local job creation and long-term social economic growth, demonstrating Metallon’s commitment to reinvesting in Zimbabwe.”
