Fidelity, ZMDC in gold venture

HARARE - Reserve Bank of Zimbabwe (RBZ) subsidiary Fidelity Printers and Refiners (Fidelity) is set to partner the Zimbabwe Mining Development Corporation (ZMDC) in the establishment of a gold mining venture.

John Mangudya, RBZ governor, said the two will explore easily accessible or “low hanging gold resources” through Fidelity’s unit, ZimGold.

“Particular emphasis will be on alluvial and prolific reef deposits supported by bulk open pit mining and on old underperforming assets as a preferred mining method to enhance gold deliveries,” the central bank boss said in his 2015 Monetary Policy Statement (MPS).

He said “ZimGold will structure its operation such as to provide for contract gold mining and own gold mining”.

“It will also acquire interest in brownfields projects and venture capital gold structures to boost production,” he said, adding that the central bank has mobilised $50 million — to be managed by Fidelity — targeted at boosting gold production in the country.

The funds, he said, will be used to finance Fidelity’s mining projects and also bankroll viable gold projects.

“The Accelerated Gold Production Initiative’s vision is to increase gold production to 30 tonnes per year by 2020, ie revenue of around $1,5 billion at current prices.”

Mangudya projected gold deliveries to increase by 7,1 percent to 15 tonnes this year from 13 899 tonnes recorded in 2014.

He said gold deliveries to Fidelity increased by 10 percent from 12 661 tonnes in 2013 to 13 899 tonnes in 2014.

“Over the period 2012 to 2014, the country witnessed a decline in deliveries from large scale gold producers to Fidelity 1 086 tonnes in 2012 to about 9,96 tonnes, in 2014, a decline of about 8,3 percent,” he said.

During the same period, gold deliveries from small scale producers, however, increased by 51,1 percent from 2,6 tonnes in 2012 to 3,9 tonnes in 2014.

Thirty percent of the country’s gold production is now coming from the artisanal and small scale producers.

Last year, ZMDC announced it was seeking $30 million to resuscitate its gold mining operations.

This comes as ZMDC’s mines have over the years been heavily weighed down by lack of working capital, creditors, ageing equipment, intermittent power supply, inadequate funding of exploration activities and depressed international gold prices among other constraints.

The central bank chief also said diamonds with further exploration, were expected to maintain their strong contribution to the mineral export revenue although declines witnessed recently on alluvial production call for swift responses in the country’s vast diamond fields.

This comes as the Zimbabwe Revenue Authority (Zimra), recently announced that total mining royalties collections for the year ended December 30, 2014 exceeded target by 10 percent, amounting to $191,6 million against a target of $175 million.

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