eBusiness Weekly
Bernard Yombayomba
Toronto Stock Exchange listed mining concern Caledonia Mining Corporation, says it is looking forward to a bigger and healthier business in Zimbabwe despite economic challenges the country is facing. Zimbabwe has been going through a myriad of challenges including cash shortage, limited access to foreign currency and volatile exchange rates.
This has seen some local miners threatening to suspend operations as they are failing to access foreign currency requirements for critical inputs.
Zimbabwe Stock Exchange-listed miner, RioZim, has for the second time in four months involuntarily suspended operations at three of its gold mines due to foreign currency shortages.
RioZim closed Cam and Motor Mine in Kadoma, Renco Mine in Masvingo and Dalny Mine in Chegutu in October last year citing shortage of foreign currency needed to import critical consumables and spare parts.
Operations at the three mines resumed after the Reserve Bank of Zimbabwe in November made commitments to support all gold producers’ operations by allowing them to retain 55 percent of their export earnings in foreign currency nostro accounts.
But according to a statement issued by the miner, the promise has not been fulfilled since December 2018, forcing closure of the three mines again.
But Caledonia Mining Corporation, which runs Blanket Mine in north west of Harare, said it has confidence in its mining operations in Zimbabwe.
Caledonia is currently expanding its Blanket Mine and has hedged 100 percent of its gold production, some 22,500 ounces, from February to June, whilst at the same time completing the final sinking of its Central Shaft project.
“We look forward to a bigger and healthier business in Zimbabwe despite the economic challenges the country has faced”, said chief executive officer, Steve Curtis in an interview with Mining Review Africa on the side lines of the Mining Indaba held in South Africa last week.
He said the company has confidence in its mining operations because Zimbabwe is well endowed with resources that will sustain its business in the mining sector.
“We have an opportunity because Zimbabwe is well endowed with resources and we look forward to a bigger and healthier business in Zimbabwe.”
“None of us could pretend that the operating environment is easy, the economic situation in Zimbabwe is very challenging for us, for the country. It is in fact, the consequence of the fact that the economy has dollarised, they use a multi-currency system that generally use the US dollar as the multi-currency for transaction and the economy is not generating enough of foreign currency, so it is the economy that needs to grow,’’ said Curtis.
However, despite these challenges, Caledonia Corporation has revealed that its plans will go forward as arranged.
“The mere fact is that we are around for years into a project which is heavily foreign currency reliant and we are progressing, we have got to a stage where the shaft may be around two hundred meters deep. We have continued to produce gold at an expanding level, it shows that you can do business in Zimbabwe but it is tough, borrowing money in
Zimbabwe is very difficult but it has been demonstrated by the President that they are open for business although there are some hurdles that they have to get through.”
Curtis said first production from Central Shaft, which was due in 2021, would take production from Blanket to about 80,000 oz/year.
He said capital investment would decline in the second half of the year and then reduce further in 2020 as the project neared completion. The shaft was at a depth of 1,150 meters and will be sunk to a depth of 1,204
Caledonia Mining announced fourth quarter production of 14,952oz, a seven per cent increase over the previous quarter and taking full year production to 54,512oz.
