Mining ZimbabweLatest Mining News, Policy and Industry Updates

A multi-phased development approach is being adopted at the Karo Platinum project in Zimbabwe, where a 17-year opencast mine is to be built with a timeline to deliver its first ore to mill in July 2024.

“In July 2024, we will put the first ore in mill,” Karo Mining Holdings MD Bernard Pryor told a project update presentation covered by Mining Weekly.

Land has been allocated for a 300 MW solar plant to serve the project, the 12-month design and construction period for which began on July 1.

The updated output is scheduled at 194 000 oz/y, which puts the project in line with  Anglo American Platinum’s Unki mine, also on Zimbabwe’s Great Dyke.

Total cost to first ore in mill is estimated at $391-million, with $20-million spent to date and with Tharisa able to provide an extra escalation reserve of $26-million should it be needed in today’s volatile world of escalation and inflation.

Under the Zimbabwean government, the project, with a total value of $686-million, has a five-year tax holiday.

Its internal rate of return is just over 26% and return on investment capital is 30%.

The earthworks contracter began clearing the site this week for earthworks terracing to begin in December.

“The accelerator is flat to the floor,” was how Pryor described the project’s pace.

Orders for ball mills and flotations cells, the two long-lead items, have been placed. The ball mills are on the critical path that defines the 24-month construction period and the advanced flotation cells are expected to lift metal recovery to 82%.

Civils contracts will be awarded this month and final negotiations are under way with the selected mining contractor, a mix between a South African mining contractor and a local Zimbabwean mining contractor, and “we should execute that in the next few weeks”.

In a country described by Pryor as having an exceptional level of education and challenged employment, there has been a nigh hundred-to-one response to the ten senior jobs advertised.

“My experience here in Zimbabwe is that the workforce is very capable, educated and has a great work ethic, which will certainly help us to bring this project in on time and on budget,” Pryor said.

A first-phase resource of just under 10-million ounces has a six-element grade of 2.04 g/t.

Typically, the reef horizons are between two and three metres thick and Karo will be targeting anywhere between three metres and five metres in terms of its mining proposition, Tharisa CEO Phoevos Pouroulis stated.

Currently Tharisa plc owns 70% and Leto Settlement the remaining 30% of Karo Mining Holdings plc, which in turn owns Karo Zimbabwe Holdings in joint venture with Generation Minerals, which is the Republic of Zimbabwe’s carried interest in the Karo Platinum project.

Pryor described environment, social and governance (ESG) as one of the project’s most important targets, along with International Finance Corporation-compliant performance standards being applied to the mining and concentrator processing plant.

“We still have the water supply and the power supply to be approved by the Zimbabwean government. Those are in process, and we see no real issues with them.

“In terms of the tailings dam, clearly a subject that is important to all miners, this is a structurally safe dam, rock built not earth or dam built, and it has been independently designed and checked by our consultants,” said Pryor.

The community is seen as key, with the two towns within 30 minutes’ drive of the project site earmarked for employee recruitment.

“We will prioritise local recruitment so that we can benefit the local communities as much as possible,” Pryor promised.

A dedicated social and environmental team of 12 people will ensure that all ESG obligations are met, he added.

Government has allocated new land for 12 households to be relocated and the new houses will be built according to laid-down standards in the next six to nine months, with previously absent power and water supply laid on.

GREEN ENERGY

Green energy and green efficiency are the other benefits of this project.

Discussions are under way with Total Eren for a 300 MW solar plant to be built on land allocated over the road from Karo’s proposed processing plant.

The power will be generated into the national grid and Karo will have a wheeling arrangement to buy back off the grid at the beneficial rates of solar power generation, which are significantly lower than the current power prices obtainable from the grid.

Needed for the processing plant will be 30 MVA, with the excess sold into the grid.

ECONOMIC CONTRIBUTION

Mining contributes 10% to 14% to the gross domestic product (GDP) of Zimbabwe and approximately 2% of the country’s GDP will come from Karo revenues.

The project will average 1 000 direct jobs during construction and a similar number during operations, leading to 7 000 indirect jobs creation in the community.

Regarding project execution, most of the detailed engineering has been completed and a pilot concentrator on site is treating about one ton of material an hour.

The pilot concentrator is being used to produce platinum group metals (PGMs) concentrates that it will look to for Phase 2 and it is also helping with the optimisation of flotation circuits and as a training ground for operators ahead of going on to the main plant.

CASH-FLUSH THARISA

It has been a standout year for Tharisa, which put in a record performance in the 12 months to September 30, with 64.1%-higher net cash of $78.6-million.

Starting with exploration and mine development takes time and requires strategic investment philosophies and capital needs to be patient when exploring new regions, Pouroulis emphasised.

If Karo meets its timelines to project completion, from first drill hole to first ore in mill would have taken six years.

Karo, 80 km southwest of Harare, has been awarded a special grant in the Great Dyke, which hosts the main PGMs- and base metals-rich sulphide zone in the Mashonaland West district, over an area of 23 902.9 ha.

To the south is Zimplats and to the north Zimplats’ Selous metallurgical complex. The land was originally explored by Zimplats, with the whole area having a resource of 96.4-million ounces.

In either cash or shares, Tharisa has invested $70.3-million. The first $4.5-million went in to acquire the first 26.8% shareholding in Karo Mining Holdings, $8-million was for first phase exploration, $3.4-million for technical studies, a non-fully-drawn $25-million kicked off the project in mid-year with early development funding, and the acquisition of the balance 39.5% shareholding had an equivalent share value of $29.4-million.

Exploration groundbreaking took place in 2018 and at the end of 2019, the area was demarcated as a special economic zone, which provides special privileges to new businesses entering Zimbabwe and investing into the country.

Phase 2 exploration recommenced post-Covid in the first quarter of 2020. The mining lease was received in 2021, which was basically for the life-of-mine and giving multi-phased access to all 92-million ounces.

Tharisa, which has paid dividends for six years, is committed to continuing to be a dividend payer in conjunction with the investment into Karo Platinum.

Mining Weekly

Zimbabwe will not rush to use mineral reserves under a new policy that compels miners to pay half of their royalties in commodities to settle its foreign debt of US$13.2 billion.

“We want to focus first on maximizing value from our minerals and then later see how we can use them to clear our arrears,” Finance Minister Mthuli Ncube told Bloomberg.

Last week, President Emmerson Mnangagwa said minerals secured under the planned policy would be used as security for loans, but did not indicate when this would happen.

“Let me…say that the precious and high-value strategic minerals we accumulate can also be used to securitise any borrowings we may prudently envisage,” Mnangagwa wrote in The Sunday Mail. “This raises our country’s creditworthiness, and, thus, our ability to circumvent and fend off funding limitations designed against our economy by those who have imposed illegal and unjust sanctions against us.”

In his midterm budget, Ncube said mines were contributing too little in taxes, with just 1.2% of GDP in direct taxes in 2021.

Miners’ reaction

Miners have mostly said the new measure will have no material impact on their operations.

“We respect the government’s position. It’s their prerogative. All they are saying is they are changing payment modalities,” said Chamber of Mines Chief Executive Isaac Kwesu.

Caledonia Mining, one of the largest gold producers, and Impala Platinum, whose Zimplats is the largest miner in the country, have also said the regulation would not hurt them.

Bernard Pryor, MD of Karo Mining, which is developing Zimbabwe’s newest platinum mine at Selous, says this is not a new idea, but that he has not seen it work elsewhere.

“That is not a novel approach by governments. A lot of governments would like to take physical because they think they can do better with it than perhaps the mining companies can. I’ve not seen that ever play out successfully in any other country,” Pryor says.

Consultations were yet to begin with the industry and, says Pryor, “I think we’ll see probably quite a lot of change to that request over a period of time.”

Zimbabwe’s debt burden

He said Zimbabwe had begun issuing bonds with maturities of between two and 20 years in order to honour its debt to creditors and was looking at how they can be traded, while it was also looking to issue bonds to compensate white former farmers over time.

“We’ve begun to make token payments to the World Bank, the AfDB (African Development Bank), European Investment Bank,” Ncube said. “And all the Paris Club creditors, 17 of them, we will be making token payments to show that we want to be a good debtor.”

He said IMF staff would visit Zimbabwe in December and then discuss a staff-monitored programme in the first and second quarter of 2023.

That, he said, would enable access to “resources from a sponsor who will help us with bridge funding in order to clear the arrears” to international lenders and after that to restructure its debt to bilateral Paris Club creditors.

NeZWire