HomeBase MetalsMwana Africa close to deal to finance mines in Zimbabwe

Mwana Africa close to deal to finance mines in Zimbabwe

The Number One mill
at Mwana Africa’s
Freda Rebecca mine
in Zimbabwe
London, England — MININGREVIEW.COM — 14 October 2009 – Mwana Africa plc – an African-focused mining exploration and development company – is close to a landmark deal to finance the second phase of its Freda Rebecca gold mine in Zimbabwe, which could set the stage for the revival of the company’s nearby nickel operation.
“AIM-listed Mwana is holding discussions with development banks about a loan to allow output to double at Freda Rebecca, which re-opened this month,” CEO Kalaa Mpinga told Reuters.

“I’m hoping that by the end of the month we will have secured the loan. It would probably be the first time a development institution has actually lent money into Zimbabwe for a project in a very long time,” he added. “In terms of restoring confidence in the ability of Zimbabwe to operate as a normal place, this is going to be the test case.”

“Mwana reopened its Freda Rebecca gold mine last month following improved economic conditions in Zimbabwe, and the first commercial gold production was due this week,” Mpinga said.

He pointed out that Mwana had enough cash to pay for the initial phase of the re-start, which would produce 30 to 35 000 ounces of gold per year, but a second stage costing around US$8 million (R60 million) would boost output to 70 to 80 000 ounces.

Cash costs were expected to be about US$700/ ounce for the first phase and US$500 to $550/ounce in the second. This compares to a current gold price of around US$1050 per ounce.

“At its peak in 2002, the Freda Rebecca mine produced 100 000 ounces a year, and that is the eventual target, which should be possible by finding higher grades and unlocking efficiencies,” Mpinga added.

He hoped that a successful re-start of Freda Rebecca would give confidence to institutions to help fund the revival of a much bigger operation, Mwana’s nearby Bindura nickel business.

Bindura Nickel Corporation “’ the only integrated nickel miner, smelter and refinery in Africa “’ shut down last November due to low nickel prices and operational problems.

“However, it is viable again with the rebound in prices, and Zimbabwe’s coalition government that has dramatically improved conditions in the country, Mpinga said.

A major revival of Bindura’s two mines, new mine project, smelter and refinery would cost around US$150 million (R1.2 billion), but it is likely that it would be undertaken in phases.