A gold mine near Bindura, Zimbabwe. Picture: REUTERS/PHILIMON BULAWAYO
A gold mine near Bindura, Zimbabwe. Picture: REUTERS/PHILIMON BULAWAYO

Harare — Zimbabwe’s biggest gold mines are being snapped up by Mauritius-based Sotic International as the price of bullion soars to the highest in more than eight years.

Landela Mining Ventures, which is controlled by Sotic, bought two of Zimbabwe’s gold mines in 2020. The newcomer is targeting six more mines, including four idled state-owned operations, said Sotic CEO David Brown. That expanding mining portfolio has strategic importance as gold is the biggest source of dollars in a nation facing foreign-currency shortages.

“Gold is a commodity with potential positive impacts,” Brown said. “We want to grow the resource base to provide upside for both company and country.”

Sotic is backed by Cayman Islands-registered Almas Global Opportunity Fund, but Brown declined to name other investors. Last year, Sotic acquired control of Bindura Nickel, Zimbabwe’s biggest nickel operation.

The country is struggling with food and fuel shortages, soaring inflation and an imploding currency. President Emmerson Mnangagwa, who came to power after his predecessor Robert Mugabe was removed by the military in November 2017, has failed to revive the economy and is reliant on security forces to quell mounting discontent.

Landela is ramping up output at Freda Rebecca, an operation formerly owned by Asa Resources, and in June concluded a deal to buy the mothballed Shamva gold mine from indebted Metallon, once Zimbabwe’s biggest gold miner. While the coronavirus pandemic delayed the acquisition of two more Metallon mines — Mazoe and Redwing — the transaction should be concluded shortly, according to Brown.

Landela is also favoured to buy four of state-owned Zimbabwe Mining Development Corporation’s gold mines, which were mothballed due to lack of capital, said Brown, a former CEO of Impala Platinum.

“We want to become a significant player in the gold industry in Zimbabwe,” said Brown, who is also chair of a Russian investor-backed company developing one of Zimbabwe’s biggest platinum mines. “We have a significant amount of resources that are available to grow the asset base and become a significant producer. We want to become bigger.”

He declined to say how much Landela is spending to buy the mines, while capital requirements are still being assessed. Some of the operations have been flooded or stripped of equipment after being idled for years.

Still, the quality of Zimbabwe’s assets and the rally in gold justify investor backing for the mines, Brown said. Zimbabwe’s gold output fell to 27 tonnes in 2019, down from 33 tonnes in 2018, as producers struggled with a myriad of challenges from power outages to shortages of foreign currency. The government is targeting output of 100 tonnes by 2023.

“The common wisdom for the gold price going forward looks like it will stay stronger for longer and to that extent the economics of the mines is significantly enhanced,” Brown said.

Bloomberg

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