Mining ZimbabweLatest Mining News, Policy and Industry Updates

Caledonia Mining Corporation has entered into a zero cost contract to hedge approximately a quarter of its 2022 gold production target at Blanket as it seeks to protect its balance sheet during its phase of higher capital investments.

The Victoria Stock Exchange-listed miner has entered into a cap and collar hedging contract for 20,000 ounces of gold in the period March to July.

The contract has a cap of US$1,940 and a collar of US$1,825 which means that for 4,000 ounces of gold per month for the period, Caledonia will receive an effective gold price per ounce of not less than US$1,825 or greater than US$1,940. It will receive an effective spot gold price between these two levels.

CEO Steve Curtis said the resources firm decided to hedge production so as to take advantage of the current strong gold prices to protect the balance.

He said hedging gold production is not an easy decision for a gold miner as investors usually wish to maximise exposure to gold price upside.

“However, given the fact that our capital expenditure phasing is heavily weighted towards the first half of 2022 as we ramp up gold production, the board considered it prudent to take advantage of the current strong gold price to protect the balance sheet during this phase of higher capital investment with a five-month hedging arrangement over a portion of our production,” Curtis said.

Hedging is a risk management strategy employed to offset losses in investments by taking an opposite position in a related asset.

The reduction in risk provided by hedging also results in a reduction in potential profits. Hedging strategies typically involve derivatives, such as options and futures contracts.

Meanwhile the company is targeting an annual gold output of 80 000 ounces in 2022 and they are also top acquire more assets in the country.

Business Times

AUSTRALIA Stock Exchange-listed Invictus Energy Limited, has completed data processing of the 2021 seismic survey for the Muzarabani oil and gas project as well as the concurrent reprocessing of a legacy Mobil dataset.

Invictus, which is developing the Cabora Bassa oil and gas project in Muzarabani, Mashonaland Central province, is reprocessing data from an initial seismic survey that was done in the 1990s by Mobil, a France-headquartered company.

Despite undertaking the initial seismic survey in the Cabora Bassa area, Mobil decided not to follow it up and thus Invictus, using more modern data processing techniques, reprocessed the data gathered and found strong evidence that the underlying geological structures had the domes and traps that could indicate oil and gas in Muzarabani.

In oil and gas exploration, seismic survey refers to the process of using high-tech equipment to listen to underground vibrations in order to determine the existence of hydrocarbons.

“Data processing of the 2021 Cabora Bassa 2D Seismic Survey (CB21 survey) and concurrent reprocessing of a legacy Mobil dataset has largely been completed by onshore highresolution data specialists Earth Signal Processing in Calgary, Canada.

“All key products have been received by Invictus and seismic interpretation is progressing well,” it said.

The acquisition and data processing of the CB21 survey, along with the reprocessing of 1990 Mobil survey data has achieved the objectives of providing a high quality, comprehensive 2D data set which is contractor-consistent and process-consistent.

The parameters employed for the acquisition of the CB21 survey, along with modern data processing technology have significantly elevated the data quality to a high standard.

“As the interpretation is progressing, multiple anomalies have been noted in the basin’s seismic data.

“These can often be indicators for the presence of hydrocarbons. Examples of these are provided in the images overpage.

“These anomalies will be investigated with additional data processing products produced by Earth Signal Processing.

“Their geophysical signature, as well as trapping geometry and position (structurally and stratigraphically) will then be evaluated,” said Invictus.

It is hoped that this would allow the anomalies to be assessed and ranked to ascertain the likelihood of viable hydrocarbons within a definable trap.

Invictus managing director Mr Scott Macmillan commented: “The maiden drilling programme to test the world-class Muzarabani prospect is coming together well.

“We are pleased to have secured Exalo’s rig 202 as well as well services with Baker Hughes and long-lead items.

“The final seismic data has provided evidence of multiple trapping geometries and a target rich environment for the upcoming drilling programme.”

The drilling campaign is scheduled to commence in June this year and Invictus is working towards a two-well programme.

“The Company is maturing additional potential within our acreage and continuing to build on our significant prospective resource inventory,” he said.

The Chronicle

Mining companies in Limpopo are not fully complying with laws compelling them to uplift local communities. This is according to a report released yesterday based on research by the Centre for Applied Legal Studies, Amnesty International and Sekhukhune Combined Mining Affected Communities (SMAC).

Shenilla Mohamed, executive director of Amnesty International South Africa, said mine owners had an obligation to the surrounding communities and to “adhere to social plans”.

Mohamed added that the government needs to be held accountable too.

The research was done between October 2020 and July 2021 in the mineral-rich but underresourced Sekhukhune region, which has an unemployment rate of 47 percent.

It focussed on three companies, Twickenham Platinum Mine, Marula Platinum Mine and Sefateng Chrome Mine, and their compliance with legal obligations to submit and implement Social and Labour Plans (SLPs).

Researchers say the obligation on companies to comply and report to the regulator on compliance with SLP’s comes directly from the Mineral and Petroleum Resources Development Act, which makes SLPs a condition for the award and renewal of mining rights.

SLPs must contain a number of measures to benefit communities and workers. They should also include basic services and infrastructure-type projects formulated in consultation with communities.

According to the report, SLPs were introduced to offset the “dark and sordid history” of discrimination, exploitation and exclusion in the mining industry.

The research finds that there were varying levels of non-compliance by the three
companies.

Researchers gave each of the companies an opportunity to respond to the allegations.

The report found that Twickenham, a subsidiary of Anglo American Platinum Limited, failed to complete a project to provide water and toilets to local schools. Anglo American Platinum Limited is the world’s largest primary producer of platinum.

Researchers said that when pressed for answers, the company acknowledged delays in implementation. “They gave no reasons in some cases and in others blamed project procurement irregularities,” the researchers said.

“Marula, another platinum mine, claimed in its most recent Environmental, Social and Governance (ESG) report that it had completed an SLP project to build and rehabilitate a road. But site visits by the research team and interviews with community members contradicted this,” the report read.

Researchers said that the lack of adequate roads has resulted in mobile clinics avoiding affected villages and community members facing great difficulty in accessing clinics and hospitals.

The report found that Sefateng was only partially compliant with its community water support and schools support projects. Information received from the Department of Mineral Resources and Energy (DMRE) indicated that Sefateng was not submitting annual compliance reports.

“This would be in direct contravention of national mining legislation. However, in their response to the research team, Sefateng denied this and noted that they have been complying with this obligation,” the report said.

Researchers highlighted the failure by the department to properly monitor compliance, in part because of the lack of resources.

They said the department had a poor record management system; had hindered access to information; and was unable to enforce compliance “resulting in communities feeling abandoned and unable to enjoy human rights such as the rights to education, access to healthcare, livelihoods and water”.

The researchers said a direct link between mining and the challenges faced by the communities could not be established but that the failure of mines in general to implement SLPs was a “compounding factor”, warranting further investigation.

Community members interviewed for the report also complained of polluted water sources and many suggested that they and their livestock suffered serious health complications.

“The overall picture painted by interviewees was a range of negative environmental, social and economic outcomes, gender inequality and a lack of adequate grievance mechanisms.”

The researchers recommended that the three mines urgently comply with their legally binding obligations.
The report also recommended that the state develop and implement a plan that ensures proper monitoring, with penalties for companies in the event of non-compliance.

“We further recommend that, whether through regulations or legislative measures, that all company SLP reports to the DMRE are publicly disclosed and made available and accessible to employees, communities and other stakeholders.”

The researchers said they had attempted on numerous occasions to engage with the department but had not received responses.

GroundUp also approached the department but did not hear back from officials by the time of publication.
Companies respond to allegations in the report Anglo American Platinum told GroundUp that the Twickenham project was placed on care and maintenance in 2016, limiting employment and business opportunities at the operation.

Currently, three of the 12 projects in its SLP between 2016 and 2020 remain incomplete due to various challenges.
“We take our SLP obligations seriously. Unfortunately, our efforts to meet our SLP obligations are sometimes affected by external factors beyond our control.

These include, but are not limited to, delays at local government and DMRE level, difficulties in our engagements with the communities, community conflict and obstacles arising from the appointment of contractors.”

The company said it had already started work on its SLP for 2021 to 2025. “We continue to study options to ensure a sustainable future for Twickenham that will benefit communities and the broader Limpopo province.”

Implats’ Marula Mine said it had grown community investment. The company said it “engages in sustainable socioeconomic development to mitigate, where it can, adverse conditions”.

It said 7,5 percent of the mine was owned by the local community through a trust and employees also had a stake. The company said 74 percent of its workforce are local residents and “total remuneration at Marula is approximately R1,6-billion annually”.

“While providing and maintaining roads fits within the ambit of the government, we fully recognise the benefits of being able to travel safely to and from work and elsewhere.

“To the extent that this infrastructure is lacking or poorly maintained, we endeavour to assist, where possible.”

The company said it had built a 12.5km tarred road (the D4170) at a cost of over R200 million, in partnership with Road Agency Limpopo over the past five years. Marula contributed R32 million to this project.

The company said it had also paid for maintenance on other roads and the construction of a bridge.

Sefateng’s chief executive Gerard Blaawu said: “It was a privilege for us to have been part of the sample group of mines in this study. There are various administrative shortcomings, communication gaps between national and local bodies, regulators, struggling municipalities as well as financial challenges.” – Moneyweb

He said that of their projects that were reviewed, they were starting to get one complaint.

The other two were partially compliant, with gaps mainly due to administrative processes and/or the municipality finding it hard to upkeep services built on their behalf.

Since the research was finalised, the mine moved from 75 percent to 80 percent compliance.

“We take to heart the recommendations in the report. Regardless of the level of applicability, we are committed to work with the regulator and other parties to implement these recommendations.”- Moneyweb

INVICTUS Energy Limited (IEL) says the processing and reprocessing of data around the Cabora Bassa project has shown signs of hydrocarbons, confirming potential natural gas and crude oil deposits.

Last year, IEL conducted a 2D Seismic Survey of the Cabora Bassa area, located in the northern part of the country, as part of its exploration into the area to find potential gas and oil deposits.

This is because the Cabora Bassa project encompasses the Mzarabani prospect, a multi-trillion cubic feet and liquid-rich conventional gas-condensate area.

“The parameters employed for the acquisition of the CB21 survey, along with modern data processing technology have significantly elevated the data quality to a high standard,” IEL said in a statement.

“As the interpretation is progressing, multiple anomalies have been noted in the basin’s seismic data.

“These can often be indicators for the presence of hydrocarbons.

“These anomalies will be investigated with additional data processing products produced by Earth Signal Processing.

“Their geophysical signature, as well as trapping geometry and position (structurally and stratigraphically) will then be evaluated.

“This will allow the anomalies to be assessed and ranked to ascertain the likelihood of viable hydrocarbons within a definable trap.”

The data processing of the 2021 Cabora Bassa 2D Seismic Survey and concurrent reprocessing of a legacy Mobil dataset has largely been completed by onshore high-resolution data specialists, Earth Signal Processing in Calgary, Canada.

IEL hired Earth Signal Processing last year.

It was hired for its expertise in onshore, high-resolution 2D and 3D seismic data processing.

The Mzarabani prospect is defined by a robust dataset acquired by Mobil, a United States-based oil firm, in the early 1990s that includes seismic, gravity, aeromagnetic and geochemical data.

Mobil explored for oil in Muzarabani in the early 1990s, before IEL purchased the dataset.

IEL said all key products had been received by the firm and that seismic interpretation was progressing.

IEL has an 80% ownership in the Cabora Bassa project.

“The maiden drilling programme to test the world-class Muzarabani prospect is coming together well.

“We are pleased to have secured Exalo’s rig 202 as well as well services with Baker Hughes and long-lead items,” Invictus managing director Scott Macmillan said.

He said final seismic data had provided evidence of multiple trapping geometries and a target rich environment for the upcoming drilling programme.

“The drilling campaign is scheduled to commence in June 2022 and we are working towards a two-well programme.

“The company is maturing additional potential within our acreage and continuing to build on our significant prospective resource inventory,” Macmillan said.

Invictus is expecting to drill the first of its two test wells later this year, which will be crucial in determining the quality and quantity of oil or gas found in the area.

NewsDay

Zimbabwe Diamonds and Allied Mine Workers Union (ZDAWMU) has challenged the government-controlled  Kuvimba Mining House’s bid to fire underground workers at Jena Mines in the Midlands province.

Jena, a gold mine, is situated about 80km north of Kwekwe.

ZDAWMU secretary-general Justice Chinhema said the move to send 140 workers home was illegal.

‘‘When Kuvimba House Mining came in, they over-employed, which they are now failing to sustain. The termination of their employment is not fair in that most of the affected are underground workers who by law are deemed permanent,’’ Chinhema said.

He said some of the affected workers had been hired for a few weeks before they got termination letters.

‘‘To be honest, some of them had worked for only two to three weeks and now they are being fired.  This is unfair labour practice,’’ he said.

“Some of these workers were by law permanent in terms of Statutory Instrument (SI) 109 of 1993 after working for several months or years at the mine. The SI adds that underground production workers must be permanently engaged.”

The affected workers were told to report to the human resources manager to discuss their terminal benefits.

The manager Joseph Chitendere said he was not in a position to comment on the matter.

“We don’t discuss the mine operations through the media,’’ he said.

NewsDay

MINING companies are more bullish of prospects this year as compared to 2021, raising expectations of another robust performance from the sector.

However, they say they are losing half the value of the portion of export earnings they sell to the Reserve Bank of Zimbabwe (RBZ) in exchange for local currency at the ruling official exchange rate.

Overall, they claim to be losing about 20 percent of the gross value of their export earnings, which they say is negatively impacting viability.

Electricity shortages and the high cost of capital are some of the challenges the sector is grappling with.

Last year, mining, which grossed more than US$5,5 billion, generated about 75 percent of the country’s export earnings.

It currently accounts for roughly 16 percent of gross domestic product (GDP).

The Chamber of Mines of Zimbabwe (CoMZ) said while miners liquidated 40 percent of their earnings at the official auction exchange rate, they buy inputs priced above the parallel market rate.

The gap between the auction exchange rate — at $124/US$1 at the last session — and open market rate has widened to about 100 percent from 20 percent previously.

“Mining houses are losing more than 50 percent of the value of the surrendered portion of export proceeds that is liquidated at the official auction market rate at a time they face local input costs priced at premiums above the parallel market rate,” CoMZ said last week.

An industry survey by CoMZ released in October last year established that the value of the surrender portion liquidated at the official auction rate was being significantly eroded due to the negative impact of the parallel market rate, which is used for pricing goods and services by local suppliers.

The mining sector rebounded by 3,4 percent in 2021 after a 9,4 percent decline the prior year, spurred by strong global commodity prices.

The sector is expected to grow 8 percent this year, as a number of mining houses are anticipated to ramp up production, while global prices are forecast to remain strong.

Mines and Mining Development Minister Winston Chitando earlier this year said Zimbabwe earned at least US$5 billion from mineral exports in 2021.

He said investments by mining entities in recent years boosted output and placed the country on course to meet its target of a US$12 billion mining industry target by next year.

“The industry was US$2,7 billion in 2017 and the milestone to earn US$12 billion by 2023 was set. The fact of the matter is every day we are moving towards the attainment of US$12 billion by 2023; it will be achieved and it is being achieved every day,” he said.

The Sunday Mail