Mining ZimbabweLatest Mining News, Policy and Industry Updates

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.

newzwire.live

The Kimber Processing (KP) is neglecting and failing to protect people against new forms of conflicts affecting the diamond sector, Kimberley Process Civil Society Coordinator and Zimbabwe Environmental Law Association (ZELA) Deputy Director Shamiso Mtisi said.

Anerudo Mapuranga

Mtisi during the opening session of the KP Intersessional meeting said the rise of synthetic diamonds a revelation for the KP to relook on its roles making sure that the marginalized societies in the diamond industry are protected from the ills in the sector.

The Kimberley Process Civil Society Coordinator said the KP was supposed to take a leaf from Pandora which has decided to move from mined diamond to synthetic due to the controversies surrounding the diamond industry.

“The rise of synthetic diamonds should be a wake-up call for rough diamond producing countries as it may affect their economies. Each generation is defined by its technologies.

“The age of synthetic diamonds, blockchain technology, artificial intelligence, machine learning and big data requires the rough diamond sector at the level of producers, traders and cutting and polishing industries to adapt.

“Adaptation entails embracing advances in scientific and social norms dictated by the needs of new generations. Governments equally need to start listening to these changing concerns to fix the problems in the diamond value chain.

 “As an example, one of the worlds biggest jewellers, Pandora, said this year it will no longer sell mined diamonds and will switch exclusively to laboratory-made diamonds due to concerns about sustainability, human rights abuses, environmental harm and poor labour standards associated with mined diamonds. This highlights that the problems the KP CSC is pointing to may be difficult for some of you to hear, but these problems don’t disappear if you simply look the other way.” Mtisi said.

Mtisi said the Kimberley Process Civil Society has been working outside the KP in an effort to bring sanity to the diamond industry due to the fact that despite the presence of the KP, criminal elements continue to benefit from diamonds at the expense of local communities.

“We have also deliberately been working more outside the KP, reaching out to members of the diamond industry, retailers, jewellers, consumers and other NGOs that are willing to listen to and understand the message we have been trying to convey in the KP for years.

“These actors appear prepared to expose the duplicity of the KP, with ill-intentioned actors and criminals hiding behind its failings to continue profiting at the expense of local communities, through undervaluation of diamonds, revenue mismanagement and violence.

“We will continue working much more closely with millennial and Generation Z consumers who want to buy ethically sourced diamonds. The future of the industry relies on keeping these consumers on board, and thus taking actions to curb illegality, human rights violations, environmental harm and poor working conditions.” He said.

According to Mtisi it was of importance for KP to start working the talk through giving voice to the voiceless and protecting communities from diamond conflicts.

“It is our mission and responsibility to bring the voice of these marginalized communities to this forum, as we feel many of the discussions we are having here are so disconnected from this reality. We want to open this forum by sharing some of the reports we have collected or come across, in the hope that all of you will keep this reality in mind, throughout this week’s discussions. This is a call to all KP Participants and Observers to meaningfully address these concerns so that we don’t have to go back to our constituencies and explain that the KP has no relevance for them. This is a selection of some of the reports that concern us most:

“ In CAR, in addition to the devastating civil war, there are new reports of mercenaries violently expelling locals from diamond mines, in complicity with the national army, through a fear campaign of rape, torture and indiscriminate attacks on civilians.

• In Tanzania, a private security company protecting the Williamson Diamond Mine of Petra Diamonds, one of the largest diamond companies in the world, is accused of shooting dozens of locals in the past years, leading to their death or life-changing injuries. The company has come to a settlement with a number of the victim’s families recently, but it remains to be seen whether that will be satisfactory, and more importantly whether the violence will stop.
• In Lesotho, communities around Gem Diamonds’ Letseng mine, the highest value per carat mine in the world, live in constant fear that the mine’s tailing dams will burst, and that their drinking water is polluted, with the mine unable to provide them any assurances.
• In Zimbabwe, locals are asking to stop digging up diamonds as these stones do more harm than good, with reports of public and private security services being involved in using violence and abusing artisanal miners and locals. The Zimbabwe Consolidated Diamond Company and any new actors have legacy issues and a duty to seriously address and clean the image of diamonds in Zimbabwe.
• Again, in Zimbabwe, Murowa Diamonds, a member of the Natural Diamond Council, committed to promoting responsible sourcing standards, is repeatedly being accused by local communities of drilling and exploring for diamonds less than 100m from a school thereby disrupting learning activities and the children’s right to education.
• In Sierra Leone, communities have for years been unsuccessfully trying to get compensation from Octea’s Koidu mine, where they claim to be forcibly removed from their homes, their farmland buried under rubble, and their water sources polluted.
• In Angola’s Lunda Norte province, communities report that their protests against the destruction of villages and livelihoods because of diamond mining continue to be violently suppressed.
• In Brazil, there is growing concern that criminal groups mining for gold and diamonds in the Amazon are destroying the environment and assaulting indigenous groups.
• Efforts to formalize artisanal mining in South Africa – with the development of the Draft ASM Policy – and Zimbabwe also thinking of developing an ASM Policy, should include measures for communities to benefit from the diamond mining sector as well. Failure to formalize artisanal mining sponsors chaos and allows criminal networks to thrive.
• In addition to all the above, artisanal miners continue to struggle with the impact of COVID19. While the world market sales and prices are rapidly recovering, artisanal miners continue to receive drastically reduced prices. These are up to 50% less than before the pandemic, seriously cutting their household budgets.

“I know that many of you are thinking that dealing with these concerns is not the KP’s responsibility. But at the same time, all of you like to say that the KP is conflict prevention or even a responsible sourcing mechanism. There is a problematic contradiction in that.

“Many of you also think that it is enough that the KP allows civil society to speak out on such issues, or that documenting and reporting human rights concerns is the sole responsibility of civil society. This is another problematic misconception. This should be a shared effort that concerns us all, be it in civil society, government or industry.

“You cannot keep on relying on our limited resources to bring the problems in your supply chains to light. These problems are not just our problems. Bad practices and bad actors contaminating the diamond trade are a threat to all of us. At present those who commit these human rights violations are not held to account, not by governments, nor by industry who are trading their diamonds. An important question for this forum is how the KP will ensure that these abusers are held accountable for their actions.

The Central African Republic

“With regard to the Central African Republic, it is in our view, time to look back and zoom out. The KP embargo on CAR has been in place for 8 years now, in different forms. But what has it achieved? The country is still at war, and communities whose livelihoods depend on diamonds are suffering even more and are driven into the hands of criminal networks and armed groups. Illicit trade and trade in conflict diamonds is flourishing. Over 90% of diamonds continue to be smuggled out of the country. The KP will never be able to stop this by looking only at the CAR. These stones find their way to the market via other countries, where they get KP certification, with numerous reports mentioning neighbouring countries, not only Cameroon, but also trading hubs like the United Arab Emirates and Lebanon. These countries need to be involved in seeking a solution to this lingering problem. Enforcing border and custom control measures and cooperation are key tenets that should be strengthened through cooperation between KP Participants.

Principles for Responsible Diamond Sourcing

“We view the development of principles for responsible sourcing as something worth engaging on. Yet, our questions with regard to implementation, monitoring and the duties and obligations of Participants in this regard, remain unanswered to date. We hope that these elements will be part of the discussion during this Intersessional, so that the KP finally moves from talking the talk, to walking the walk.” Mtisi said.

Crude oil prices rose yesterday, with Brent hitting $75 a barrel for the first time since April 2019, as investors remained bullish about a quick recovery in global oil demand and as concerns eased over an early return of Iranian crude.

Brent crude futures for August climbed 29 cents, or 0.4 percent, to $75.19 a barrel by 06:58 GMT, paring earlier losses. It rose as high as $75.27 a barrel, the strongest since April 25, 2019, earlier in the session.

US West Texas Intermediate (WTI) crude for July was at $73.66 a barrel, unchanged from the previous session.

WTI for August climbed 13 cents, or 0.2 percent, to $73.25 a barrel.

Brent gained 1.9 percent and WTI jumped 2.8 percent on Monday.

Both benchmarks have risen for the past four weeks on optimism over the pace of global Covid-19 vaccinations and expected pick-up in summer travel.

“The market sentiment stays strong with improved outlook for global demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities, adding that a rally in Asian stock markets is also helping boost risk appetite among investors.

Global shares yesterday extended their recovery from four-week lows as investors focused on prospects for post-pandemic economic growth, rather than fret more over the hawkish stance taken by the US Federal Reserve at a policy meeting last week.-Al Jazeera.

The Bank has noted with serious concern the continued circulation of false and malicious articles on social media alleging that Zimbabweans will no longer be able to pay for goods and services in foreign currency, particularly one article captioned

“Foreign currency no longer legal tender”. These articles and statements are false and should be treated with the contempt they deserve, as there is no policy or law that prohibits the use of foreign currency in Zimbabwe as alleged.

The articles are at the behest of irresponsible, mischievous and malicious people who are always bent on purveying false statements calculated to cause unnecessary anxiety, panic, alarm and despondency within the economy. The statements are also calculated to discredit Government and the Bank’s progressive efforts and achievements in stabilising and growing the economy.

The Bank wishes to reiterate that the public can pay for goods and services in local currency or foreign currency in accordance with the laws of the country and that they should ignore the malicious rumours being circulated on social media.