Karo finally starts building new US$391m mine, targets ‘stranded’ pension fund money in US$50m VFEX bond sale

Karo Zimbabwe
Zim has not explored minerals enough, and that's an attraction for some explorers (file)

Tharisa is targeting Zimbabwean pension funds and banks in a US$50 million bond on the Victoria Falls Stock Exchange (VFEX) to help fund Karo Platinum, the new mine that the Joburg-listed miner has started building in Zimbabwe.

Earthworks contractors are now moving on site at Selous and the company plans to break ground in December, finally ending delays caused partly by COVID-19.  

“In July 2024, we will put the first ore in mill. In between, this December, we are going to start with our groundbreaking. The kick-off with our earthworks contractor starts (Thursday) and he will mobilise there straightaway with his kit to start clearing the site before we move into earthwork terracing. So, it’s real, it’s happening, and the accelerator is flat to the floor,” Karo MD Bernard Pryor said on Wednesday.

The budget to get the project off the ground has risen due to a change in output plans and an increase in input costs. Originally, Karo had planned to spend US$250 million on a 150,000 ounces per year mine, on a life-of-mine of 20 years. This has now gone up to 194,000 ounces annually, to be mined over 17 years. A sharp rise in steel and transportation costs and the inclusion of a US$45 million contingency have lifted the capital cost to US$391 million.

Karo will raise the money from US$260 million in project finance and US$130 million by leveraging the company’s assets. The third avenue is a three-year US$50 million bond listing on VFEX in November, says Pryor.

“We have done a roadshow in Zimbabwe. There is quite a lot of stranded US dollars in Zimbabwe, which various pension funds and banks wish to deploy; we estimate there’s somewhere between US$1.8 billion to US$2 billion,” Pryor says.

“We’ve got a lot of interest in the bond, and I think US$50 million is a good target to achieve.”

The company will award a contract for civil works this month and has picked a contract mining partner.

“It’s a combination of a South African mining contractor and a local, Zimbabwean contractor. We are in the final negotiations with them and we should execute that in the next few weeks,” Pryor says.

Karo is in talks with energy firm Total Eren for a 300MW solar plant to power the mine.