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Zimbabwe's Mining growth and potential, the need for recapitalisation. Investment in support infrastructure.
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Roy PitchfordCEO Country Factor
MINING IN ZIMBABWE - OVERVIEW
• PREDATES COLONIAL ERA
• GEOLOGICAL – PRODUCTION DATA FROM 1910
• AT ITS PEAK, MINING IN ZIMBABWE PROVIDED
• 7% of GDP
• 50% of foreign currency earnings
• Direct employment to 60,000
• Development of towns, infrastructure, road, rail, and all forms of communication
MINING IN ZIMBABWE – INVESTMENT POTENTIAL
HIGHLY PROSPECTIVE FOR;• Coal• Diamonds• Gold• Platinum• ChromeOTHER MINERALS• Iron Ore• Phosphates• Asbestos• Black Granite• Coal Bed Methane• Industrial Minerals
MINING IN ZIMBABWE – ECONOMIC ENVIRONMENT
• Single digit inflation• Multiple foreign currencies in use – legally• No foreign currency surrender requirements• Market liberalised• Competitive taxation regime
• NEGATIVE ISSUES INCLUDE;• Skills loss• Property and mineral rights• Unrealistic indigenisation objectives• Political uncertainty
MINING IN ZIMBABWE – COAL
• Deposits considered world-class• Low ash• Current production at 20% of capacity• World-wide demand increasing• Increased exploration activity
HOWEVER• Rail infrastructure requires upgrading • Coking facilities require upgrading• Mining equipment investment needed• New production facilities need to be constructed
MINING IN ZIMBABWE – DIAMONDS
• Country not fully explored• Early 80’s aeromagnetic survey anomalies need
investigation • Several mining operations producing ~ 400,000
carats per annum• 2 million carats per annum production possible• Local processing opportunities
HOWEVER• Minerals rights claims need to be resolved• Adherence to international protocols required
MINING IN ZIMBABWE – GOLD
• Peak production in 1999 – 27 tonnes• Target of 50 tonnes by 2015• Output dropped to 3,5 tonnes per annum• RBZ exchange rate policies and non-payment for
gold reduced exploration and development expenditure
• Constraints now removed• Capital injection to existing mines and brown-field
projects provide short-term gains• Modern exploration expected to lead to new
discoveries• Recent M&A activity demonstrates low cost
acquisition of short-term production resources/reserves
MINING IN ZIMBABWE – PLATINUM GROUP METALS
• Second largest pgm resource in the world• Resources relatively shallow - low cost of production• Three of the world’s four major producers present• Reasonable facilities for processing• Limited green-field exploration• Defined deposits available for development – held by
the Government of Zimbabwe• Enhanced/increased beneficiation opportunities exist• Pgm and associated base metal prices robust• Zimbabwe capable of increasing international
market share of pgm supply
MINING IN ZIMBABWE – PGM’S CONTINUED
• Conventional wisdom states that 80% to 90% of the world’s pgm resources, to a depth of 3,000 metres,are in RSA – 10% Zimbabwe
• Zimbabwe’s pgm resources are less than 1,000 metres
• Measuring pgm resources to 1,000 metres in both countries, the ratio will be much less than 90 : 10
• 70 years of pgm mining in RSA has depleted the shallower resources
• Shallow resources reduce mining costs• Zimbabwe therefore, with shallower resources –
lower cost production, and a greater share of resources less than 1,000m – should have a greater pgm market share
MINING IN ZIMBABWE – PGM’S CONTINUED
In support of asserting that Zimbabwe should have a
greater share of the international pgm market, public
information on Impala Platinum’s resources and
production statistics are utilised in the next group of
slides
IMPALA PLATINUM – RESOURCE & PRODUCTION COMPARISONResource
%Production
%Resource
%Production
%
Impala (RSA) 30 66 38 66Marula (RSA) 3 5 4 5Two Rivers (RSA) 1 10 2 10Tamboti (RSA) 12 0 0 0Afplats (RSA) 10 0 0 0
56 81 44 81
Zimplats (ZIM) 42 12 53 12Mimosa (ZIM) 2 7 3 7
44 19 56 19