Zimbabwe’s largest gold producer Metallon Corporation sees a four-fold jump in net profit to $20 million for full year 2014 amid projections that annual output will rise to 500 000oz over the next five years from the current 83 000oz spurred by expansion of existing projects and development of new ones, an official said today.
Chief executive-designate Ken Mekani told delegates attending the Utho Capital mining conference that the company, which currently accounts of a fifth of the gold produced locally, will this year increase its output to 100 000oz after government lowered the royalty rate for the precious metal to five percent from seven percent.
He said the company, which currently operates four mines- How Mine, Shamva, Mazowe and Arcturus, has plans to reopen Redwing Mine, currently under care and maintenance, next year, a development that will boost output.
“Right now only four of our mines are operating. The fifth mine, that is Redwing Mine in Penhalonga, is under some development but we hope to have Redwing mine in operation by mid next year,” Mekani said.
“Our plan is really that in the next five years, Metallon should at least produce half a million ounces per year. Metallon has got an ambitious expansion plan but we know that we cannot achieve our plans if we do not work with authorities in Zimbabwe.”
The low cost gold miner is also planning to develop two new projects – Motapa and Midwinter – as well as some mines in the Democratic Republic of Congo and Tanzania. Mekani said Metallon’s assets are considered to be the best gold mines in Zimbabwe due to abundance of high grade ore at low cost of production. How Mine, the group’s flagship business, is expected to produce 52 000oz this year.
Mekani said Metallon remained optimistic that government would approve its local ownership plan which submitted a few months ago in line with Zimbabwe’s indigenisation law which caps foreign shareholding in major businesses at 49 percent.
South Africa’s businessman Mzilikazi Khumalo acquired the former Lonrho business in 2002. In 2005 production peaked to 156 000oz making Metallon the country largest gold producer.
Meanwhile, the Chamber of Mines of Zimbabwe (CoMZ) has said Zimbabwe gold mining sector requires $420 million over the next four years to surpass an all-time peak of 27 tonnes of the bullion as the capital intensive sector tool a knock in the first half of the year.
CoMZ president Alex Mhembere told delegates attending the mining and infrastructure conference that a recent Word Bank report had shown that the gold sector has the potential to produce 28.5 tonnes of the precious metal by 2018 should the sector attract nearly half a billion in fresh capital.
He said depressed mineral prices, high taxes, inadequate funding, frequent power outages and escalating operating costs have resulted in the sector revising its growth projects to a negative 1.9 percent from 10.7 percent.-The Source