Meikles granted mining concession

HARARE - Meikles Resources, a subsidiary of diversified Meikles Limited, has been  granted a mining concession in the mineral rich Midlands Province.

John Moxon, the group's chairman, said the grant allows them to prospect for various minerals including iron ore and chrome.

He said the group also has opportunities to explore gold and tantalite.

Moxon had announced in November last year the formation of the stand-alone mining investments arm, projecting that revenues from the venture could exceed those realised by the group.

“We plan to have at least one producing mine in operation in 2014,” said Moxon in the group's financial's for the year ended March 31, 2013.

“We have signed a memorandum of understanding, which will shortly become a full shareholders agreement, with a substantial technical partner to pursue these opportunities,” he said.

Moxon said he anticipated funding for the mining operations to be substantial and “the division (Meikles Resources) will raise its own capital and will not be dependent on group financial resources.”

This development follows reports that the Zimbabwe Stock Exchange-listed Meikles had partnered State-controlled Zimbabwe Mining Development Corporation to form a mining joint venture.

Meanwhile, Moxon said the group’s after tax profit went up to $6,5 million during the period under review, improving from a $3,4 million loss incurred in previous comparable period.

Gross profit increased by $16,3 million to $7,8 million from an $8,5 million loss.

“Key benchmarks of turnover and margin resulted in improved gross profits, compared to the previous year.
 
“Increase in operating costs were contained at levels below growth in turnover,” said Moxon.

He pointed out that the group continued to incur substantial interest costs which reached $7 million during the period.

“It is calculated that our inability to recover our deposit ($26 million) from Reserve Bank of Zimbabwe (RBZ) has resulted in the group paying excessive interests costs of $7 million during the year under review,” Moxon said, adding that they anticipated interest costs to be adversely affected by approximately $8 million should they fail to recover the deposit.

During the period under review, the group’s retail chain TM Supermarkets (TM) recorded an earnings before interest, tax and amortisation (Ebitda) of $11,5 million, compared to $5,2 million registered in prior comparable year.

“A number of other stores received upgrades of various items of equipment, pending a full refurbishment. As expected, the partial refurbishments have also resulted in an increase in turnover and an improvement in gross margins,” he said.

Shareholders are expected to ensure that additional funding for store refurbishment and expansion amounting to $25 million will be made available to TM.

Moxon said the refurbishment of the group’s flagship five-star hotel Meikles Hotel had taken longer than anticipated due to funding constraints.

“There have been various reasons for the delay, but shortage of funding at various times, but now rectified, has probably been the main reason for the delay,” he said, adding that once the redevelopment is complete they would have a world class product for guests.

Overally, the group’s hospitality arm achieved an Ebitda of $612 000 compared to a loss of $900 000 in the previous year. - Kudzai Chawafambira

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