Kuvimba plans to raise Shamva gold output fivefold by 2023

Worker at Shamva Mine: Chamber of Mines says broad policy changes needed

Kuvimba Mining House, the country’s biggest gold producer by output, plans to increase output at Shamva Mine fivefold by next year.

The government holds a 65% stake in Kuvimba, which bought Shamva from Metallon in 2020 as part of a rush of mine asset acquisitions.

“Shamva is coming up with a huge expansion project which will see them doing opencast mining,” Deputy Mines Minister Polite Kambamura told Bloomberg.

Kuvimba produced 115,136 ounces last year from its gold mines. Apart from Shamva, the other major gold mine the company runs is Freda Rebecca in Bindura.

Unexplored resource

Before the Kuvimba takeover, Shamva had halted operations as it struggled to raise capital to remain in business, despite having one of the largest untapped resources in the industry.

Shamva had an estimated resource of 2.5 million ounces of gold in 2018. Last year, it announced plans to produce 14 000 ounces per month under a US$180 million investment in a new opencast mine at Shamva Hill.

Zimbabwe is targeting 40 tonnes of gold this year, but the Chamber of Mines says growth is still held back by hostile government policies and power outages.

To encourage more output, government has extended incentives gold miners. Large producers that exceed their average monthly production can keep 80% of what they earn from selling that additional gold.

Under current laws, miners are required to sell 40% of their earnings to central bank at the official exchange rate, which miners say erodes their earnings. The industry welcomes the incentive, but says it is not enough.

“Overall, it’s a good policy,” says Isaac Kwesu, CEO of the Chamber of Mines. “But those already operating at full throttle will not be able to benefit from it.”

Kambamura says the government’s gold plan includes reviving mothballed state-owned gold mines and recapitalising them. He says government has identified two local lenders that could help provide the US$1 billion of funding needed by the gold industry over the next five years.

Zimbabwe’s gold miners say they can make the investments required to help reboot the country’s economy only if they can retain a larger share of their foreign currency earnings.

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newZWire/Bloomberg