Mzi Khumalo’s Metallon Gold on comeback trail

[miningmx.com] – MZI Khumalo’s Metallon Gold is on the comeback trail having set down plans for acquisitions that the company hopes will entrench it as a leading bullion producer in South Africa’s northern neighbour, Zimbabwe.

Metallon Gold has not been spared the difficulties in the Zimbabwe operating environment, with Ken Mekani, who is set to take over as new CEO, saying at the Zimbabwe mining conference on October 9 that “some of our operations are not running at full capacity’.

The company is expecting to ramp up production from last year’s 82,000 ounces to 100,000 oz this year. The company has lined up a growth strategy for the next five years, which will be tied to acquisitions and production ramp-up.

“Our plan really is that in the next five years, Metallon should produce at least half a million ounces a year. Wherever possible we are going to do mergers and acquisitions if an opportunity fits our strategic vision,” Mekani said.

Metallon Gold runs five gold properties in Zimbabwe and is planning to add two more. Four of its current properties are currently operational while the other one is expected to be operational by July next year, according to Mekani.

Zimbabwe’s gold mining industry is struggling with power outages and limited access to lines of credit. Some of the mines are eyeing retreatment of dump tailings while a few others are working on expansion projects through new deposits and further exploratory work.

Zimbabwe chamber of mines president, Alex Mhembere, said at a mining conference held in Harare on Wednesday that the Zimbabwean gold producing industry has the potential to produce 28 tonnes by 2018, but only if it can unlock access to $420m in recapitalisation facilities.

“The mining industry is now facing challenges and these include depressed mineral prices. All minerals we produce are facing this challenge, particularly gold which has been hovering around $1,200 an ounce and sometimes dipping below $1,200/oz. It is very difficult to sustain large scale gold mining in Zimbabwe,’ said Mhembere.

In the half year to June, Zimbabwe’s gold production tumbled 26% to six tonnes compared to 2013. Government sources told Miningmx that ministers from the finance and mining portfolios, as well as the governor of the Reserve Bank of Zimbabwe held discussions on Monday in a bid to come up with policies that could help the mining sector enter recovery and subsequently growth.

Zimbabwean mining houses have been hit by uncertainty emanating from the country’s placid regulatory environment. Under a controversial empowerment drive, foreign owned mining groups are required to cede majority shares to black Zimbabwean groups.

The government has already indicated that it is no longer going to pay for shares ceded by units of Anglo American Platinum, Impala Platinum and Aquarius Platinum to black Zimbabwean groups. Mekani said he was expecting the government to speedily approve Metallon Gold’s empowerment compliance plan.