Mining ZimbabweLatest Mining News, Policy and Industry Updates

THE steel manufacturing sector has welcomed Government’s decision to ban exportation of chrome ore saying this will assist local players to secure ferrochrome at competitive rates.

The banning of chrome ore and chrome concentrate follows a Cabinet resolution that was made in August last year. The former is already effective while the later will be effective in July 2022.

In announcing the policy shift Minister of Information, Publicity and Broadcasting Services, Monica Musvangwa, on Tuesday said the ban of the chrome ore exportation will capacitate current smelters and maximise the value chain to be realised from the country’s abundant resources as spelt out in the National Development Strategy 1.

Institute of Zimbabwe Foundries (ZIF) president, Itai Zaba, said the Government’s bold stance was crucial for the metal foundry industry, which was facing challenges in securing inputs at affordable rates.

“Zimbabwe foundries will be able to get all grades of ferrochrome at better rates opposed to current high import cost,” he said.

“This means we will lower our cost of production and make our products cheaper on the market.”

This is also of the need to safeguard the ferrochrome industry including metallurgical processes such as steel manufacturing.

As such, Zaba said the ban will promote beneficiation of chrome ore, which will promote industrial growth, employment creation and technology transfer to the country.

He said the ban will not benefit the foundry family alone but downstream suppliers.

“Beneficiation will promote industrial growth via setting up of new plants and this will bring about the much-needed employment and also brings about technology transfer to Zimbabwe,” said Zaba.

“Also, the value chain cannot be closed in at the foundry alone, it goes far to various suppliers in services, chemical, gas, fuel, power, construction, banking and Zimra who will find opportunity to do business in the foundry and chrome beneficiation sectors.

“So, one should never be blinkered like a horse to only see the foundry industry in this equation, it’s a big net of benefits to the nation.”

Also commenting on the issue, chairperson of the Mines and Mining Development Parliamentary Portfolio Committee, Edmond Mkaratigwa, he said directive given by the Government was in the national interest.

“The Government has banned the export of chrome ore. This will bring long term benefits to the country, which will be seen soon as the decision was done at the interest of the people of Zimbabwe,” said Mkaratigwa.

“Market monitoring is important as returns are the main considerations in all business endeavourers. And this ban was done after determining the cost and benefits analysis of available options to the country and its citizens.

“There were challenges around returns from the sales of these primary resources relative to its benefits to its implicated citizens. These are the matters we need to consider,” he said.

Under vision 2030, President Mnangagwa’s administration has identified the mining sector as a key player towards realising an upper-middle-income economy.

Business Weekly

AUSTRALIA Stock Exchange-listed resources junior, Invictus Energy, says it is on track to commence its planned two-well oil and gas exploration drilling programme in Muzarabani in May.

The muzarabani prospect is believed to host 8,2 trillion cubic feet plus 247 million conventional gas condensate while  the total assessed reserves of Invictus’ special grant 4571 stand at 9,25TCf and 294 million barrels of condensate.

Discovery of oil/gas would mean significant benefits for Zimbabwe’s economy, including energy self-reliance, production of petro-chemicals, Liquified Natural Gas (LNG), fertliser, increased exports and fiscal revenue among others.

“We are planning for a successful drilling campaign, which if transpires will be a transformational event for both Invictus and Zimbabwe,” Invictus Energy managing director Scott MacMillan said.

Already, the company has posted major milestones on the project, including signing petroleum exploration development and production agreement with Government, completion of a seismic survey, signing agreements for a drilling rig and contract.

The company said this week it had secured the necessary casing, wellheads and long lead
items for exploration well drilling programme scheduled.

A well casing is a lining that is installed in an oil well once it is drilled and surrounds the well entirely. Typically, the casing is hollow steel pipe that lines the inside of the wellbore.

The casings are used to support the oil or gas wells, as the raw sides of the well would collapse in without the support rendered by these key equipment.

A wellhead is the component at the surface of an oil or gas well that provides the structural and pressure-containing interface for the drilling and production equipment.

Long lead items are those components of a system or piece of equipment for which the times to design and fabricate are the longest, and therefore, to which an early commitment of funds may be desirable in order to meet the earliest possible date of system completion.

The announcement came days after the Australian firm announced plans to raise A$5,5 million (A$) to finance further development of the Muzarabani project through issuance of at least 55 000 new shares.

The company also said it had completed an extensive tendering exercise for the integrated well services contract including cementing, directional drilling, logging. The formal award of the contract is expected shortly.

“We are very pleased with the way the drilling programme is coming together with Invictus securing the wellheads and casing long lead items for a high impact 2-well drilling programme,” said managing director Scott MacMillan.

“We are now finalising the well services contract award and working to execute the binding rig agreement with Exalo for the #202 drilling rig.

“Invictus remains on track for the upcoming drilling campaign to commence in May 2022,” he added.

Invictus has registered significant milestones in the exploration for and development of the Muzarabani oil and gas project, including completion of a seismic (subsurface data gathering) study and conclusion of drilling agreement with a British company.

The company, which expects that its recently concluded 2D seismic data will help refine the location and path of the planned Mzarabani-1 gas exploration that will test the potential of the Cabora Bassa project (Muzarabani), has also secured drilling for the project.

Official data shows that the Muzarabani prospect has been independently assessed to host prospective resources of about 9,25 trillion cubic feet of gas and 294 million barrels of condensate, essentially a light oil.

Invictus last year signed a petroleum exploration development and production agreement (PEDPA) with the Government, which spells out the rights and obligations of each party through the development phase of the project.

In terms of the fundraising, the Australia Stock Exchange (ASX) listed company has received firm commitments from sophisticated and institutional investors to raise A$3,5 million (before costs) by way of placement of new shares and US$2 million through a share purchase plan.

“As announced on December 9, 2021, we are positioning Invictus to undertake a 2-well exploration campaign commencing (first half of 2022) including the drilling of Muzarabani-1 well targeting prospective resources of 8,2 Tcf + 247 million barrels conventional gas condensate.

“We have a busy (first) half of 2022 planned with finalisation of our data processing for our seismic survey, update of our prospect and lead inventory, conclusion of our farm-out processnand securing long lead items as we embark on our planned 2-well drilling campaign of our world-class asset including the Muzarabani-1 well which will be one of the largest conventional targets drilled globally in 2022,” Mr MacMillan said last week.

Essentially, the funding enables Invictus to finance critical programmes ahead of planned exploration drilling of two oil and gas wells in Muzarabani, which the company has said is scheduled for the first half of next year.

Under the planned placement, Invictus Energy will issue 35 000 000 new fully paid ordinary shares (New Shares) at an issue price of A$0,10 per new share, a 13 percent discount to the last closing price on December 22, 2021.

Proceeds from the placement will be used to fund the rig mobilisation fee, purchase of long lead items for the planned second-well drilling programme and finalisation of the data processing of its Muzarabani seismic survey. A share placing (placement) is when new equity shares are issued to individual investors, corporate entities, or small groups of investors for capital.

This increases the amount of shares in issue and dilutes existing shareholders.

In concert with the placement, Invictus said it would offer all eligible shareholders a share purchase plan (SPP) to raise up to A$2 million, resulting in a maximum of 20 000 000 shares being issued under the SPP.

All eligible shareholders will have the opportunity to apply for up to A$30 000 worth of New Shares.

A share purchase plan (SPP) is a form of capital raising by a listed company that offers
share holders the opportunity to apply for new additional shares.

Regulations limit the maximum application per shareholder to A$30 000.

Typically, an SPP is conducted at a discounted price to the current listed price of the stock to encourage shareholders to purchase more shares.

“The issue price under the SPP of A$0,10 is equal to that of the new shares issued under the Placement, with SPP participants also receiving attaching options on a 1-for-2 basis, at a strike price of A$0,14, with a 3-year term,” Invictus said.

In the event of over-subscriptions, the company said its directors may also, in their absolute discretion, decide to increase share purchase plan acceptances by a further $1 million.

Proceeds from the SPP were to be allocated to further purchases of long lead items for the planned 2-well drilling campaign and for general working capital.

Business Weekly

The country’s sole buyer and exporter of gold, Fidelity Printers and Refiners (FPR) says it will “soon” engage the Zimbabwe Revenue Authority (Zimra)  over taxes charged on miners in a bid to attract small scale miners to sell on the formal market.

Zimbabwe’s mining sector has high tax burden which discourages small scale miners to formalise hence more gold will be lost through parallel market.

FPR acting general manager Peter Magaramombe told Business Times the sole buyer will remove all hurdles in its way to chase the 100-tonne target by 2023.

“We will engage Zimra to lessen the tax burden on small scale miners so as to lure them to sell to the formal channel by giving them friendly tax regime. As long as we continue with punitive taxes gold will continue to be sold on parallel market hence we should make a plan on reduced taxes,” Magaramombe said.

An average of three tonnes is believed to have been sold on the parallel market monthly.

Magaramombe said there are plans to increase presence by establishing more gold buying centres in all active regions.

“We are facilitating a loan facility to capacitate existing and new gold mining ventures so as to increase production,” he said.

Gold is Zimbabwe’s third largest foreign currency earner after platinum and diaspora remittances.

It is one of the most liquid minerals thereby fuelling smuggling as small scale miners opt for higher prices.

In the past, Fidelity Printers and Refiners was paying below the international prices and the money would come after more than a month, thereby creating a fertile ground for smuggling.

That has been rectified and miners are paid at prevailing international prices

Gold deliveries rose 45% to 25.36 tonnes during the 11 months of the year from 17.44 tonnes delivered to Fidelity Printers and Refiners during the same period last year due to improved mining conditions and incentives.

From the cumulative 25.36 tonnes delivered to Fidelity Printers and Refiners, small scale miners accounted for 15.21 tonnes with primary producers delivering 10.14 tonnes.

Business Times

AUSTRALIAN based oil and gas company Invictus Energy is working on raising US$3,98 million from shareholders to pay for Exalo’s drill rig to be delivered for the Cabora Bassa project in Zimbabwe.

The Cabora Bassa project comprises the Mzarabani and Msasa gas and condensate prospects, which Invictus describes as “world-class multi-trillion ft3” plays.

Early this month, Exalo Drilling signed a Memorandum of Understanding with Invictus Energy Ltd to drill the Muzarabani-1 exploration well with an option for an additional exploration well at the Cabora Bassa project in Zimbabwe.

Last Wednesday, Invictus announced a placement of A$3,5 million and a share purchase plan of up to A$2 million to raise a total aggregate amount of up to $5,5 million.

Under the placement, Invictus will issue 35 million new fully paid ordinary shares at an issue price of A$0.10/share.
The proceeds from the placement will be used to fund a range of initiatives to further develop the Cabora Bassa project.

Invictus will also use the proceeds to pay for the rig mobilisation fee, purchase of long-lead items for the planned 2-well drilling programme and finalisation of the data processing of CB21 seismic survey.

In concert with the placement, Invictus will offer all eligible shareholders a share purchase plan to raise up to A$2 million, resulting in a maximum of 20 million shares being issued under the plan.

All eligible shareholders will have the opportunity to apply for up to A$30 000 worth of new shares.

The project received environmental approval from Zimbabwean authorities in August last year. — New Ziana