RESOURCES group RioZim is now on solid ground for increased gold production following approval given by shareholders to acquire Palatial Gold Investments which owns the Dalny Mine Complex.
The complex comprises of the mine, a gold processing plant, several surrounding gold claims as well as equipment and a mining compound. It is expected to produce additional 100 kgs of gold for the group after the first 12 months.
In an interview after the group’s extra-ordinary general meeting this mornings, acting chief executive officer Bheki Nkomo said the group’s growth strategy, premised on acquisitions, ramping up production and re-opening of Cam and Motor mine, has started paying off.
“Our plans to ramp up production have been successful and we are now looking at increasing our gold output from previous levels,” he said.
Nkomo said the acquisition of Dalny at a cost of about $8 mln will be financed internally as the group’s cash cow, Cam and Motor is now making significant contribution to both production and revenues.
“We are financing it internally; Cam and Motor has opened now and our revenues are beginning to pick up. This deal will be closed on March 31, 2017; thus, we need to make payment within 30 days,” he said.
Dalny has an estimated mine life of 13 years and the company will invest into exploration to identify the actual resource. During the first 12 months, the company will adopt an open pit mining model, producing at least 50 kgs of gold per month.
“During that period, we will embark on an exploration and development programme, so that we can delineate more resources. At the same time we will pursue plant expansion. Currently the plant has capacity to treat 500 tonnes per day; so we want to double that capacity to achieve targeted 100 kgs on a monthly basis,” he said.
Nkomo said in order to minimize capital expenditure on the project, the company is into contract mining at the complex with costs being charged per tonne of ore produced.
“At the moment we are in the process of stripping the ground and de-watering some of the shafts,” he said.
Dalny Mine complex has been under care and maintenance since August 2013 and at some point which RioZim leased the Dalny gold processing plant in 2015 to process ore mined from Cam and Motor mine. However, the company has since commissioned a new processing plant at Cam and Motor..
In terms of the transaction, RioZim will pay US$2 million exclusive of the initial deposit within a month after the approval of the transaction. It paid a deposit of US$200 000 in June last year and will also pay US$3 million dollars in installments of US$250 000, which has to be paid off in less than 24 months. FinX