METALLON Gold Zimbabwe is set to receive a US$8,5 million injection from local banks as it seeks to resume operations by the end of this month.
The country’s largest gold mining producer has not been producing the precious metal due to financial constraints caused by the Reserve Bank’s failure to pay for the gold sent to its subsidiary Fidelity Printers and Refineries.
“We have been promised a total of US$8,5 million by some local banks. Although inadequate it will go a long way in resolving our problem,” Metallon Gold Zimbabwe group chief executive officer Collen Gura told businessdigest.
Gura said although the banks currently did not have the funds to lend to companies, negotiations for them to acquire funds from their offshore partners were at an advanced stage. Gura said that they had engaged with their suppliers to persuade them to open lines of credit as they resuscitate operations.
“We have also approached some of our key suppliers and sensitised them on the need for them to release goods to the group before they are paid for,” he said.
“With the exception of a few, we are warmly surprised that they fully understand our predicament and have agreed to give us their full support. This move is expected to augment bank funding,” Gura said.
He said that they were encouraged by these developments and aim to reopen at least two of their mines by the end of the month.
Gura said the group led by their principals in South Africa, had for some time been engaged in negotiations with off-shore financial institutions for additional capital equipment funding.
Although it is said to have been a very slow process hampered by the current world-wide economic recession, Metallon were confident that they would eventually secure off-shore funding to resume full production.
“The current world wide economic recession has not spared international financial institutions, instead they are the most affected. Progress on this front has been painstakingly slow. We however remain hopeful that this will yield the desired results,” Gura said.
The success of this initiative, Gura said, is expected to revitalise their operations, rebuild capacity to producing at their former levels as well as restore employee morale. He said that although they needed US$10 million to kick start operations and re-equip all their mines, they could start their two main mines Hull and Shamva with a budget of US$6 million.
Gura added that since the two mine constitute 66% of the group’s production and close to 95% of the group’s cash flow, it would make economic sense for them to start with these two mines and roll out the other three later using their own cash.
Metallon Gold Zimbabwe produces nearly half of the country’s gold and operates five mines —— Hull, Shamva, Redwing, Arcturus and Mazowe mines.
BY KUDZAI KUWAZA