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Export surrender review sinks miners

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Export surrender review sinks miners

Zimbabwe miners say the increase in the export surrender requirement to 40% is hurting production, resulting in serious shortfalls as they battle to sustain operations in the capital-intensive sector.

The mining sector generates more than 60% of Zimbabwe’s foreign currency revenue.

On January 7 this year, the central bank’s Monetary Policy Committee (MPC) increased the export surrender requirement on all export receipts to 40% from 30%.

Miners say they are already battling serious shortfalls in meeting their obligations that require forex as well as finding it difficult to sustain production.

The auction system, several miners say, was failing to adequately supply the greenback to the miners.

Chamber of Mines of Zimbabwe chief executive Isaac Kwesu said the sector was engaging the central bank over the matter.

“We are engaging with the view that the retention may be reviewed. It’s the matter we are seized with,” Kwesu said.

Central bank chief John Mangudya had not responded to enquiries by Business Times by the time of going to print.

Recently, Mangudya said that exporters facing shortfalls were now allowed to participate in the forex auction system.

But, some miners were saying they were not getting sufficient forex from the auction system.

Kwesu said the Chamber was still assessing the situation at the auction system.

“Our engagements with the monetary authorities on the matter are ongoing. The current position of the RBZ on the issue is as announced in the latest Monetary Policy Committee and also highlights that in the meantime exporters who have shortfalls in their forex requirements will be allowed to participate at the auction market,” Kwesu said.

“Thus we will also be engaging to ensure the efficiency of the auction market is such that all genuine exporter bids get priority in accessing forex timeously and in adequate volumes.”

Previously, the miners were forced to liquidate all unutilised export proceeds after 60 days.

But, the MPC scrapped the compulsory requirement in January this year.

Instead, the apex bank increased the surrender threshold to 40% from 30% with the central bank saying this would fund the forex auction system.

In his monetary policy statement, Mangudya said the bank would maintain and sustain the auction system through the 40% export surrender requirement, 20% domestic foreign exchange sales surrender requirement and 15% foreign exchange contribution from the fiscus.

He said the bank would continue refining the foreign exchange auction system taking into account fundamentals as well as closely monitoring the utilisation of funds.

The capital intensive mining sector requires over US$3bn to increase production.

However, miners believe the monetary authority’s decision to increase the surrender requirements were severely affecting their production cycle.

The ministry of Mines and Mining Development is working on a plan to transform mining into a US$12bn by 2023 from about US$3bn.

This would be achieved through the creation of an enabling environment, removal of restrictions, increased exploration, expansion of existing mining projects, and resuscitation of closed mines, opening of new mines and mineral beneficiation and value addition.

The mining sector is projected to rebound by 11% this year driven by planned expansion programmes aimed at increasing production by miners. The sector is projected to have contracted to -4.7% in 2020.

 

Business Times

Eureka conduct first blast to signal reopening

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Eureka conduct first blast to signal reopening

The first open pit blast has been successfully detonated at Eureka Gold Mine ahead of production resumption, Dallaglio Investments have said.

Reconstruction works at the mine were commissioned by President Mnangagwa in 2018 as part of a grand strategy to maximise on the country’s economic endowment and driving the economy towards an upper-middle-income economy by 2030.

Since then, Dallaglio Investments have splurged millions in a bid to return the mine to full production which is expected to start in the third quarter of this year.

In an interview, Dallaglio Investments’ Business Improvements Specialist Loveness Chiyanike, said the successful blast marks a huge milestone in the mine construction.

Chiyanike also expressed confidence that the mine is on course to achieve its reopening timeframe this year a development that will go a long way towards the attainment of the mining sector’s US$12 billion 2023 milestone.

“We have had our first blast (at Eureka) and we are really excited about it,” said Chiyanike.

“We are still inspecting the pit and we have so far observed that it went well and we are looking forward to having our second blast on Saturday.

“Everything around the reopening is going on as planned and its exciting times ahead for us,” she said.

Eureka was forced to shut operations after running into viability problems two decades ago with capital at the center of the mine’s troubles.

The first blast was preceded by the delivery of two state-of-the-art heavy-duty gold mills on site in February.

Dallaglio Investments’ splurging of capital into Eureka comes as the miner has confirmed that exploration week have shown that the mine has a resource base worth over US$1 billion.

The expected resumption of full production at Eureka could see Daglallio – which also owns Pickstone Peerless Mine near Chegutu – boost its production to about four tonnes per annum.

 

Business Weekly

Exploration boom in West Africa challenged by lack of services

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Exploration boom in West Africa challenged by lack of services

The West African mining industry has seen significant fundraising activity since October last year, driven by higher metal prices and the need to meet a growing global demand for metals needed for electric vehicles and renewable energy.

For Capital Drilling (LON: CAPD), a mining service provider that has spent the last two years expanding into West Africa, lack of exploration spend, flat drilling activity and record levels of financing have created a prime scenario for companies to expand in the area.

The world’s second biggest gold-producing market zone, after China, is attracting a growing number of players, such as Barrick, IAMGOLD and Endeavour Mining, which recently acquired Teranga Gold.

Capital Drilling believes activity in the region is just taking off, as companies look to replace mine production and discover new sources of key metals amid talks of a new a commodity supercycle.

“As with any rapid increase in activity, a mismatch in demand and supply of exploration, delineation and production drilling rigs has the potential to put the mining and exploration industry in the region under significant pressure,” Capital said in a White Paper published Tuesday.

New mining codes drawn up by various countries to attract and secure foreign investment have favoured a gold boom in West Africa that is extending to the rest of the continent, including Egypt.

Exploration boom in West Africa challenged by lack of services

According to the London-listed mining supplier, West Africa saw the third largest inflow of exploration expenditure globally in 2020, behind Australia and Canada, with over $470 million invested.

The region’s exploration activity has been fuelled by the comparative lack of modern exploration campaigns used in developed markets such as Australia and North America, Capital said. Yet the region benefitted from being the world leader in exploration success, with over 50 million ounces of gold reserves discovered between 2009 and 2019, dwarfing its nearest rivals, Canada (36 million ounces) and Ecuador (24 million ounces).

THE INCREASING NEED FOR INVESTMENT TOWARDS THE DISCOVERY OF NEW OREBODIES AND THE EXPANSION OF EXISTING RESOURCES MUST BE PAIRED WITH AVAILABLE, CAPABLE SUPPLIERS OF MINING SERVICES AND EQUIPMENT

Capital anticipates an increasing need for investment towards the discovery of new orebodies and the expansion of existing resources. The firm believes this time around, companies will see themselves pushed to accelerate exploration and expand producing assets than in any of the previous three supercycles of the last century.

The supplier notes the average life of mines in the gold industry have halved in the last decade, which makes the need for new discoveries greater than ever.

Miners in West Africa, the supplier concludes, face the challenge of being able to implement their ambitious exploration programs amid restrictions brought on by covid-19 and the availability of the sufficient mining services resources to meet that demand.

Capital Drilling, which generated $18 million in revenue in 2020, has drilling, mining, maintenance and geochemical laboratory projects in Burkina Faso, Cameroon, Egypt, Guinea, Mali, Mauritania, Nigeria, Saudi Arabia, Tanzania and Côte d’Ivoire.

Mining.com

Invictus Enenrgy on capital raise

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Invictus Enenrgy on capital raise

Australia Stock Exchange (ASX) listed and Zimbabwe-focused oil and gas exploration junior, Invictus Energy, has requested a suspension of trading in its shares ahead of an update this week relating to a capital raising programme.

Invictus Energy managing director Scott Macmillan, said in accordance with the requirements of Listing Rule 17.1, the company had requested a trading halt of the company’s securities.
“The Company will be providing an update in relation to a capital raising. The Company is expecting to announce an update to the market on or prior to the commencement of trading on 24 March 2021,” Macmillan said.

The company, whose main asset is the expansive oil and gas exploration prospect in the Cahora Bassa region, which encompasses the Muzarabani prospect, has not indicated how much it seeks to raise or how the funds will be spent.

However, the company is on record saying it has spent about US$3,5 million on the Cahora Bassa/Muzarabni project and may require circa US$16 million to $20 million to undertake drilling of test wells later this year.

Trading in the company’s shares will be suspended until tomorrow or when the information on the capital raise programme has been released to the market. Its stock lasted traded at (AU$) 14 cents a share on Friday last week.

“The securities of Invictus Energy Limited will be placed in trading halt at the request of IVZ (Invictus Energy Limited), pending it releasing an announcement,” said Daniel Nicholson, ASX advisor listing and compliance (Perth).

Invictus’ share price jumped from AU$0.088 to AU$0.145 per share on Wednesday, March 10, 2021, prompting regulatory authorities to ask the exploration firm to indicate if it was aware of information driving the frenzied interest and spike in the price.

The Cahora Bassa , which includes the Muzarabani Prospect, is according to the company potentially the largest undrilled seismically defined structure onshore Africa.

It has been a big year so far for the Australian listed firm’s share price, which has doubled since the beginning of 2021.

Just three trading days before the ASX closed for 2020, Invictus Energy announced it had received a non-binding farm-in offer to Geo Associates’, Invictus 80 percent shareholder, Cahora Bassa (Muzarabani) project.

Invictus has since undertaken detailed traversing and mapping across the area, identifying the optimal acquisition routes.

In December last year, the company announced that a review of the Petroleum Exploration Development and Production Agreement (PEDPA) had been completed by the inter-ministerial committee of the

The Government of Zimbabwe and has been approved.

The PEDPA provides the framework for progression of the Cabora Bassa Project through the exploration, appraisal, development and production phases and the obligations and rights of each party over the project lifecycle.

It has also stated it was planning to carry out more testing at the end of the rainy season (October to April). The company has also announced it plans to begin drilling on the Cahora Bassa/Muzarabani prospect in October this year.

The company last year received a license from the environmental management authority, meaning that it can start working on the prospective site in Muzarabani.
Further, the Zimbabwe Investment Development Agency approved the extension of the firm’s investment licence by another three years, which will allow the company to progress its investigation for oil and gas.

 

Business Weekly

US$67m Blanket Mine Central Shaft project ready for commissioning

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US$67m Blanket Mine Central Shaft project ready for commissioning

CALEDONIA Mining Corporation has injected US$67 million using internal cashflow initiatives into Blanket Mine’s five-year Central Shaft sinking project, which is due for commissioning this quarter.

The Gwanda-based gold mine, which is owned by Caledonia, completed the Central Shaft sinking project last year.

Caledonia chief executive officer, Steve Curtis, said the last 12 months have been transformational for the business.

“Central Shaft has been a five-year project costing approximately US$67 million, all funded through internal cashflow and I am delighted that equipping was completed in the period and commissioning is on track to be completed in the first quarter of 2021,” he said.

Last year, Blanket Mine produced 57 899 ounces, which was at the top end of the guidance range and was a new record for annual production.

The strong operating performance was supported by a rising gold price and gross profit for the year under review was $46,6 million, almost 50 percent higher than 2019.

“Once Central Shaft is commissioned, we can start to expect further increases in production: guidance for 2021 is a range of 61 000 to 67 000 oz while from 2022 onwards it is 80 000oz, 38 percent higher than in 2020,” said Mr Curtis.

He said their strategic focus was expected to reduce operating costs and increase flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket’s long-term future.

“We will also conduct exploration activities at Glen Hume and Connemara North while evaluating further investment opportunities in the gold and precious metals sector in Zimbabwe and in other jurisdictions, with our long-term vision of becoming a mid-tier, multi-asset gold producer,” said Mr Curtis.

“In trying to minimise the impacts of our operations on the natural environment and in a general drive towards a more sustainable future for our business, Caledonia has entered into a contract to construct a 12MW solar plant at the Blanket Mine.

“To fund the project, in the third quarter of 2020, the company issued approximately 600 000 shares to raise US$13 million before expenses.”

Mr Curtis said the number of shares issued was lower than the 800 000 new shares that the Caledonia had expected to issue, thereby improving the anticipated returns to shareholders from the project.

Around 27 percent of the mine’s daily electricity demand is expected to be provided by the new solar plant, thus significantly decreasing the mine’s reliance on non-renewable energy sources.

 

 

Business Weekly

Miners urged to join ZMF

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Miners urged to join ZMF

Zimbabwe Miners Federation (ZMF) is calling for artisanal and small-scale miners to join the organization to benefit from the organizations’ initiatives in an endeavour to drive formalization and regulation to increase mineral output in the country.

Speaking on its Twitter handle, ZMF urged miners to join its association so that they can benefit Mining Equipment from the Federation.

“Join ZMF Today and become a beneficiary of Mining Equipment,” read the Tweet in part.

Furthermore, in a bid to bridge the mechanization gap, ZMF has managed to donate critical equipment to affiliate associations across the country, a kind gesture that has overwhelmed miners.

The Federation has been on a nationwide tour engaging and donating compressors to miners associations, including miners from Mberengwa Miners Trust, Great Zimbabwe Miners Trust, and Guinea Fowl Mines Trust.

Botswana finds 11 diamonds at Thorny River project

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Botswana finds 11 diamonds at Thorny River project

Botswana Diamonds (LON:BOD) said on Monday it had recovered 11 diamonds and “abundant” kimberlitic indicators from drill samples at its Thorny River project in South Africa’s Limpopo province.

The diamond explorer said that following a “detailed” ground geophysical program carried out in October, six reverse circulation holes were drilled into the newly-discovered River Kimberlite pipe.

“The recovery of so many kimberlitic indicators and in particular diamonds, which are very rare to recover in small sample narrow reverse circulation drill holes is highly encouraging and bodes well for the potential commerciality of this exciting discovery,” the company said after analyzing the drill samples.

Botswana Diamonds noted the gems recovered were all of “good colour and clarity,” and were of commercial quality of a type in high demand.

“THE RECOVERY OF SO MANY KIMBERLITIC INDICATORS AND IN PARTICULAR DIAMONDS BODES WELL FOR THE POTENTIAL COMMERCIALITY OF THIS EXCITING DISCOVERY”

John Teeling, CHairman

The company said the diamonds were not weighed, as the sample size was small, adding that they were not representative of a possible population.

Shares in the company jumped on the news and were trading 11.2% higher in London at 0.95p by 11:00 am local time. The miner’s market capitalization is sitting at £7.4 million.

The next step would be to undertake a detailed core drilling program, which is planned for the dry season, Botswana Diamond said.

The Thorny River project is located in the northern Limpopo province and the volume of its main deposit has been modelled at between 1.2 and 2 million tonnes (to 100m). It has a diamond grade ranging between 46 and 74 cpht and diamond values in the range of $120 and $220 per carat.

Botswana, which was overtaken by Russia as the world’s top diamond producing country in 2014, is grappling with aging mines, as well as power and water shortages.

Still, the nation is home to some of the world’s most prolific diamond mines, including Lucara Diamond’s (TSX:LUC) Karowe operation, where the now-famous Lesedi la Rona, the second-largest gem-quality diamond to ever be found, was unearthed in 2016.

Besides diamonds, the country also produces nickel, copper, coal, and iron ore.

Mining.com

Iron ore price drops sharply on weak Chinese demand concerns

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Iron ore price drops sharply on weak Chinese demand concerns

Iron ore prices tumbled on Monday, dragged down by concerns over weak demand for the steelmaking ingredients, as markets eyed the possibility of further production cuts in the top steel-producing city of Tangshan.

China’s top steelmaking city said it will punish firms that either have not taken the steps spelled out under its emergency anti-pollution plan or have illegally discharged pollutants, following weeks of smog in northern China.

The country, which accounts for more than half of the world’s steel output, has also shut down numerous small and low-quality iron ore mines and will continue to raise its bar on ore quality to match its environmental standards.

Source: Fastmarkets – Global Iron Ore 2021

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $157.01 a tonne, down 4.38% from the previous trade.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange ended the daytime session 5.9% lower at 1,004.50 yuan ($154.35) a tonne.

On the Singapore Exchange, the front-month April contract was down 2% at $151.10/tonne by 0718 GMT.

Dalian coke tumbled 7.3% to 2,131 yuan per tonne while Dalian coking coal shed 3.9% to 1,547.50 yuan per tonne.

Iron ore price reached its highest level since September 2011 in mid-January, but has since declined 9.7%

“We think the next three years could be marked as ‘Supply-side reform 2.0’, during which time we should see accelerating policy changes limit production growth in the industry – this time due to tightening environmental regulations,” analysts at JP Morgan wrote in a note to Reuters.

“The spectre of further restrictions on the real estate market (is) also weighing on sentiment,” ANZ commodity strategists said.

ANZ cited a 7.6% year-on-year growth in property investment in China in January-February, coinciding with “an increased focus on containing asset price bubbles.”

Mining.com

ZESA: Sakunda tried to sell us ‘calamity’ Dema power plant for US$66m

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ZESA: Sakunda tried to sell us ‘calamity’ Dema power plant for US$66m

ZESA rejected a proposal by Kuda Tagwirei’s Sakunda Holdings to buy the failed Dema diesel power plant for US$66 million, Parliament heard on Monday.

Sakunda was in 2015 awarded a contract to install the 200MW plant in Seke, despite not having participated in the tender for the project. The order to award Sakunda the contract outside the tender process came from the Office of the President and Cabinet, according to a 2019 audit report by PriceWaterhouseCoopers. The report is being examined by Parliament’s public accounts committee, which is seeking answers from ZESA on the deal.

The plant ran only between July 2016 and March 2017, before Sakunda shut it down citing diesel shortages. Sakunda has approached ZESA with a proposal to buy the plant, supplied by Sakunda contractor Aggreko. The power utility rejected this, according to executive chairman Sydney Gata.

“We declined to purchase the power station for US$66 million,” Gata told the committee. “I had opportunity to visit the power plant, and to inspect the engineering layout, the designs and facilities at the power station. I’m very surprised that this country could actually license an asset like that. I saw something that, as an engineer, is a capital offence.”

"It was a potential calamity for the communities..."

According to Gata, there were no safety measures at the site, placing the surrounding areas at risk.

A site visit revealed how 5000 litres of diesel were being stored in an exposed open plastic-enveloped reservoir.

“It was a potential calamity for the communities around there. I did not see fire-fighting equipment, I did not see emergency equipment. I didn’t see environmental mitigation measures,” Gata reported.

After being handed the project in 2015, Sakunda went on to subcontract Aggreko, one of the losing bidders, as a technical partner in the project. Aggreko, which rents out diesel power plants, has since had “contractual disagreements” with Sakunda, and this has seen the 100MW generator, part of the plant, being stripped from the site.

‘Not our deal’

ZESA management admitted that it was pushed into the Dema project, against the advice of its own legal and technical advisors. Under that deal, ZESA would buy power from the plant at 15.45 US cents per kWh, above the price offered by other sources.

Gata said: “Sakunda were engaged for this project, even though they had not actually tendered in the initial floating of the tender. Their engagement was through a directive from the Ministry of Energy. The second note is that the engineers’ and lawyers’ reports had an adverse opinion with regards to the bankability of this project.”

When Sakunda failed to supply power the company incurred US$2.5 million in penalties, one of the terms of the supply deal. Still, Sakunda went to government to have these penalties written off.

“What I’m aware of is that the supplier approached government for the purpose of having these penalties written off,” projects manager Flora Chikonye told the committee.

Directives

ZESA managers conceded that, left to make its own decision, they would not take up such a project.

“We are aware of the cost of diesel power. It is not a technology that we are prepared to take, unless it’s really a last resort,” Chikonye said.

New projects at Hwange, Kariba and renewables would fill any supply gaps, and diesel power would not be a priority for ZESA, she said.

Gata said Parliament must act on protecting state owned enterprises from being told what to do.

“Our nation will need one day to revisit the subject of ministerial directives to public enterprises,” Gata said.

When “we consider the number of white elephant projects” and others that violate the law, “it is this issue of directives that needs to be qualified soon”, Gata told the MPs.

The burden is left to project managers to oppose projects that have been imposed from their superiors, who would be acting on the instruction of ministers, Gata said.

At the time it was given the contract in 2015, Sakunda had partnered Derrick Chikore, an in-law of then President Robert Mugabe, as business partner.

 

NewZwire

After EPO award, Premier African Minerals changed mind on Zimbabwe

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After EPO award, Premier African Minerals changed mind on Zimbabwe

Five months ago, George Roach, the CEO of Premier African Minerals, was sounding the frustration shared by many would-be investors in Zimbabwe. He was casting his eyes elsewhere.

Bureaucracy was stalling the company’s investment plans, focused on the RHA Tungsten mine and Zulu Lithium in Fort Rixon. A single signature, he said then, was delaying the granting of an exclusive prospecting order (EPO), a permit that would allow the company to explore claims and move towards development.

Numerous meetings with senior officials, including with the Minister, had brought no results, Roach said.

The company was now looking to its other investments in the region, especially a then new investment in Namibia’s MN Holdings Otjozondu. Premier, listed on London’s AIM exchange, was also thinking about selling part of its Zimbabwe assets.

But Roach has changed his mind.

Zulu Lithium is one of 20 new EPOs just issued by the Ministry of Mines, and now the industry veteran says his company is not only staying put in Zimbabwe, but it is no longer looking to sell any assets in the country.

“The strategy related to the divestment of our Zimbabwe assets may no longer be appropriate. Accordingly, Premier will focus on the development of Zulu and realisation of the potential true value of this asset and proper exploration of the upside potential in the EPO,” Roach says.

Premier’s RHA plant: The company seeks lithium development

Premier prospects

Last year, Roach panned the Ministry of Mines, saying after a series of meetings, including with the Minister, there was no movement. Now, he is more upbeat. News of the EPO has driven up Premier’s share price on AIM, and attracted funding interest.

“The granting of the EPO reaffirms the Zimbabwean Government policy that Zimbabwe is open for business,” he says. Premier’s prospects are today fundamentally different.”

Premier has hired New York-based EAS Advisors to introduce institutions and funding, as the explorer works to advance mining and exploration projects. The company plans to fund a definitive feasibility study (DFS) at Zulu Lithium.

A scoping study indicated a value of US$127mln for a 15-year open cast operation mining a concentrate of spodumene and petalite at Zulu Lithium. The site is about 80km from Bulawayo, and may be one of the largest undeveloped lithium-bearing areas in Zimbabwe.

With the EPO, Premier has received offers for funding for DFS, which would take an estimated 14 months. There are also offers for investment linked to take-off and future mine development.

Beyond RHA and Zulu, Premier in June last year announced that it had bought a portfolio of hard-rock lithium assets from Australian firm Li3. The 1500 hectares of licences are located within the Mutare Greenstone Belt, near the Mozambican border.

 

NewZwire

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