AFRICAN Consolidated Resources is focusing on a gold project, as now is not the right time for “engaging” with the State over the decision to strip the company of the multibillion-dollar Marange diamond field.
“Marange is water under the bridge,” said CEO Craig Hutton.
“Marange has been a problem and a disappointment for us, but we haven’t lost the company. I do believe that we will come to an amicable resolution.”
Zimbabwe seized the diamond fields, discovered by De Beers, from UK-based African Consolidated in 2006.
The Marange diamonds are being dug by China’s Anjin Investments with Mbada Mining, which is closely held by South African and Zimbabwean investors. All firms operate 50-50 ventures with state-run Zimbabwe Mining Development Corporation (ZMDC).
“We certainly want to, at some point in time, engage with the government and come to an amicable resolution,” Hutton said.
“We don’t think the time right now is appropriate to be engaging on Marange. We will focus our efforts on our other core assets where we can deliver value.”
African Consolidated is developing the Pickstone-Peerless gold mine. The project, scheduled to begin output in the first quarter, will produce 15,000oz to 20,000oz of gold before growing to as much as an annual 80,000oz two years later.
It is “our cornerstone project, our company maker”, said Hutton. “I don’t think the political situation is something that is not manageable. That is why we are still there.”
The company said projected capital expenditure towards commissioning a 20,000 tonne per month operation at the site would reach about US$17 million and committed not to resort to shareholders for funding.
“Sources of funding to minimise any Recourse to shareholders are likely, in addition to the company’s current cash resources, to include Department of Trade and Industry project grant from South Africa, sale of the Harare office, cash flow from the trial mining, potential sale of tailings, forward sale agreements and/or debt finance. Cash resource at 31 March 2013 was $11 million,” the company said in a presentation on Monday.
Management also said they planned to present a plan to the government for complying with the country indigenisation laws which require majority local control and ownership of foreign businesses operating in the country.Advertisement
African Consolidated also has nickel projects in Zimbabwe, as well as copper and rare-earth deposits in Zambia.