HARARE – Zimbabwe’s largest gold producer, Metallon Gold, plans to ramp up output to half a million ounces a year in the next five years and will be looking for acquisition opportunities, its incoming chief executive said on Wednesday.
Ken Mekani told a mining conference in Harare that gold production would hit 100 000oz this year, up from 82 000oz in 2013.
Metallon has five gold mines in Zimbabwe, but only four are operating.
“Some of our operations are not running at full capacity. Our plan really is that in the next five years, Metallon should produce at least half a million ounces a year,” Mekani said.
“Wherever possible we are going to do mergers and acquisitions if an opportunity fits our strategic vision.”
Metallon owns How Mine, its flagship asset in western Zimbabwe, Mazowe and Shamva north of the capital, Arcturus near Harare and the closed Redwing in the east. Redwing will be reopened in mid-2015, according to Mekani.
Mekani said Metallon’s average production costs were $900 per ounce and that the company would reduce this to $800. The spot gold price rose to a session high of $1 220,40 on Wednesday.
Costs at How Mine, which produces half of Metallon’s total output, are among the lowest in the world at $600 per ounce, Mekani said.
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“Even if the price of gold continues to fall, How Mine will continue to survive,” he said.
The Zimbabwe government this month cut the royalties imposed on gold to 5% from 7%, which Mekani said would boost the company’s finances.
The government is set to approve Metallon’s black economic empowerment plan, he said, which is designed to comply with a law that requires foreign-owned mines to sell majority shares to blacks.
Uncertainty over the black empowerment drive, frequent power cuts, shortage of finance to expand production and weakening bullion prices have dampened gold production.
Zimbabwe’s gold output fell 26% to six tonnes during the January to July period this year from the year before, according to official data.
Alex Mhembere, Chamber of Mines president, told the mining conference that production could rise to 28 tonnes a year by 2018 if the sector received $420 million in financing. – Reuters
