Karo Resources Venture Raises Eyebrows

KARO Resources directly employs just eight people, two years after it was allocated vast platinum claims sitting on 23 000 hectares under a project the government said the company would set up a US$4,2 billion operations, the Zimbabwe Independent can reveal.

Tinashe Kairiza/Melody Chikono

On various occasions when President Emmerson Mnangagwa and other government officials have toured the site where the multi-billion dollar plant is supposed to sit, the state-owned media has reported that the project would create 90 000 jobs.

However, in a series of investigations by the Zimbabwe Independent that included interviews with mining experts, this paper failed to ascertain how the US$4,2 billion value of the project had been arrived at.

Karo officials were unable to say how much the investment would be worth and did not know how the reported figure had been calculated.

As reported by this newspaper last week, Karo Resources has only mobilised US$8 million from Tharisa Plc, to finance exploration activities. Karo Resources, owned by businessman Luca Pourolis holds a 42% stake in Tharisa Plc, which is listed on the London Stock Exchange (LSE) and Johannesburg Stock Exchange (JSE).

Tharisa Plc head of investor relations and communications Ilja Graulich Ulrich told the Zimbabwe Independent that the exact quantum of the project’s capital outlay was dependent on an ongoing bankable feasibility study, results from the exploration exercise and the availability of financial resources.

He said: “Any investment will depend on the nature of the resource, the outcome of a bankable feasibility study and the availability of capital.

“Tharisa has acquired a 26,8% stake in Karo and has made US$8 million available for the first phase of drilling which has been completed.”

Under plans of the envisaged multibillion-dollar project, Karo Resources has already missed some of its targets which include setting up the first of four portals this year.

Sources close to the project told the Zimbabwe Independent that Karo Resources lacked the “financial wherewithal to finance” operations which include setting up the four portals and the platinum refinery plant that will be supported by a 300 MW solar power plant.

However, Graulich attributed the delays in setting up the first portal this year as initially planned to the novel coronavirus pandemic which has devastated the global economy.

“[The delays to set up the first portal this year were due to] Covid-19, which has [affected] economies globally,” he said, without explaining how coronavirus induced pressures specifically militated against the project.

Graulich highlighted that resources required to set up the first portal “will depend on the outcome of a bankable feasibility study.”

Though government on various forums has primed the project as a potentially game-changing initiative with capacity to spin 90 000 jobs across Zimbabwe’s fragile economy, Ulrich said the job-creation potential of the project could not be ascertained yet.

“Karo has eight employees on the ground, with a number of Zimbabwean contractors having been used for the phase 1 drilling campaign. We do not have a final employment number yet as there are a number of factors that determine employment levels.

“[These include] the outcome of a bankable feasibility study, project development timelines given the nature of capital markets and what capital will be available for Zimbabwe from investors,” he said.

Karo Resources contracted a local company called Trident Drilling when it undertook the exploration exercise.

When quizzed about how much Karo Resources paid for the lucrative claims which were previously held by Zimplats, Graulich explained that the entity bid for the mining rights through a tender process.

He did not comment on the amount of money Karo Resources paid through registration, licensing fees and other associated costs for the vast claims.

“The rights were acquired under a government tender process, as are any mining rights in Zimbabwe, or globally, as evidenced in most jurisdictions under World Bank (WB) guidelines,” Graulich told this newspaper this week.

In 2018, the Mnangagwa administration allocated the abundant platinum to Karo Resources, which is incorporated in Cyprus.

The entity intends to set up a platinum refinery plant in Zimbabwe with capacity to produce 1,4 million ounces by 2023.

In the short term, Karo Resources had initially targeted to produce 3,6 million tonnes of ore and 350 000 ounces of platinum group of metals in 2020. Over the next three years, the entity ambitiously highlighted that it wished to scale up platinum ore production to 14,4 million tonnes.

In South Africa, Pourolis was investigated for making false claims to raise capital for the Kalkfontein project.

The centrepiece of Pourolis’ plans in Zimbabwe through Karo Resources includes setting up a base metal refinery and precious metal refinery.

The businessman’s early efforts to penetrate the Zimbabwean market date back to 2005, but the government of former president Robert Mugabe delayed issuing the requisite licenses.

But after Mugabe’s rule came to a dramatic close in November 2017 through a military coup that propelled Mnangagwa to the helm, Karo Resources was given the nod to set up platinum operations in 2018.

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