Support small-scale gold producers — Nyambirai

supporting small producers who have the potential to boost the country’s overall output.
Speaking at the recent Zimbabwe Investment Conference, TN Holdings chief executive Mr Tawanda Nyambirai called upon potential investors in Zimbabwe’s gold mining sector to adopt a new model of investment that focuses on capital expenditure and returns, rather than direct ownership of the natural resources.
“Indigenisation needs not be a debate if potential investors engage existing projects and focus on how their funds are utilised and the returns they will yield from their risk capital in these projects.
“In 2004 alone, small gold producers generated 8 000kg of gold against 9 000kg produced by the big players in the same year, which shows the former’s potential.
“Investors can come in to support these small gold producers and make a significant profit in the process,” said Mr Nyambirai.
A report compiled last year by London-based gold analyst GFMS in conjunction with the Chamber of Mines, showed that Zimbabwe’s gold mining sector is characterised by too many small mines.
The report said, although there are no accurate records of the number of gold mines in the country “a figure of 5 000 mines does not sound unreasonable.”
It also noted that this problem also applied to the big mining corporations and as such called for greater consolidation.
Expressing similar sentiments to Mr Nyambirai, Zimbabwe Mining Development Corporation chairman Mr Godwills Masimirembwa said investors were not really concerned about the stake they could acquire in a mining project but rather the profits that could be accrued.
“Indigenisation is not really an issue with most investors, but what the investors will get from their investments.
“For instance, the ZMDC is working with a number of investors on a 50-50 basis and these have joined us willingly because of the profitability they saw in these projects,” he said.
The ZMDC is involved in joint venture mining projects including a diamond mining venture with a Chinese firm in Chiadzwa and a platinum project with Amari Resources Holdings Ltd that is yet to take off.
Also speaking at the same event, Chamber of Mines president Mr Victor Gapare said Zimbabwe has the potential to produce at least 40 tonnes of gold a year on the basis of a US$1 billion capital injection.
At its peak in 1999, the local gold sector registered output of around 37 tonnes.
Mr Gapare said the country’s potential for extensive gold output had been stifled by lack of funding.
“Zimbabwe’s greenbelts are very similar to those in Australia, which in 2010 emerged as the world’s second highest producer of gold after China.
“Furthermore, we are traditionally a low cost gold producer because of the nature of our geology; it is also comparably cheaper to carry out due diligence because of earlier exploratory work. We have, however, suffered from the lack of capital outlay in the gold mining sector.
“The country can produce 40 tonnes of gold annually on the basis of at least US$1 billion capital injection,” he said.
Studies show that Zimbabwe’s gold production costs are lower than those of South Africa, for example, which was the fourth largest producer of the mineral in 2010.
Last year this country produced around 8 tonnes of gold despite electricity shortages and limited funding, a figure that is expected to increase to 13 tonnes this year on anticipated expansion projects.
According to GFMS, Zimbabwe’s gold sector has been operating at 40 percent of installed capacity.