Mining ZimbabweLatest Mining News, Policy and Industry Updates

The Sese community in Chivi District yesterday blocked the entrance to the RZMurowa compound in protest of the exploration currently taking place in their community.

The community needs Murowa to cease operating in Danhamombe Secondary school premises and houses lamenting that learning is being disrupted by noise from machinery. The school’s development committee (SDC) last year gave RZ Murowa until the 5th of December to wind up operations and leave the area.

The community accuse RZMurowa of conducting exploration without consultation. Last year the local councillor in the area, Alec Mhundu said the mine had also not formalised its operations with the Chivi Rural District Council (RDC).

“What the villagers raised is a cause for concern because as a local authority we are not aware of Murowa Diamonds’ existence or who gave them the permission to be where they are operating from,” said Mhundu.

“Council should be collecting rates from them and if they are indeed genuine miners, they should formally apply for land from the local authority.”

Sources privy to the issue indicate Murowa engaged the community way before they commenced exploration. Some of the community members signed consent forms in areas where the diamond miner indicated an interest in exploring. Some even received food hampers from the miner.

The miner has remained mum on the situation.

For 2 years, the community of Sese in Chivi District has fought a lone battle against Murowa Diamonds, which has been drilling allover the community, including a local school. In the photo members of the community block the entrance to Murowa compound in Sese pic.twitter.com/n39S19uiMZ

— Farai Maguwu (@FMaguwu) June 23, 2021

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Zimbabwe gold deliveries fell 17% to 1.668 tonnes in May 2021 from 2.015 tonnes achieved in the prior comparative period owing to unfavourable policies and smuggling.

In April this year, gold deliveries declined 5% to 1.38 tonnes from 1.46 tonnes recorded in the same period in 2020. The only positive output was recorded in March this year, during which deliveries improved 2% to 1.80 tonnes from 1.77 tonnes.

Despite the slowing down of rainfall the gold output continues to fall each month. This means that Zimbabwe could struggle to reach its target of 100 tonnes per year by 2023.

The country’s sole buyer and marketer of gold, Fidelity Printers and Refiners (FPR) acting general manager, Peter Magaramombe, told Business Times that Covid-19 induced lockdowns have affected mining as accessing raw materials remained a challenge under the restrictions.

“The gold deliveries to Fidelity were 1.668 tonnes in May 2021 against 2.015 tonnes delivered to us during the same period last year. The decline on deliveries from the small scale sector is attributed to the Covid-19 lockdown/restrictions occasioned by the second wave in this country.

“And also the heavy rains the country received up to February which caused flooding in a number of mining sites rendering extraction of ores difficult,” Magaramombe said.

He said as the weather gets drier, output from the small scale sector is expected to pick up.

During the period under review, small scale miners delivered 0. 783 tonnes while primary producers delivered 0.884 tonnes to FPR.

Overall, gold deliveries for the first five months of the year fell 24% to reach 7.028 tonnes from 9.195 tonnes during the January to May period in 2019.

In January 2021, from the output of 0.997 tonnes, primary producers delivered 0.64 tonnes against small scale who managed 0.355 tonnes, in February 2021, the small scale extracted 0.56 tonnes and primary producers delivered 0.61 tonnes.

Recently, former FPR general manager, Fradreck Kunaka said the country could be losing over 30 tonnes yearly valued at US$1.7bn due to smuggling unfavourable mining policies.

Gold mining experts said the country should totally liberalise the gold sector to combat smuggling and compete at the highest level with foreign gold buyers.

Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said there is reluctance from the authorities’ side to curb leakages.

“The authorities know the unfriendly policies they put in place but are not acting upon it which is a cause for concern

“The country wants to achieve 100 tonnes per year within the next two years but with high taxes, costs and lack of funding tells that the country is not ready to achieve this target,” Chinyenze said.

Zimbabwe’s gold output plummeted 31% to 19.052 tonnes in 2020 from 27.66 tonnes recorded in  2019 due to Covid-19 effects, delay in payments and low foreign currency retention levels.

Business Times

Revenue from Zimbabwe’s platinum sector is expected to exceed US$3bn by the end of next year, driven by new projects that are expected to take off at the end of this year and the beginning of 2022, Mines and Mining Development minister Winston Chitando has said.

Revenues for the sub-sector have been hovering between US$1.5bn and US$2bn a year.

Some of the projects in the pipeline include Great Dyke Investment’s Darwendale Platinum project, Bravura platinum and some expansion projects at Mimosa Mining Company and Unki Platinum Mines.

“We are expecting platinum to exceed US$3bn revenue by the end of 2022 driven by new projects that are expected to start production by the end of this year and the beginning of next year,” Chitando said.

Zimbabwe’s platinum producers are also planning to engage a consultant to give advice on the establishment of a base metal refinery by 2025 and a precious metal refinery by 2027 to process platinum from all the country’s platinum mines.

The platinum miners — Zimplats, Mimosa Mining Company and Unki — have a strong plan to jointly develop a base-metal refinery in the country. The plan has been under consideration since 2014.

Zimbabwe has the second largest known deposits of platinum after South Africa and has been pushing mining firms operating in the country to build refineries to stop the export of raw platinum ore.

In 2015, the government imposed a 15% tax on raw platinum ore exports to force companies to process locally but suspended the levy after the miners agreed to support local platinum processing.

The establishment of a platinum refinery has become even more urgent considering that mining is expected to anchor economic growth under the National Development Strategy 1 which charts policies, institutional reforms and national priorities needed from 2021-2025 to achieve an upper-middle-income economy under Vision 2030.

Business Times

The Reserve Bank of Zimbabwe (RBZ) has slashed small scale miners’ royalties and the cost of importing cash as part of efforts to improve gold deliveries to Fidelity Printers and Refiners (FPR) and stem the smuggling of the yellow metal.

FPR is now buying gold at the prevailing international gold prices.

Yesterday, the spot price for gold in the international market was US$57,225 per kilogramme.

Analysts said the move was triggered by the plummeting output of the yellow metal.

This worried the monetary authorities.

ZMF chief executive officer Wellington Takavarasha told Business Times that there have been some improvements on gold deliveries in the past week.

“With the granting of the right to sell the yellow metal at the prevailing international gold price, removal of punitive taxes and cost of importing cash, gold deliveries had been high in the past 10 days,” Takavarasha said.

“We are happy to tell you that from Monday last week, our members were delivering to FPR and were paid on the spot. Last week alone, we delivered   over 0.350 tonnes which is a huge jump from other weeks we could deliver less than 0.1 tonnes per week.”

He said all outstanding payments to ZMF members were paid as FPR took heed of RBZ governor John Mangudya’s word of “giving us competitive prices”.

Takavarasha encouraged ZMF members to continue selling gold to FPR as it is paying at the same rate as the parallel market.

“Why do we have to go to the black market or smugglers when the formal sector is paying more than the cartels,” he said.

During the past three years, small scale miners delivered close to 70 tonnes of gold to FPR against large scale miners’ output of 52 tonnes.

Given that the small-scale miners are highly informalised, their gold is prone to smuggling as they sell it to the highest bidder.

In his Monetary Policy Statement in February, Mangudya attributed the fall in gold deliveries to the subdued performance by the small scale miners.

But FPR wants the spot payments to continue to improve deliveries.

FPR acting general manager Peter Magaramombe said the gold buyer has no payment backlogs.

“Payment on time is good but there is need for incentives to improve   the output in the long run. It is thus expected that there will be an improvement in deliveries,” Magaramombe said.

He said the small-scale miners are paid as they step in with their gold into FPR while the large- scale miners are paid within seven days of delivery.

Zimbabwe’s gold output plummeted 31% to 19.052 tonnes in 2020 from 27.66 tonnes recorded in 2019 due to Covid-19 effects, delays in payment and low foreign currency retention levels.

Gold deliveries for January 2021 were 0.99 tonnes from 2.54 tonnes during the comparable period last year.

Large scale producers delivered 0.64 tonnes while small scale miners delivered 0.35 tonnes to FPR.

Gold export receipts in January 2021 were at US$53.1m from US$98.1m during the same month last year due to subdued deliveries due to Covid-19 effects, heavy rains that the country experienced in January and the failure to remove costs on small scale gold miners.

In a recent mining report, mining experts advised that President Emmerson Mnangagwa’s government should give artisanal mining cooperatives legal standing, pay gold producers at world prices and strengthen mining dispute resolution.

Zimbabwe is targeting 100 tonnes of gold per year by 2023.

Business Times

KUVIMBA Mining House has turned around the fortunes of several struggling mining assets around the country and within its first year of operations paid a hefty US$5,2 million dividend to stakeholders.

The group took over the ownership and management of several mining assets in Zimbabwe during the second half of 2020, and has seen the performance of the underlying mining assets improve significantly.

Eighteen months ago, Shamva Gold Mine, Homestake and Zimbabwe Alloys were all under judicial management with uncertainty hovering over the heads of employees and communities that also benefitted from the operations of the companies.

To the extent of this improvement, the group yesterday shared a US$5,2 million dividend to seven key shareholders at a ceremony held in Harare.

The money was distributed as follows: Sovereign Wealth Fund of Zimbabwe (US$520 000), Public Service Pension Management Fund (US$560 000), Deposit Protection Corporation (US$400 000), Insurance and Pensions Commission (US$400 000), Datvest Nominees (US$1 million), National Venture Capital Company of Zimbabwe (Pvt) Ltd (US$600 000) and Government (US$1,72 million).

According to management, the dividend is based on unaudited figures, “but the board felt that given the underlying performance of its subsidiary companies the dividend was appropriate.”

“The investment in Kuvimba is also in line with Government’s aim of driving robust and rapid economic growth and the transformative thrust of moving the economy up the value chains.

“During the National Development Strategy 1 (NDS1) period, Government priorities have been placed on developing and strengthening already existing value chains, decentralisation of industrialisation initiatives and provision of a consistent, stable policy environment for the mining sector,” said Finance and Economic Development Minister Professor Mthuli Ncube who was the guest of honour.

“In this regard, Government has taken the opportunity to partner with willing and able private sector players who believe in the National Vision and are desirous to participate in the economic prosperity of the people of Zimbabwe.

“In the same vein, Government is also demonstrating to all existing and potential partners that Zimbabwe is capable of meeting its domestic financial obligations.”

The majority shareholding in Kuvimba Mining House is held by a broad spectrum of local institutions, including a 12,5 percent, which is for the purpose of meeting obligations in respect of compensation for white former commercial farmers for improvements under the Global Compensation Agreement signed between Government and former farmers, a 7,5 percent stake by the National Venture Fund, which is managed by the National Venture Capital Company of Zimbabwe. Of this, 2,5 percent is held on behalf of youths whose projects will be supported under the Fund; 2,5 percent for supporting women’s projects and 2,5 percent is held for the account of Veterans of the Liberation Struggle.

About five percent shareholding is held by the Insurance and Pensions Commission and proceeds thereof are earmarked for compensation in respect of legacy pensions. The Deposit Protection Corporation holds five percent shareholding in the company. The DPC is working on a framework towards some compensation for small depositors for loss of value on savings.

Also, seven percent of shares in Kuvimba are held by the Public Service Pension Management Fund, while 6,5 percent shareholding is held by the Sovereign Wealth Fund of Zimbabwe, a statutory fund, which is now being fully implemented for the future benefit of the Zimbabwean citizenry.

The Government holds 21,5 percent equity in Kuvimba, and the balance of 35 percent is held by the private sector investors, which includes management. Shareholders are pleased with the outcomes of the mining entity.

Insurance and Pensions Commission commissioner Dr Grace Muradzikwa, said the model worked to cushion pensioners in the long-run.

“Today’s event makes us appreciate Government’s wisdom in allocating shares for the purpose of cushioning pensioners, since they are backed by real assets, which will benefit our pensioners for the foreseeable future on a sustained basis,” said Dr Muradzikwa.

Earlier in May, Kuvimba’s Freda Rebecca broke a 20-year production record by producing 300kg of gold.

Said DPC chief executive Mr Vusi Vuma: “The distribution of the dividend in the first year gives us confidence in its (Kuvimba)’s future”.

Kuvimba owns and manages three operating gold mines, three non-operating gold mines, various chrome operations, an operating nickel mine as well as an investment in a platinum project.

“I would like to congratulate the management and staff of Kuvimba Mining for this achievement. Considering the levels of production and the state of many of the entities that make up Kuvimba Mining only a year ago when the operations began to being able to increase production and maintain costs to the extent of issuing a dividend of this magnitude a year later is remarkable,” said Commercial Farmers Union’s Mr Andrew Pascoe whose organisation has 12,5 percent in the mining giant.

The company strategy has followed an initial phase of stabilising the operations, secondary phase of increasing metal output from current operations and the third phase is to operationalise the current non-operating asset.

Phase one has largely been completed and this was achieved through the reinvestment of capital in the operations, management re-organisation.

The Chronicle

A MAZOWE gold miner, who was allegedly displaced from his farm by the former First Family Grace Mugabe, has applied summons against the late President’s widow seeking her eviction.

Langton Chapungu was ejected from his 110 Smithfields Farm in Mazowe in 2008.

Chapungu once approached the court for similar summons and applied for a spoliation order to repossess the farm and equipment seized during the farm grab.

In the present application, Chapungu cited Grace as respondent.

The miner claimed that he was the owner of 110 Smithfields Farm registered under deed of transfer No 6758.

“The defendant (Grace) occupied my farm or caused my farm to be occupied by unknown people. The defendant went further to build a school in the farm without notice to me. Despite myself having a prospecting licence to prospect gold in the area the defendant caused some Chinese to occupy my homestead and a white man to farm on the land,” he wrote in the application.

“I issued summons under case No 8314/19, but surprising the case was withdrawn by unknown people who forged my signature, hence these summons.”

The case is still to be heard.

NewDay

Mining investment consortium, Chandiwana Mining Corporation, says it is constructing a processing plant at the Zvishavane-based Sabi Gold Mine as it moves to ramp up output.

Chandiwana is the majority shareholder in Sabi Mine, holding 51% stake. It has the intention to increase its shareholding in the gold miner.

Brian Chandiwana, the managing director of Chandiwana Mining Corporation, confirmed the development this week.

“The project is worth about US$7m, it’s a repleach of open castable resource oxides (plant) and we will be commissioning (it) at the end of the year. We are halfway in terms of the project,” Chandiwana told Business Times.

He said Chandiwana was also involved in the US$10m construction of a refractory gold processing plant in Kwekwe. The project is in partnership with Minerals Marketing Corporation of Zimbabwe.

The roasting Plant is expected to undertake the processing of refractory gold around the Midlands area.

Chandiwana has been instrumental in the revival of Sabi Gold Mine which at one time was closed due to shortage of working capital and ballooning debt levels.

Chandiwana partnered ZMDC to revive Sabi Mine.

At the time when Chandiwana came in, Sabi Mine required recapitalisation to the tune of US$15m to have the capacity to produce 45 kg per month of gold.

Sabi has a mine capacity to treat 450 tonnes of ore per day.

The Sabi mine claims were first pegged in 1890 with the first recorded production in 1909. It was acquired by ZMDC in 1984. ZMDC used to own 100% Kimberworth Investments trading as Sabi Gold Mine.

At full capacity, the mine can employ about 450 employees and is currently serviced by one rectangular double compartment shaft reaching down to 15 metres below 12 level elevation.

Business Times

REGIONAL cement maker PPC says its Zimbabwean unit grew revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) in functional currency despite a difficult trading environment.

PPC operates a clinker plant at Colleen Bawn in Gwanda in the southern part of the country, as well as cement-milling plants outside Bulawayo and Harare.

Apart from South Africa and Zimbabwe, PPC also has units in Botswana, Ethiopia, the Democratic Republic of Congo (DRC) and Rwanda.

According to its audited consolidated annual financial statements for the year ended March 31 2021, the group said accounting for Zimbabwe in terms of IAS 29 — financial reporting in hyperinflationary economies — resulted in a net monetary loss of R200 million.

“Although trading conditions in Zimbabwe were characterised by high inflation and a shortage of foreign currency, PPC Zimbabwe grew revenues and EBITDA in functional currency. However, a 75% devaluation of the Zimbabwean dollar against the South African rand resulted in a reduced contribution to the group’s profitability,” PPC said.

“The materials business could not recover from the impact of the lockdowns, although it experienced increased demand in some market segments.”

The group reported a net fair value gain on the Zimbabwe financial asset of R256m and a net fair value loss on the Zimbabwe blocked funds of R17 million.

PPC said cash available from operations amounted to R1 022m while cash generation benefited from improvements in EBITDA, reduction in working capital absorption, and lower finance costs paid.

Cash generation and preservation is a key performance measure for PPC.

Group revenue increased by 3% to R8 938m due to the recovery in cement sales, the report says.

Excluding Zimbabwe, group revenue increased by 7%.

Group EBITDA increased by 16% to R1 598 with an EBITDA margin of 17,9%.

EBITDA benefited from volume growth and stringent cost control.

Excluding PPC Zimbabwe, the group’s EBITDA from continuing operations increased by 66%.

Finance costs decreased by 19% to R283m due to lower average borrowings.

Earnings per share for the period for continuing operations increased to 65 cents, while headline earnings per share for continuing operations reduced to three cents.

Operating profit increased by 75% year-on-year from R600m to R1 051m.

Headline earnings from continuing operations, however, decreased from R787m to R77m due to the impact of non-cash pre-tax items on headline earnings.

The group said fair value adjustments and foreign exchange movements resulted in a loss of R376m, mainly due to strengthening of the South African rand against the US dollar during the year.

The South African rand depreciated against the US dollar in the prior year.

Gross debt amounted to R2 628m on March 31 2021.

It said the R3 172m decline in gross debt includes R2 482m relating to the DRC transferred to liabilities associated with assets held for sale and disposal.

“Despite the difficult trading conditions in most of our markets, our businesses have benefited from a recovery in cement demand, resulting in improved financial performance.

“The strategic repositioning of PPC as a leading cementitious player is progressing well, and we will redouble our efforts in the new financial year,” PPC CEO Roland van Wijnen said.

“We also achieved significant milestones in our capital restructuring and refinancing project, which remains a priority for PPC. So far, we concluded an agreement with PPC Barnet’s lenders, which terminates their right to recourse to PPC.”

Wijnen said they signed agreements for the sale of PPC lime and their aggregates business in Botswana. He said they also agreed with their South African lending partners to defer the equity capital raise in South Africa from March 2021 to September 2021.

“We continue to engage with our lenders to find the most economically efficient way to recapitalise the South African business,” he said.

On the outlook, PPC said despite the recovery in cement demand in most of its markets, it was mindful of the prevailing uncertainties around the COVID-19 pandemic and its impact on economic activity.

“PPC will remain focused on improving cost competitiveness and cash generation.

“PPC will take the necessary strategic and operational measures to ensure that it can continue to serve its customers, protect its employees and implement strategic initiatives to ensure financial sustainability through all demand cycles,” it said.

NewsDay

Kuvimba Mining House has paid out US$5.2 million in dividends to shareholders, less than a year after bringing some of the country’s biggest mining assets under its wing with government support.

From white former farmers, the insurance regulator, and Government, the shareholders that lined up to receive their dividend cheques on Wednesday represent a broad range of interests, in a display of the company’s growing influence on the economy.

Kuvimba owns key mines such as Bindura Nickel Corporation, the country’s nickel producer, Freda Rebecca, Zimbabwe’s biggest gold miner, Shamva Mine, as well as an interest in Great Dyke Investments, potentially the country’s largest platinum operation.

Last year, Kuvimba also started running State-owned mines Jena, Elvington and Sandawana, after ZMDC ceded control. Kuvimba has also recently taken over Homestake, which runs the mothballed Tiger Reef Mine and Globe & Phoenix tributes in the Midlands.

Government last year announced that 65% of the company was now in its hands and those of other local interests. The remaining 35% is held by a private investor. The company is Sotic International, the Mauritius-registered company through which Kuvimba acquired BNC and other assets.

Which local shareholders are involved and how they are sharing this maiden dividend?

Government stake

The Government of Zimbabwe holds 21.5% equity in Kuvimba. Its share of the dividend is US$1.72 million. Government is the largest of the local shareholders.

White farmers compensation fund

12.5% of is held by a special compensation fund for white former farmers. The fund is raising money to pay white farmers as agreed last year under the Global Compensation Agreement, the US$3.5 billion deal signed between the Government and displaced white farmers in 2020.

According to Andy Pascoe, president of the Commercial Farmers Union, farmers had raised doubts about the shareholding in “unknown ventures, unknown proceeds”. But he said they take the dividend as a “seed”.

National Venture Fund

7.5% of Kuvimba is held by the National Venture Fund. The fund was set up to support businesses owned by women, youths and war veterans. Of the 7.5% held by the fund 2.5% is meant to support youth-run startups; 2.5% for women’s projects and 2.5% for war veterans. Last week, government launched a new investment company for war veterans, the War Veterans Investment Corporation.

Insurance and pensions

5% of Kuvimba is held by the Insurance and Pensions Commission (IPEC). The insurance regulator will use its share to compensate pensioners who lost value to the 2019 currency changes.

In the 2021 budget, government set aside US$75 million for this compensation. IPEC was initially sceptical of government’s plan to pay this via Kuvimba shares, says the regulator’s commissioner, Grace Muradzikwa.

“On further engagements with government, we were advised that resources were in the form of shares in a ‘good asset’. To be honest, we received the message with mixed feelings since we were not sure of the performance of the company and its dividend payment history,” she says.

But, Muradzikwa said, the early dividend may justify the decision.

Depositors

The Deposit Protection Corporation holds 5%. The DPC is meant to compensate small bank depositors for loss of value on savings.

Public service

7% of shares in Kuvimba are held by the Public Service Pension Management Fund, which manages pensions for government workers.

6.5% shareholding is held by the Sovereign Wealth Fund of Zimbabwe. A sovereign wealth fund is a government’s investment fund, usually funded by money generated by the government.

There was no disclosure on exactly the number of shares each entity holds in Kuvimba, the dividend payable per share, or the payout to the 35% shareholder.

Future dividends? Not so much

Kuvimba CEO David Brown, however, cautioned that Kuvimba may not be as generous as it has been, as it reinvests earnings back into the company.

“The dividend that we are declaring today, is being calculated with regard to preliminary consolidated results of the group. But I think we must bear in mind that future dividends will always have to be managed as a balancing act between reinvestment into the business in order for it to grow, as well as rewarding shareholders,” Brown says.

The company’s expansion plan suggests a large capex outlay will be needed.

BNC completed shaft deepening in April, a project that first started in 2003 but had been abandoned for lack of funding. The deeper shaft will extend the life of mine and cut costs.

At Freda Rebecca, the company says it has broken a 20-year production record this year. Over the past decade, the mine averaged between 1,500kg and 2,100kg annual gold output. In the year to March this year, production rose to 2,690kg, and the company targets 3,215kg this year.

The mine reaches the end of its life in five years, and the company is exploring resources to find the next location for the next mine to replace Freda Rebecca.

At Shamva, Kuvimba plans to start construction of a new mine in early 2022 after completion of a detailed feasibility study and raising capital to exploit resources at Shamva Hill.

Says Brown: “Once fully developed, Shamva has the potential to become the largest gold mine in Zimbabwe by output and will target an annual production of 3,500kg of gold per annum.”

This would be a big turnaround for Shamva, formerly owned by Metallon. The mine had been shut down in 2019 and was sold to Kuvimba last year.

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