Mutapa Gold, part of the Mutapa Investment Fund, says it has raised US$90 million from local banks to fund expansion projects.
Its main expansion project is the US$152 million plan to develop an opencast mine at Shamva Hill. This project starts in August. The company’s main assets are Freda Rebecca, Shamva and Jena Mine. Freda Rebecca, Zimbabwe’s biggest gold producer, is nearing the end of its mine life. This is pushing Mutapa to step up exploration and invest in new sources of gold. The Shamva Hill project is expected to increase output at Shamva from 66kg to 200kg of gold a month.
Gold miners are looking to grow production to take advantage of high prices. But finding the money remains hard for producers. New mines and expansions need heavy upfront investment, meaning producers still need to borrow even while their earnings rise. Mutapa says the US$90 million raised locally is only part of what it needs, and it is looking offshore for the rest of the money.
“At the last count, we will be around US$90 million from local banks. The balance we will source elsewhere, but we are already hearing some of the banks say, ‘you don’t need to go elsewhere’. And I’m saying I might if your costs remain at the levels they are,” says CEO Patrick Maseva Shayawabaya, referring to the high interest rates that made local lending expensive.
In the year to March, Mutapa produced 104,626 ounces (3,255kg) of gold. It expects output to rise to 110,000 ounces this year, with revenue of US$500 million and pre-tax profit of US$200 million.
Lifted by higher gold prices, Mutapa Gold made US$70 million in pretax profit, distributing half of it in dividends to shareholders. The Mutapa Fund got the biggest share of US$22 million, followed by CBZ (US$4.37 million), the National Venture Capital Fund (US$2.62 million), and the Public Service Pension Fund (US$2.45 million).
Mutapa expects production to rise to 110,000 ounces this year, generating revenue of US$500 million and pre-tax profit of US$200 million.
