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Kudzanai Sharara
The $3 billion Darwendale platinum project, one of key deals primed to transform the country’s economy, is now poised to begin in earnest after the Great Dyke Investments (GDI) secured funding.
This comes hard on the heels of another platinum project by Karo Resources has commenced. By November 2018 the $4,2 billion platinum investment deal had reached resource definition. Resource definition involves projecting the quantum of the resources.
The deals to secure funding for Darwendale platinum project were sealed last week in Russia, during President Mnangagwa’s visit to the European country at the invitation of President Vladimir Putin.
Initially brokered in 2014, the project has encountered several unforeseen gridlocks resulting in delays.
But late last year, President Mnangagwa was optimistic that the deal will still come to fruition.
“In mid-January next year, I am scheduled to visit Russia at the invitation of President Putin. The Russians are players in our platinum mining industry. Together, we should be able to ensure Darwendale Platinum Project finally takes off,” said President Mnangagwa then.
And true to his forecast, the project has now managed to access close to $300 million needed for the first part, now expected to commence in a few months.
Part of the funding will come from Pan-African multilateral financial institution African Export–Import Bank (Afreximbank), while another Pan-African multilateral development finance institution Africa Finance Corporation, will also weigh in with additional funding.
According to a video footage from the signing ceremony seen by Business Weekly, Afreximbank signed a memorandum of mutual understanding with regards participation in the Darwendale platinum project.
The funding from Afreximbank, which amounts to $192 million will be in form of a loan-based finance.
Africa Finance Corporation also signed a deal worth $75 million, but this will come in form of a share participation.
GDI chairperson Dr Resphina Rukato, confirmed the development on Wednesday and explained the structure of the funding.
“The Memorandum of Understanding with the African Export-Import Bank (Afreximbank) envisages provision by the credit organisation of a direct credit line facility for the Project (project financing) in the amount of $151 million and additional $41 million as part of the credit line facility for formation of working capital required at launch of production and sales of commercial products.
“The Memorandum of Understanding with the African Finance Corporation (AFC) provides for equity interest of the Corporation in the Darwendale Project in the amount of up to $75 million,” said Dr Rukato.
She said parties to the deal expect financial closure by June 2019 “and immediately (mining) start after that”.
Dr Rukato said a Memorandum of Co-operation with AO Russian Export Centre (REC) was also signed and will result in REC providing “insurance of political risks of participation in the Darwendale project for and AO Afromet” (which represents the Russian shareholding in the Russian-Zimbabwean joint venture Great Dyke Investments).
Dr Rukato said the project is one of the most cost-effective in the industry in terms of capital and operational costs, including due to the flat and shallow ore body.
She said based on the results of the 2017 Bankable Feasibility Study (BFS), the reserves for mining in the first phase of the project were estimated at 7,8 million ounces, or 240 tonnes of PGM and gold.
At optimum capacity, the project was expected to require an investment of up to $3 billion. GDI plans to set up a refinery in line with Government’s thrust on value addition and beneficiation.
If the initial plan is not changed dramatically, the project would be implemented in three phases, with the first one being exploration and infrastructure establishment as well as construction and commissioning of the first stage of facilities for mining.
The project implementation strategy envisages the phased construction of the mining, processing and metallurgical complex
which includes mining of up to 10,5 million tonnes of ore and production of 870 000 ounces (27 tonnes) of platinum group metals (PGM) per year, which will enable it to
enter the list of top five PGM producers in the world.
Given that large-scale exploration works of the Darwendale deposit started in January 2015, it is anticipated that now that funding has been secured, it won’t be long before the project starts.
Bongani Ndlovu