INCESSANT power outages have stymied Metallon Gold’s operations in Zimbabwe after the gold producer saw production fall 15% in the March quarter. Some 4,275 ounces of output were lost owing to the power shortages.
Zimbabwe, which is using a multiple currency regime, has also introduced new financial measures that will see gold producers receive half of their export earnings from bullion paid in the South African rand.
Central bank chief, John Mangudya, said on Wednesday that “with effect from 5 May 2016, 40% of all new US dollar foreign exchange receipts from export of goods and services, including tobacco and gold, would be converted by the Reserve Bank to rands and 10% to Euros”.
Metallon, which together with all other gold producers in Zimbabwe is required to sell its bullion through a unit of the central bank, said it has had to close one of its mines.
It is additionally facing frequent production and processing plant breakdowns, a situation that has contributed to its lower production in the March quarter.
“Metallon lost 324 hours of production in Q1 2016 which equates to approximately 4,275 ounces. In Q1 2015, Metallon lost 167 hours of production due to power interruptions. Metallon is progressing well in regards to possible solutions for supplementing grid power supply,” it said on Thursday.
Gold, chrome and platinum are among the top five export products by Zimbabwe, most of these to South Africa, which has prompted steps by the central bank to enforce payment of proceeds for these exports in the South African currency. Zimbabwe is also eyeing a return to the London bullion market.
“There have been some challenges in production during the first quarter due to equipment breakdowns at How and Shamva Mines and significant power interruptions,” said Ken Mekani, CEO of Metallon.
