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Business Reporter
ZIMBABWE’S largest gold producer, Metallon Gold plans to spend over $20 million on new projects during this financial year as the mining concern seeks to improve production levels.

In its first half production and corporate update released yesterday, the group which has four operational mines – How Mine, Shamva, Mazowe and Acturus said gold production for the period under review stood at 48,143 ounces.

“Gold production for second quarter was 23,759oz and first half 2015 gold production was 48,143 ounces. The first half 2015 production was six percent higher than the first half 2014 gold production of 45,524 ounces.

“Metallon continues to engage with financial institutions for capital expenditure funding and is confident that funding at significantly lower cost will be available in the next few weeks. Metallon is committed to spending more than $20 million on new projects in this financial year,” said the group.

It said gold output shortfall and increased costs against the budget for first half was mainly due to a loss of nine days production in January 2015 due to the North Shaft Hoist motor failure and a planned shutdown of underground ore hoisting for 12 days in April 2015 in order to replace the 25 Level loading station infrastructure at How Mine.

The installation of a new loading station had been outstanding for the past five years and will reduce future operational and safety risks.

Metallon added that gold output shortfall and increased cost against the budget for the first half was also attributed to a shortfall at Mazowe Mine due to equipment challenges in the crushing and milling plants.

“There were 19 days of lost production in April 2015 because of a breakdown at mill No. 1. Major repair work was completed to the mill civils, which will improve mill availability. The purchase of a new secondary crusher and screen, as part of the equipment replacement programme, will result in further improvement of production.”

A plan to recapitalise the mine and restructure the management team is being implemented. Two new locos, two new air loaders, secondary crushers and slurry pumps have been purchased which will improve production over the coming months.

Over the last two years, the group has reduced bank loans from $24.2 million to $15.6 million, of which $3.8 million was interest repayments.

In the first half of the year, the group obtained an additional bank debt facility of $5 million, bringing the total current debt position to $20m.

“In this volatile gold price environment, Metallon’s main focus is to maintain a low debt position and negotiate down the current cost of interest repayments. Metallon is committed to ensuring that outstanding creditors are paid and the new management team has drawn up a plan for liquidating outstanding creditors. Metallon’s target is that future payments are made within 45 days of any services entered into.”

In April, the group announced its intent to inject more than $294 million to expand its operations over the five-year period through 2019.

Of this investment, $78,3 million generated from internal cash resources and bank facilities will come this year alone.

It is envisaged that the expansion projects will increase production from the 90,000 ounces (about 2,5 tonnes) produced last year to 150,000 ounces — or 4,2 tonnes — this year, which is 30 percent of Zimbabwe’s gold output.