Oliver Kazunga, Senior Business Reporter
ONE of Zimbabwe’s big gold miners, Metallon Gold, has set a target of producing 115 000 ounces (oz) of the yellow metal this year on the back of improved development and increased production across the group.
As a long-term strategy, the gold producer also targets producing 500 000oz annually in the next five years. In its production update for the year ended December 31, 2016, Metallon said gold production for the period was at 94 212 oz, a figure which was two percent lower than the 2015 figure of 96 530oz.
Annual gold production was lower than planned after the commissioning of the Mazowe Processing Plant was postponed owing to equipment delays as well as the fall of ground incident at How Mine in December 2016.
The group’s chief executive officer, Mr Ken Mekani, was quoted this week as saying:
“2016 was a year of positive progress for Metallon. The business delivered an outstanding Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) with a 40 percent increase compared to 2015. This was attributable to solid production from operations, especially at How Mine, improved cost efficiencies and a strong gold price.
“Furthermore, Metallon continued to invest its cashflows back into the business with over $12 million spent on capital expenditure, testament to our commitment to improving our operations in Zimbabwe.”
He, however, said certain hurdles were encountered, especially with regards to the completion of the Mazowe Processing Plant. Mr Mekani said there were impediments in taking delivery of final materials and equipment partly due to delays in making external payments in Zimbabwe.
“The plant is now constructed and scheduled for commissioning in first quarter of 2017. We look forward to even greater improvements in 2017 as we target approximately 115 000oz of production and receive additional benefits from increased sales volumes and lower average costs,” he said.
“Metallon will also be focusing on commencing exploration and development at brownfield sites in Tanzania. This is part of Metallon’s long-term strategy to become a 500 000oz per annum producer in the next five years.”
EBITDA for 2016 was $18,6 million last year, 40 percent improvement on $13,3 million obtained in 2015.
EBITDA is essentially net income with interest, taxes, depreciation and amortisation added back to it and can be used to analyse and compare profitability between companies and industries as it eliminates the effects of financing and accounting decisions.
The average gold price realised last year was $1 239 compared to $1 159 the previous year.
In 2016, capital expenditure across the group was $12 million of which $3,7 million was sustaining and restoration capital and $8,3m was expansion capital spent on new projects.
The group said such expenditure demonstrates its commitment to investing in Zimbabwe. — @okazunga