Mining ZimbabweLatest Mining News, Policy and Industry Updates

London Stock Exchange-listed entity Contango Holdings is set to sell a 51% stake in its 2 billion-tonne Muchesu coal project in Zimbabwe to Huo Investments.

by Ryan Chigoche

Currently, the coal project is 74.75% owned by Contango’s subsidiary, Monaf Investments. In an update, the company revealed that they have already signed binding agreements with Huo Investments, who are set to become the largest shareholder and operator of Muchesu.

Huo Investments will invest up to US$20 million in Muchesu to complete the 51% equity ownership stake.

As part of the deal, the investor will invest US$2 million in Contango, as well as provide a production royalty in relation to Muchesu.

Huo Investments (Pvt) Limited is an investment vehicle of Wencai Huo, a Zimbabwe-based Chinese national with extensive mining and business investments in Zimbabwe and Southern Africa.

“The investor has entered into an agreement under which new ordinary shares in Monaf will be issued to the investor so that, following completion, the investor shall own 51% of the enlarged share capital of Monaf. The company’s interest in Monaf will be diluted by these arrangements, but it is expected that the minority shareholders of Monaf will maintain their respective percentage holdings of the issued share capital of Monaf. This investment is subject to standard regulatory approvals in Zimbabwe, and following completion, Contango will have enshrined rights to maintain the appointment of two directors on the board of Monaf,” read part of the company statement.

As a result of the confirmation that Contango Holdings is closing in on the sale, the company’s shares were up 7% as the negotiations have progressed to final documentation.

Last month, the group had said it was in talks with businessman Wencai Huo over the sale of 51% of the Muchesu coal asset in Zimbabwe. On Tuesday, Contango said:

“The company will update the market upon confirmation and entry of final definitive documentation in relation to this transaction.”

As part of the deal, the investor has also entered into a subscription agreement with Contango for 142,000,000 new ordinary shares at a price of £0.0111 per share, with the company set to receive US$2,000,000 in fresh funding.

The subscription will be applied towards general working capital purposes. Following the subscription, the investor will hold 142,000,000 ordinary shares in the company, resulting in a holding of approximately 20% of the enlarged share capital following the subscription.

Monaf and Contango have entered into a mineral royalty agreement which will become effective immediately following the disposal of the company’s 51% interest in Monaf and the waiver of the mineral royalty agreement entered into between Monaf and the company in favor of Consolidated Growth Holdings Limited on 24 July 2020.

The royalties will be awarded on gross production at Muchesu, for the life of the mine, as follows: US$2 per tonne in relation to thermal coal production, US$4 per tonne in relation to industrial coal production, and US$8 per tonne in relation to coking coal production.

Formerly known as the Lubu Coal Project, the Muchesu Coal Mine covers 19,236 hectares of the highly prospective Karroo Mid Zambezi coal basin, located in the established Hwange mining district in north-western Zimbabwe.

The local community also owns 30% of the project. Previous owners have expended more than $20 million on Muchesu, which has enabled a sizeable resource in excess of 2 billion tonnes.

Approximately US$10 million has subsequently been spent by Contango on mine construction and development to bring Muchesu into production.

Toronto Stock Exchange-listed Pambili Natural Resources Corporation has achieved another milestone, securing final approval from the TSX Venture Exchange (TSXV) for its acquisition of the Golden Valley Gold Mine near Bulawayo, Zimbabwe.

By Rudairo Mapuranga

The approval marks a significant advancement in Pambili’s strategic plan to revitalize underperforming gold mines, paving the way for enhanced productivity and growth within Zimbabwe’s mining sector.

Pambili’s acquisition of the Golden Valley Gold Mine from White Satin Investments (Private) Limited signifies a pivotal moment in the company’s growth trajectory. The TSXV’s final acceptance of the transaction, following a detailed review process including the approval of Pambili’s updated NI 43-101 Technical Report, underscores the robustness of Pambili’s strategic initiatives.

Jon Harris, Chief Executive Officer of Pambili, highlighted the importance of this approval, stating, “The final acceptance of the transaction by the TSXV confirms that the company has complied with the exchange requirements. More importantly, it also provides us with a secure platform from which to develop our strategy of consolidating underperforming gold mines starved of the capital required to develop their full potential. We expect to announce further such acquisitions in due course.”

Expanding Zimbabwe’s Mining Potential

Pambili’s acquisition strategy is designed to breathe new life into gold mines that have not reached their full potential due to a lack of investment. The company’s focus on such projects not only enhances its portfolio but also contributes significantly to the overall development of Zimbabwe’s mining industry. By turning around underperforming mines, Pambili is helping to unlock Zimbabwe’s vast mineral wealth, thereby generating economic benefits for the local communities and the nation at large.

A Track Record of Strategic Development

This latest development follows a series of strategic moves by Pambili, including the conversion of a 50-hectare milling site surrounding the Golden Valley mine into five 10-hectare mining claims. This expansion has increased the Golden Valley project area to 60 hectares of highly prospective ground, providing a broader platform for exploration and potential gold production.

Golden Valley, Pambili’s flagship project, is situated on the Bulawayo greenstone belt in Zimbabwe’s Matabeleland Province. With a history of high-grade gold production, the project includes a gold processing plant, a stamp mill, and two historic adits. The company’s planned underground drilling program at Golden Valley, endorsed by an independent technical report, further underscores its commitment to developing this high-potential asset.

Investor Confidence and Future Prospects

Pambili’s strategic acquisitions and methodical approach to expanding its operations have garnered significant interest from international investors. The company’s vision of consolidating and revitalizing underexplored gold projects aligns with global investment trends, attracting substantial support from both insiders and new investors.

“The participation of international investors in our projects is an endorsement of our approach to provide attractive shareholder returns through the consolidation of underexplored and underdeveloped gold projects in Zimbabwe,” Harris noted.

As Pambili continues to implement its strategic vision, the company’s contributions to Zimbabwe’s mining industry are poised to create substantial economic value. The successful acquisition of the Golden Valley Gold Mine and the expansion of its project area exemplify Pambili’s role in driving growth and innovation within the sector.

With further acquisitions on the horizon, Pambili is well-positioned to become a leading player in the rejuvenation of Zimbabwe’s mining industry, fostering sustainable development and prosperity for the nation.

China has unveiled a list of rare earth regulations aimed at protecting supplies in the name of national security, laying out rules on the mining, smelting and trade in the critical materials used to make products from magnets in electric vehicles to consumer electronics.

The regulations, issued by the State Council or cabinet on Saturday, say rare earth resources belong to the state, and that the government will oversee the development of the industry around rare earths – a group of 17 minerals of which China has in recent years become the world’s dominant producer, accounting for nearly 90% of global refined output.

Their global industrial significance is such that under a law that entered into force in May the EU set ambitious 2030 targets for domestic production of minerals crucial in the green transition – particularly rare earths due to their use in permanent magnets that power motors in EVs and wind energy.

EU demand is forecast to soar sixfold in the decade to 2030 and sevenfold by 2050.

The new Chinese regulations, which will take effect on October 1, say the State Council will establish a rare earth product traceability information system.

Enterprises in rare earth mining, smelting and separation, and the export of rare earth products, shall establish a product flow record system, shall “truthfully” record the flow, and shall enter it into the traceability system, the State Council said.

China already last year introduced restrictions on exports of the elements germanium and gallium, used widely in the chip-making sector, citing the need to protect national security and interests.

It also banned the export of technology to make rare earth magnets, in addition to imposing a ban on technology to extract and separate rare earths.

Those rules fanned fears that restrictions in rare earth supplies might help increase tensions with the West, particularly the United States, which accuses China of using economic coercion to influence other countries. Beijing denies the claim.

China’s rare earths regulations also come as the EU gears up to impose provisional tariffs on Chinese EVs on July 4 to protect the 27-state bloc from what it says is a flood of EVs produced with unfair state subsidies, though both sides have said they plan talks on the proposed tariffs.

Mining Weekly

The lithium market has entered a “new normal” period of stability, with sustained price surges now a thing of the past, according to analysts at Fitch Solutions BMI. Zimbabwe, one of the top lithium producers in the world, plays a significant role in this evolving landscape.

Falling lithium prices over the past year mean prices are expected to remain low for the next decade, Sabrin Chowdhury, head of BMI commodities analysis, said from Singapore. This outlook is reshaping the industry landscape, presenting opportunities and challenges for major producers and junior developers.

“This stabilization is primarily due to a rapidly expanding global supply, which has already pushed the market into surplus,” Chowdhury said. “We expect no return to previous highs for lithium. Prices will remain below the peaks of 2022 and 2023 for at least five to ten years.”

For this year, BMI forecasts mainland Chinese 99.5% lithium carbonate prices to average $15,500 per tonne, increasing to $20,000 per tonne in 2025. This starkly contrasts with the over $72,000 per tonne average in 2022. Similarly, BMI predicts lithium hydroxide monohydrate (56.5% grade) to average $14,000 per tonne this year and $20,500 in 2025, down from about $70,000 per tonne in 2022.

The extended period of low lithium prices could be a boon for cost-saving methods and industry M&A, the analysts said. Juniors and developers may have to incorporate new technology, such as direct lithium extraction for brine projects, while the industry’s numerous operators will likely face consolidation.

“Out of 164 total operations in our database, 126 individual companies own these projects,” BMI metals and mining analyst Amelia Haines said on the call. “This creates an optimal environment for mergers and acquisitions, with larger, well-funded miners looking to acquire promising lithium assets to meet growing demand.”

Competitive Edge

Technological advancements are poised to impact supply and demand and are fundamental in gaining a competitive edge for entrants to the cut-throat market, the analysts said.

“Relatively new direct lithium extraction technology can potentially reduce production times and environmental impact compared with traditional methods,” senior metals and mining analyst Olga Savina said.

Despite the price decline, many major producers continue to remain profitable. This is mainly owing to their ability to maintain low production costs. In Australia, for instance, the production cost of mining spodumene is significantly lower for projects like Tianqi Lithium and IGO’s (ASX: IGO) joint Greenbushes mine and Pilbara Minerals’ (ASX: PLS) Pilgangoora. Higher-cost producers Galaxy Resources, Altura Mining, and Nemaska Lithium had to curtail production or go bust. Lithium demand is set to continue its vigorous growth, driven mainly by the electric vehicle (EV) sector.

However, advancements in battery technologies, including the rise of lithium-iron-phosphate (LFP) batteries and potential breakthroughs in solid-state batteries, could influence needs, the analysts said.

Global lithium demand from EVs is expected to increase by about 14% in 2024 and 2025. The EV sector is expected to account for most of the lithium demand, with worldwide passenger EV sales forecast to reach 17.6 million units in 2024, representing a 21.3% year-on-year growth.

“We expect global lithium production to grow by 16.4% year over year in 2024 to 1.12 million tonnes lithium carbonate equivalent (LCE) and by 19.7% in 2025 to 1.35 million tonnes LCE,” Savina said. By 2028, global lithium mine production and demand are projected to reach an equilibrium at about 1.9 million tonnes, with demand set to overtake supply thereafter.

Australasia

Australia and mainland China will be the primary drivers of this growth. Australia, already a leading hard-rock lithium producer, will continue to dominate due to its strong project pipeline, BMI said. Mainland China will keep importing lithium for its battery industry while expanding its domestic production capacity and securing supplies by developing projects overseas.

Emerging players like Argentina and Zimbabwe are also expected to contribute significantly to the global supply. “Argentina’s growth in the lithium sector looks promising as several major projects begin operation,” Savina said. Major economies are implementing several measures to achieve critical mineral supply chain resilience. These measures aim to reduce external risks and ensure a stable supply of lithium for the green energy transition, Haines said.

The United States Inflation Reduction Act provides tax credits for EVs that use critical minerals mined domestically or in markets with free-trade agreements with the US. This has spurred significant investment in lithium projects across North and Latin America, including Argentina, Canada, and the US. The European Union’s Critical Raw Materials Act aims to build onshore production capacity and promote import diversification. Europe has lithium resources across several countries including Portugal, the Czech Republic, and Finland.

“Onshoring mineral production and processing capacity, enhancing recycling capabilities, forming strategic partnerships, and diversifying supply chains are crucial strategies,” Haines said. “These measures aim to reduce external risks and ensure a stable lithium supply for the green energy transition.”

Multi-listed, gold-focused miner, Caledonia Mining Corporation Plc, has announced that its board of directors has declared a quarterly dividend of 14 United States cents (US$0.14) on each Company’s shares.

By Rudairo Mapuranga

For a consecutive quarter since October 2021, the gold mining company will pay a dividend of US$0.14. The board has, however, promised to review dividends based on the company’s performance and capital investment requirements.

According to Caledonia, the relevant dates relating to the dividend are as follows:
– Ex-dividend date VFEX: July 10, 2024
– Ex-dividend date AIM: July 11, 2024
– Ex-dividend date NYSE American: July 12, 2024
– Record date: July 12, 2024
– Payment date: July 26, 2024

Shareholders with a registered address in the UK will be paid in Sterling.

Caledonia paid its initial dividend in February 2012 of 6 Canadian cents. On April 4, 2013, Caledonia announced an annual dividend in respect of the year to December 31, 2012, also of 6 Canadian cents. On November 25, 2013, Caledonia announced that in 2014 it intended to pay an annual aggregate dividend of 6 Canadian cents per common share, payable on a quarterly basis. The first quarterly dividend of 1.5 Canadian cents per common share was paid at the end of January 2014, and further quarterly dividends were subsequently paid at the end of April, July, and October in each year.

In December 2015, Caledonia announced that, with effect from the results for the year to December 31, 2015 (which were released at the end of March 2016), it would report its financial results in United States Dollars, instead of Canadian Dollars. Accordingly, all dividends would also be declared in United States Dollars. In January 2016, Caledonia announced that the dividend payable at the end of January 2016 would be 1.125 US cents, and the quarterly dividend policy was subsequently increased in Q3 of 2016 from 1.125 US cents per share to 1.375 US cents per share, an increase of 22%. In conjunction with the overall 1-for-5 share consolidation which became effective on June 26, 2017, Caledonia announced on July 4, 2017, that it had made a commensurate adjustment to the dividend by increasing it fivefold.

On January 3, 2020, it was announced that Caledonia would be increasing the quarterly dividend by approximately 9% to 7.5 US cents per share, commencing with the dividend to be paid at the end of January 2020. On June 29, 2020, it was announced that Caledonia would be increasing the quarterly dividend by approximately 13% to 8.5 US cents per share, commencing with the dividend to be paid at the end of July 2020. On October 1, 2020, a further increase was announced to 10 US cents per share (an 18% increase). In 2021, increased dividends were announced in every quarter: January, April, July, and October. The October dividend was increased by 8% to US$0.14 per share, where it has remained, a 104% increase from the dividend announced in October 2019.

In January 2022, the Company announced a further dividend of US$0.14 per share. With Central Shaft now complete, the Company’s strategy is predominantly focused on de-risking the business from being a single-asset producer.