Mwana pins hope on Zim operations

HARARE - London-listed resources group Mwana Africa plc (Mwana) says it is looking up to its Zimbabwe operations to be self-sufficient.

The pan-African miner — involved in the production, development and exploration of gold, nickel, copper and diamonds in Angola, Botswana, the Democratic Republic of Congo (DRC), South Africa and Zimbabwe — recently outlined ways to save $2,6 million a year in the wake of its financing challenges.

Mark Wellesley-Wood, the group’s newly-appointed chairman, said the group had defined a three-pronged strategy, which he believes will deliver significant value over coming months.

He said the group was out of “financial distress” after the recent two-part fundraiser, which brought in $6 million.

“...thanks to the Freda Rebecca gold mine and the Bindura nickel mine (both in Zimbabwe) the business will be self-sufficient from here on,” Wesley-Wood said.

“We see an opportunity to concentrate on the assets and maximising those for shareholders,” he said.

The first step of Mwana’s strategy has been to find significant cost savings and it is almost halfway to unearthing an annual total of $1 million.

This is now being ploughed into improving the existing asset base, which also includes the three million-ounce Zani Kodo deposit in the Democratic Republic of Congo (DRC).

Management’s main focus will also be on a smaller number of core assets from a portfolio that spans gold, nickel copper, diamonds and magnesium in four African countries.

“We have one cash flow generator in Freda Rebecca. We have Bindura’s bigger operations, which are on the cusp of turning around and being a contributor and we have a significant resource in the DRC,” said Wellesley-Wood.

“The size and the definition of what’s core and what’s not is partly in the future, and is part of a piece of work we are conducting, and we will report back on that later in the interims, but it is fair to say this cost reduction exercise will spread throughout the group,” he added.

Kalaa Mpinga, group chief executive said there were a number of events that should point investors to the true value of Mwana’s assets.

The first is an updated competent person’s report prepared by SRK Consultants for the Bindura Nickel Corporation.

To make it financially viable in this low price environment for the metal, the group accelerated its programme to access the higher grade material.

It is this which should ensure Bindura is a far stronger contributor to the business than has been previously predicted.

The SRK update, expected by the end of the month, will put the meat on the bones, the Mwana boss revealed.

Last month, some 700 tonnes of nickel were produced by the Trojan smelter, which is a new record, Mpinga revealed.

The Freda Rebecca Mine, meanwhile, is expected to produce around 72,000 ounces of gold next year, while emphasis will be on getting the C3, or total cash cost of the operation, below $1 000 an ounce.

A boost to the operation will come if Mwana successfully gets the tailings retreatment plant up and running. This could add a valuable 15 000 ounces to output of the precious metal — a kicker that hasn’t been factored into the current share price.

Finally, the group is currently assessing how best to exploit the potentially world class Zani-Kodo ore body in the DRC. — With Proactive Investors

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