Focused gold miner, Dallaglio Investment has created a roadmap which will see the gold miner raising funds for the future cost of rehabilitating its mining sites.
Rudairo Mapuranga
The Victoria Falls Stock Exchange listed diversified group Padenga Holdings limited owned gold miner understands that the social and economic impacts of mine closure are significant and underline the importance of early preparation. This is because mines may also close prematurely, for example through low commodity prices, regulatory changes, technical challenges or social conflict – not just depletion of reserves. This has therefore made the company plan for rehabilitation on time.
“The company makes full provisions for the future cost of rehabilitation mine sites and related production facilities on a discounted basis at the time of developing the mines and installing and using those facilities,” Padenga Board Chairman Thembikhosi Sibanda said through the group Audited Condensed Consolidated Financial Results for the year ended 31 December 2021.
According to Sibanda, Dallaglio will raise rehabilitation funds up to 2034 where its mines will have exhausted their life.
“The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites which are expected to be incurred up to 2034 which is when the producing mine properties are expected to cease operations. These provisions have been created based on the company’s internal estimates assumptions based on the current economic environment have been made which management believes are reasonable basis upon which to estimate the future liability.
“These estimates are reviewed regularly to take into account any material changes to assumptions. However, actual rehabilitation costs will ultimately depend upon market future market prices for necessary rehabilitation works required that will reflect conditions at the relevant time. Furthermore, timing of rehabilitation is likely to depend on when the mines cease to produce at economical viable rates. This in turn will depend upon future gold prices which are inherently uncertain,” Sibanda said.
In international standards, Mine sites should provide adequate financial assurance for mine closure, taking into account considerations such as post-mining land use, stakeholder objectives and regulatory requirements. Closure costs are most often substantially incurred after the mine is no longer generating revenue. Consequently, financial provisions for closure must either be set aside by the company prior to or during active operations, provided by other revenue streams or made available through security of other assets. The choice of financial assurance option may depend on regulatory requirements. The closure planning process should prepare cost estimates suitable for the stage of closure planning and design, increasing in detail as the closure of the site approaches and more engineering detail becomes available.
