Mining ZimbabweLatest Mining News, Policy and Industry Updates

ALTHOUGH Invictus Energy, the Australian firm scouring the earth for oil and gas in Zimbabwe’s Muzarabani area, says geological studies have shown the area holds significant potential to host hydro-carbons, it has remained cautiously optimistic, pointing out the chance of a commercial discovery is only 10 percent per each site drilled.

Results from further processing of geological data gathered by French oil giant, Mobil, in the early 1990’s and further primary data which Invictus collected and similarly used international experts to interpret, have shown encouraging potential for hydro-carbon deposits in the area, exploration drilling must still be undertaken to prove this.

After Mobil’s survey three decades ago, Invictus carried further studies when it conducted another seismic study (gathering sub-surface vibrations using modern equipment), which entailed much denser line spacing to pinpoint locations with the highest potential for petroleum.

With the study results showing strong potential that the area has what it takes to host petroleum deposits, excitement has been palpable at Invictus, more so within Government, given the implications of a commercial discovery on the fiscus, local area development, job creation, national energy security, export revenue and national economy.

Invictus plans to start exploration drilling in Muzarabani-Mbire around the end of June or early July this year at a cost of US$25 million. Mobilisation of British firm, Ezalo’s rig number 202, is scheduled to begin mid-May from Tanzania’s Songo Songo area where it is currently undertaking some contracted work.

Geo-Associates, Invictus Energy’s controlling shareholder, director Paul Chimbodza, told delegates in Muzarabani during a tour of the oil and gas site this week, arranged by the Australian firm’s board of directors (led by chairman Stuart Lake), senior Government officials and local traditional leaders that they were not sure yet if the area holds petroleum deposits or not.

He said Invictus, after refining the data gathered by Mobil and evaluating the data it collected through the seismic study it carried out in the area last year, the company made  the decision to proceed to exploration drilling based on the encouraging study findings.

“The information that we now have has said to us we must go ahead and drill (exploration wells). In the game of exploration, I want to emphasise the word “Exploration”. You win some, you lose some, but the important thing is, we are geologists and earth scientists, our job is to find what the good Lord has hidden underground there.

“And, if you do not explore, you do not find. So, it is our game, and thanks to Dr Stuart Lake and his team for making the funds available for us to embark on such a high risk exercise.

Where we are now is we have now signed up for a (drilling) rig that has been doing some work in Tanzania where they are also looking for hydro-carbons or oil and gas.

“The plan is for that rig to start mobilising from Tanzania, a place called Songo Songo on the 15th of May (2022). The rig will go on a barge on the waters and it will be brought down to Beira (Mozambique) and then from Beira, the rig will move by road and come down to Muzarabani – Mbire.

“The plan is for us to start drilling when the rig is on site. It is going to take us two to three weeks to rig it up and start the actual drilling, which we plan to start sometime late June or early July. At this stage the plan is for us to do two wells, these wells are quite deep wells,” he said.

The first well will be four kilometres deep and the second, shallower one, will be roughly two kilometre deep. Conventional borehole water wells get to 100 metres for the deepest ones, Chimbodza said.

“These two wells are going to be critical, the question that we always get asked is ‘Is the oil/gas present in the area?’) And when we tell people we do not know, they think we are not  telling the truth. Yes, we have got all these sophisticated equipment that we use, but the ultimate answer is actually in the drilling, which we hope to do in June or July.

“If we do find (oil or gas) there will be much more drilling to follow that, there could be more seismic work after drilling, where we do what we call appraisal of the basin. So, the two wells are exploration wells; anything that follows that is appraisal drilling.

“What will that do for the people that are gathered here? Most of them do not worry about the technicalities that we worry about. People want to know what this means for MbireMuzarabani.

“We always refer to this project (Muzarabani-Mbire oil and gas project) as a potential game changer, not only for Muzarabani or Mbire, but for Zimbabwe and the region.

“Once we have a commercial discovery our hope is that Zimbabwe can be energy sufficient as far as electricity is concerned. We know how our country has been battling with power cuts.

“With the Muzarabani-Mbire project being successful, it is very easy for us to be able to generate enough electricity, not only for the whole of Zimbabwe but probably pushing that into the region.

“We will be self-sufficient in terms of our fuels, but that’s the dream ahead of the work that we want to do in June and July. It is a very critical stage, a very costly stage.

“It will cost us in the region of about US$25 million to do these wells and the chances of success are about 10 percent, hence we spent a lot of time being so meticulous about where we must drill or where we are going to drill,” Chimbodza said.

Invictus chief executive, Scott MacMillan, said the company’s prospective area had potential to host 9,25 trillion cubic feet of gas and nearly 300 million barrels of condensate, essentially light oil. He said a trillion cubic feet of gas could generate 5oo megawatts for 20 years.

The company’s prospective area is considered probably the largest undrilled seismic structure onshore Africa. Invictus chairman Stuart Lake said the fact that chances of success were slim, was the reason the company had taken its time to refine geological data from Mobil and also invested in further evaluation studies to pick the right spots to drill.

Drilling results may show two kinds of success; commercial success where the quantities can be economically exploited and technical success where deposits are found to exist in quantities that are not sufficient to sustain commercial exploitation of the hydrocarbons.

Notably though, a dry hole; an exploratory or development well found to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well,  does not necessarily mean the end of oil and gas search for a particular basin.

Whether the well is a “duster”, dry hole, depends on many factors of the economic equation, including proximity to transport and processing infrastructures, local market conditions, expected completion costs, tax and investment recovery conditions of the jurisdiction and projected oil and gas prices during the productive life of the well.

MacMillan said in the event of a dry hole, Invictus would undertake technical evaluation to understand the reasons for the unproductive exploration, which may entail determining if the area is completely devoid of potential to host hydrocarbons or whether the area proves to be holding petroleum deposits, but a richer target should be located and explored further.

As such, a dry hole does not necessarily result or call for a basin to be abandoned. For instance, Dr Lake said Namibia eventually made commercial discovery after initially drilling 30 dry holes while South Africa achieved success following earlier dry holes number a staggering 200.

TotalEnergies has made a significant discovery of light oil with associated gas on the Venus prospect, located in block 2913B in the Orange Basin, offshore southern Namibia. Similarly, Total has made a significant gas condensate discovery on the Brulpadda prospects, 175 kilometers off the southern coast of South Africa

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Business Weekly

The Affirmative Action Group (AAG) presidium has been dissolved with immediate effect with the country’s biggest gold buyer Pedzisai Scott Sakupwanya now the new president taking over from Mr Mike Chimombe, AAG founding president Dr Phillip Chiyangwa has announced.

Addressing the media today, Dr Chiyangwa said the decision to dissolve the presidium was meant to strengthen and augment the zeal to empower the organisation.

He said all other structures in Zimbabwe and internationally remain intact with AAG remaining as an affiliate of the ruling Zanu PF party.

Invictus Energy has secured a deal that expands its exploration area seven-fold, and the company is moving into a critical phase; a production sharing agreement with government.

The company’s SG 4571 licence area will expand from 100,000 hectares to 709,300 hectares. The concession gives Invictus the right to explore across the entire Cabora Basa basin.

“The enlarged SG 4571 licence provides us with a basin master position encompassing the entire Cabora Bassa Basin in Zimbabwe. Subject to making an opening discovery with one of our first two wells, it potentially could provide us with future discoveries on a large scale within the basin,” Invictus MD Scot Macmillan says.

While survey data has shown the potential of oil or gas in the area, only the drilling of wells can confirm this. Invictus plans to start drilling exploration wells in Muzarabani in June.

Production sharing: what’s at stake?

Government and Invictus are currently discussing a production sharing agreement, and Finance Minister Mthuli Ncube says they hope to sign it by the end of April and have the legal changes needed approved by Parliament in July.

Invictus is represented in the talks by its 80%-owned local partner Geo Associates, while Zimbabwe’s interests are held by the Sovereign Wealth Fund of Zimbabwe (SWFZ).

A production sharing agreement sets out how revenue and output are shared between the government and Invictus, should the company discover commercially viable deposits of gas or oil.

Already, the two sides have agreed that SWFZ will be granted a 10% back-in-right within six months of a final investment decision being made to go ahead with any commercial development. A back-in-right contract allows the government to take up shares in the operation once a commercial discovery has been made.

Under such agreements, investors like Invictus raise their own money and take the risk for exploration and development. Should they find commercial deposits, they are given a period to sell the output to recoup those costs, before sharing with government.

“The PSA is basically where you have agreed with the government, how much government gets, and how much the contractor gets, and that is in advanced negotiations,” according to Invictus chairman Stuart Lake.

He said in an interview with ZTN: “What we’ve shared with the government so far is all the examples that have happened in the region; what worked and what didn’t work for various companies. They (government) have gone outside to a variety of very learned individuals to get good feedback about, ‘is that correct or otherwise’. They got their own feedback, so we’re getting close to getting that progressed.” NewZwire

IMPALA Platinum Group company Zimplats has posted a 32% year-on-year decrease in net profit to $170.68-million for the six months ended December 31, 2021, compared with a net profit of $250.61-million for the six months ended December 31, 2020.

The results were impacted by net foreign currency exchange losses of $21.8-million arising mainly on Zimbabwean dollar-denominated monetary assets owing to the depreciation of the Zimbabwean dollar.

Further, revenue of $585-million was 13% lower year-on-year largely owing to negative revenue from movements in commodity prices arising on pipeline sales following the decrease in average metal prices compared with the second half of the previous financial year.

Consequently, the gross profit margin was 50%, compared with 56% in the prior comparable period.

Zimplats generated net cash inflows from operating activities of $261.3-million.

A dividend of $120-million has been declared for the interim period.

Meanwhile, tonnes of ore mined decreased by 5% year-on-year to 3.5-million tonnes, mainly as a result of production disruptions at the Mupfuti mine during a changeover of the trackless mining equipment service provider. The changeover has now been completed.

Tonnes milled was unchanged from the prior interim period’s 3.4-million tonnes.

Platinum, palladium, rhodium, gold, ruthenium and iridium (6E) mill head grade, at 2.42 g/t, was 2% lower than the prior comparable period owing to a higher contribution of ore from lower-grade mines.

6E production decreased by 2% to 282 829 oz, driven by the drop in 6E head grade.

In terms of Zimplats’ capital investment programmes, the redevelopment of Bimha mine was completed within budget at $99.8-million.

The upgrade of the Mupani mine is on schedule, with earthworks for the dome and load out station complete.

Upgrading of Bimha is progressing well, targeting 3.1-million tonnes yearly in the first quarter of full-year 2024.

Meanwhile, a bankable feasibility study for the refurbishment of the mothballed base metal refinery at SMC is ongoing, targeting completion by the end of the financial year.

Further, a bankable feasibility study for a proposed 185 MW solar project has been completed and an independent power producer’s licence issued by the regulator.

Zimplats anticipates a sustainably good operating environmental and continued enforcement of Covid-19 protocols moving forward.

NewZimbabwe

 Zimbabwe’s largest diamond miner, the Zimbabwe Consolidated Diamond Company (ZCDC), aims to increase its annual production to over 5 million carats from 4.1 million carats last year.

Other diamond mining companies, including Anjin, a Zimbabwe-China joint venture and Murowa, have also embarked on a drive to expand production, Mines Minister Winston Chitando said on Thursday.

“There is strong growth taking place in the diamond sector, ZCDC had record production last year, they produced 4.1 million carats from a base of about 1.8 million carats in 2017 and this year their target is to produce over 5 million carats so they are doing very well,” Chitando said.

The ZCDC, Anjin, Murowa and Russian-owned Alrosa are the four companies licensed to mine diamonds in Zimbabwe.

Zimbabwe’s diamond industry is expected to contribute at least 1 billion U.S. dollars to the government’s ambition to extract minerals worth 12 billion dollars as part of an overall plan to transform the country into an upper-middle-income economy by 2030.

Under the envisaged mining roadmap, gold is expected to contribute 4 billion dollars, platinum 3 billion dollars, while chrome, iron, steel and coal will contribute 1 billion dollars.

In 2021, Zimbabwe’s mineral exports reached 5.7 billion dollars, a huge leap from 3.2 billion dollars recorded the previous year.

The mineral-rich southern African country sees the mining sector as the main driver for economic growth.

NewZimbabwe

THE Supreme Court has reserved judgment in an appeal brought by Esigodini gold dealer Baron Dube, who is challenging his conviction and sentence.

Dube (46) was in December last year released on $30 000 bail pending appeal by Bulawayo High Court judge, Justice Martin Makonese.

He was ordered to surrender his travel documents as part of the conditions.

Dube was convicted of murder and sentenced to an effective 10 years in jail by Bulawayo High Court judge, Justice Maxwell Takuva in November 2020 in connection with the death of Prince Antony Bvundura in September 2018.

Dube shot and killed Bvundura, a member of a rival mining gang in Esigodini, during a fight over a mining claim at Block 13 Atlas Mine in Esigodini.

Bvundura was aged 22 at the time of his death.

Deputy Chief Justice Elizabeth Gwaunza sitting with Justices Lavender Makoni and Samuel Kudya reserved judgment during the Supreme Court circuit in Bulawayo.

In his grounds of appeal, through his lawyer Mr Leopold Mudisi of Mutendi, Mudisi and Shumba Legal Practitioners, Dube said there was insufficient evidence to justify his conviction.

In his heads of argument filed by Advocate Thabani Mpofu, who was instructed by Mutendi, Mudisi and Shumba Legal Practitioners, Dube said there was no proper record of proceedings, arguing that the record before the court was a summarised one.

“It is unsafe for this court to adopt a hands-off approach under the circumstances. This is more so the case when one has regard to the excessive questioning of the defence witnesses by the court,” he argued.

“Clearly the court already had a view not just of this case, but the conduct of artisanal miners. What is taken down as evidence must of a necessity be affected by that view.”

Adv Mpofu said Dube’s position was that the revolver had fallen in the dark and upon attempting to pick it up, it accidentally discharged.

“If appellant (Dube) was to be disbelieved, this defence that he had placed before the court had to be inconsistent with the findings made by the court. The difficulty with the judgment of the court is that appellant’s version is consistent with the critical findings of fact made by the court,” he said.

Adv Mpofu said that the court a quo erred by making a finding that his version of events of an accidental discharge of firearm was false.

He said the wound found on the deceased was consistent with a projectile from a revolver.

“The revolver can accidentally discharge if it hits a hard surface, which evidence is in line with my evidence that the revolver accidentally discharged,” he argued.

He said the court a quo erred by cross-examining him extensively instead of questioning to establish certain facts.

“The whole process was inquisitorial instead of accusatorial, that is to say court descended into the arena to my prejudice thus rendering the trial unfair. The court erred at law by convicting my client on a single witness evidence notwithstanding inconsistencies in his testimony thereby watering down the strength of the State case,” argued Adv Mpofu.

The State, which is represented by Mr Khumbulani Ndlovu, opposed the appeal, arguing that the court a quo properly assessed and attached due to probative weight to the evidence as led during trial.

“The findings on the credibility of witnesses are in my view sound in light of the facts and circumstances of this case.
Ultimately nothing turns on appellant’s conviction and, in the circumstances, it is submitted that the court a quo properly exercised its sentencing discretion when it meted out and imposed a sentence of 10 years imprisonment following appellant’s conviction,” he said.

According to court papers, on September 26, 2018, Bvundura went to work at Block 13 Atlas Mine in Esigodini in the company of his workmates. On the same day, Dube arranged a gang of about 20 people to go and take over the mine where there was a gold rush.

At about 11PM, Dube armed himself with two guns – a revolver and a rifle – while his accomplices were carrying machetes, axes, shovels and picks.

He drove to the mine in his Toyota Land Cruiser with the gang and on arrival at the mine, he chased away all miners, claiming he had been granted authority to operate at the mine by the owner, one Mr Tendai Musanangura.

Bvundura, who was part of a group of miners fleeing during the skirmishes, was shot and died on the spot.

According to post-mortem results, the cause of death was gunshot wound, heart destruction and hypovolemic shock.

The Chronicle

PPC, Africa’s biggest cement company, says cement sales in Zimbabwe grew 25% year-on-year up to March, on better-than-expected demand from individual buyers and government projects.

Cement sales are expected to come in 36% better than pre-pandemic levels, PPC said in an update on Wednesday.

“PPC Zimbabwe continues to trade well and ahead of expectations. For the 12 months ending March 31, 2022, PPC Zimbabwe’s cement sales volumes are expected to increase by 21%-25% year-on-year, benefiting from retail demand, increased sales to concrete product manufacturers, and support from government-funded projects,” PPC reported in a trading update.

In a separate presentation to investors on Wednesday, PPC said 54% of its sales in Zimbabwe were in foreign currency.

The company said, in terms of forex receipts, it was profiting from domestic forex sales, foreign direct investment-funded projects and diaspora demand.

The company previously struggled to repatriate its earnings to South Africa in dividends. But, since November 2020, PPC has managed to send US$10,6 million in dividends. In total, PPC has repatriated US$95 million from Zimbabwe since 2010.

The company has now cleared all its Zimbabwean debts, which stood at US$18,9 million in December 2019.

Cement consumption across the industry has grown to 1,4 million tonnes per year, from below one million tonnes in 2017.

PPC expects demand to reach 1,6 million tonnes next year.

Previously, PPC said it was supplying public projects that include the  expansion, the completed Muchekeranwa Dam, Gwayi-Shangani Dam, the new Manyame Air Base Hospital, National University of Science and Technology (Nust) student accommodation, Robert Gabriel Mugabe International Airport, the Beitbridge-Harare Highway and the Beitbridge Border Post expansion.

To sustain growth, PPC plans to “grow retail volumes by targeting micro retailers and entrepreneurs”, evidence of the growing influence of the informal sector in Zimbabwe’s economy.

To show how individual home builders are driving cement sales, 79% of PPC’s sales are in bags, and the remainder in bulk.

Mining, PPC says “is a growing segment with potential to unlock further volumes”

 newZWire

Kibo Energy plc, a UK renewable energy company listed in London and Johannesburg, has acquired the 100MW Victoria Falls Solar Park project for US$13 million.

The first 25MW of the project is fully funded and under construction, with the first 5MW expected to be in production by end of April 2022. The 25MW is to be connected to the grid by year-end.

Kibo is buying the project through a share purchase agreement with Brownhill, the company that was developing the project via its subsidiary Power Ventures.

Kibo, which has previously had interests in coal mining, has been moving away from fossils to invest in renewables, and CEO Louis Coetzee, says the Victoria Falls deal ties in with its strategy.

“We are pleased to have been in a favourable position to participate in this transaction, which is timely, following the company’s strategy to disinvest from fossil fuels and focus on renewable and clean energy projects,” Coetzee says.

“The successful completion of this Transaction will scale up Kibo’s footprint in Africa, with the potential addition of renewable energy projects in excess of 100MW with the first 5MW going into production at the end of April and the first 25MW fully funded for construction and commissioning.”

It is connected to the Hwange-Victoria Falls national transmission line, less than a kilometre from the solar facility.

On completion, the project will generate 100 MW of solar power, and is projected to deliver free cashflow (EBIT) of around US$107 million, according to the company.

Chasing solar

In 2020, government invited bids for the installation of 500MW of solar power plants, hoping a shift to renewable energy will help ease crippling power cuts. But investment into Zimbabwean solar has been slowed by investor doubts that they will be paid in US dollars for supplying power. Government is reluctant to issue IPPs the guarantees they demand.

The Victoria Falls project, however, has a 10-year power purchase agreement denominated in USD, and it will supply mining and industrial customers.

Kibo, has invested in coal assets before, including a 300MW coal-to-power project in Tanzania and Mabesekwa in Botswana. But it is shifting to renewables, with one of its most recent new projects being a 2.7MW plastic-to-syngas power plant in South Africa.

The company’s acquisition strategy has been to target projects that are near production; its renewable energy assets all have a time horizon of less than 18 months to first production.

NewZwire

PROSPECT Resources’ wholly-owned subsidiary, Promin Resource Holdings Ltd, has acquired a potential high-grade lithium deposit located approximately 8km north of Arcadia Lithium project, the parent company has revealed.

According to the company’s half year financial results for the year ended December 31, 2021, an exploration programme is underway.

“The Step Aside claim comprises approximately 140 hectares and is located in the Harare Greenstone Belt, west of the Mashonganyika Fault. The potential of the area has been confirmed by positive regional stream and soil sample geochemistry results.

Four mineralised pegmatites have been mapped from east to west within a meta-dolerite host rock. These mineralised pegmatites are all roughly parallel to each other, lying in a north-south orientation and have dip angles of 40-45˚ to the west.”

The company revealed that an exploration programme is underway, with the commencement of rock chip sampling and if successful a trenching and drilling exercise to help with determining the sub-surface strike extensions.

“This will provide greater detail as to the thickness and strike length of any potential underlying pegmatite,” it said.

On December 23, 2021, the Australia–listed mining concern announced that it had, through its 100% owned subsidiary Prospect Minerals, executed a binding share sale agreement with Huayou International Mining (Hong Kong) Limited, for the sale of its 87% shareholding in Prospect Lithium Zimbabwe, owner of the Arcadia lithium project.

Huayou agreed to purchase Prospect Minerals’ 87% shareholding in Prospect Lithium Zimbabwe and associated intercompany loan for approximately US$377,8 million in upfront cash consideration.

Meanwhile, for the period under review, the company recorded a loss (including that incurred by the discontinuing operations) of A$2,4 million compared to A$1,2 million realised in the same period in 2020.

Also, it had net cash outflows from operating and investing activities (including those used in discontinuing operations) of A$5 018 000.

As at reporting date, the firm had cash and cash equivalents of A$20,1 million including the cash holdings within the disposal group classified as held for sale of A$212 000.

Prospect Resources Arcadia Lithium Deposit has been identified as a priority mining development project by the government.

The company’s lithium project has been identified as one of those key projects in Zimbabwe that can help turnaround the economy.

Newsday