Zimbabwe’s largest gold miner Metallon Gold will raise ouput to 95 000 ounces this year but will miss an initial target of 136 000 ounces due to flooding at three of its mines, a senior official said on Friday.
Metallon, owned by South African mining magnate Mzi Khumalo, has five gold mines in Zimbabwe, but only two, the flagship How mine and Shamva mine, are producing gold and operating at around 80% capacity.
The company produced 53 100 ounces of gold during the year to September 2010.
Metallon chief operating officer Allan Mashingaidze said Metallon’s Redwing Mine in eastern Zimbabwe required $10 million to extract water and could be operational within 12 months.
The other two, Arcturus and Mazowe near Harare, are partially flooded but would hit full production within six months.
“In our current financial year to September (2011) our target is to produce 136 000 ounces of gold but because of these constraints we see ourselves achieving 65 to 70% of that by the time we close the year,” Mashingaidze told Reuters.
“So we are likely to end up between 92 to 95 000 ounces.”
Metallon closed all its mines in 2008 at the height of an economic and political crisis but resumed operations in July 2009 after a new unity government allowed miners to sell their own bullion. The Chamber of Mines said last month Zimbabwe’s gold output is expected to increase by up to 35% this year to 15 tonnes, but warned that funding and power shortages and high costs could to stifle growth in the sector. A metric tonne contains 32 150 troy ounces.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
Mashingaidze said power supplies to the mines had improved after Metallon secured uninterrupted power from the Zimbabwe Electricity Supply Authority.
He said Metallon was producing gold at $430 an ounce at How Mine and at over $800 an ounce at Shamva Mine.
“Those other three are still operating at costs per ounce above the gold price and we certainly have work to do to bring those down to below $1 500,” said Mashingaidze.
Spot gold fell to a one-week low at $1 525,74 an ounce and was bid at $1 528,04 an ounce on Friday.
Zimbabwe’s mining sector was rattled by government regulations in March which gave miners 45 days to submit proposals on how they intend to sell majority stakes to local Zimbabweans by the end of September this year.
The plan, which is being pushed by President Robert Mugabe’s Zanu PF party, has divided the unity government he formed with Prime Minister Morgan Tsvangirai, whose Movement for Democratic Change says this could scuttle economic recovery.
Mashingaidze said Metallon had submitted its proposals to the government. He did not give details.
“There are certainly challenges in meeting that six-month deadline. The question remains unanswered as to how we are going to finance these transactions,” Mashingaidze said.
