Unaudited results for the first half of the year ending September 30 2010 show that the Mwana Africa-owned mining company upped production levels after completing the first phase of its recapitalisation exercise.
The group, which also appointed Swiss Bank UBS as its financial advisor, is planning to restore operations of its nickel mine, Trojan, currently under care and maintenance.
The mine is expected to resume operations after a consulting firm concluded that Trojan’s business plan was “both realistic and achievable”.
The nickel mine, according to the statement, is also in an “advanced stage of discussions” with possible financiers expected to bankroll the project.
“The past six months have seen notable achievements at each of the company’s principal assets. Most significant of these was the continued success of the production ramp up at the Freda Rebecca Gold Mine in Zimbabwe. Production at the mine reached the planned Phase 1 annualised rate of production of 30 000 ounces of gold per year in September (2,662 oz for the month). 10 915 ounces of gold were produced in the period generating US$13,5m of gross revenue,” said Mwana in a statement attached to its financials.
Increased production, according to the statement, is also expected to lift Freda Rebecca’s permanent labour compliment currently standing at 430.
At the current production levels, Mwana sees gold production rising to seven metric tonnes year-on-year from 4,9 metric tonnes recorded last year.
The rise, however, remains far much lower than Zimbabwe’s record production of 27 metric tonnes recorded in 1999 when the country was still part to the elite London Bullion Market (LBM).
The Southern African nation was ejected from the LBM when production plummeted to below 10 metric tonnes at the height of hyperinflation.
Despite favourable prices on the world market, production of the precious metal remains hamstring by inadequate and costly funds.
“The board remains cautiously optimistic on the prospects for commodity prices in the markets in which Mwana operates. Gold continues to trade at high price levels which is benefiting the restart of Freda Rebecca. Meanwhile, the board believes that the price of nickel has stabilised at a level at which BNC, once restarted, can operate sustainably,” reads the statement.
“Mwana Africa raised approximately US$8 million in October 2010 allowing the Phase 2 programme to proceed. The IDC loan draw-down remains subject to the fulfilment of certain conditions precedent. The management team continues to work on drawing this loan down; the proceeds of which will be used to repay funding advanced by Mwana Africa to Freda Rebecca for Phase 1 and Phase 2,” the statement added.
Zimbabwe’s gold mining sector restored its buoyancy last year after government liberalised marketing arrangements. Tenure of gold dealing licences currently valid for one year remains a thorny issue for mining players.