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Petra reports strong Q1 performance, despite strike, Tanzania export ban

Despite labour disruptions at LSE-listed Petra Diamonds’ Finsch, Koffiefontein and Kimberley Ekapa Mining (KEM) Joint Venture (JV) operations in late September, CEO Johan Dippenaar says the group achieved a strong start to the 2018 financial year.

Production for the quarter was down 4% year-on-year to 1.05-million carats, mainly as a result of the planned reduction in tailings production at Finsch and the KEM JV.

Run-of-mine (RoM) production, however increased by 17% year-on-year to 842 809 ct, despite the labour disruptions, which reduced RoM production by about 70 000 ct and tailings production by about 10 000 ct.

“The group is continuing its production build-up and it is encouraging to see the increasing contribution of RoM production,” commented Dippenaar.

The Finsch mine’s RoM production increased by 2% year-on-year to 467 795 ct, owing to improved RoM grades as a result of the continued ramp-up of the Block 5 sublevel cave, as well as owing to high-grade RoM surface stockpiles.

RoM production at Cullinan increased by 35% year-on-year to 250 001 ct, owing to the production ramp-up of the new processing plant. The XRL modules of the plant, which recover coarse material greater than 12 mm in size, were put into operation in September. Two diamonds larger than 200 ct have already been recovered.

At Koffiefontein, RoM production decreased by 19% year-on-year to 12 563 ct, as a result of the loss of about 3 000 ct of production during the labour disruption.

Petra on Monday reported that construction of the ore handling infrastructure at Koffiefontein would be completed in the quarter to end December 31, with RoM production to return to planned levels from the second half of the 2018 financial year.

The KEM JV’s attributable production also decreased by 29% year-on-year to 170 014 ct, with RoM treatment having increased as the modifications to the Central Treatment Plantwere completed.

Meanwhile, production at the Williamson mine increased by 66% year-on-year to 85 213 ct.

However, a ban on the export of Petra’s diamonds from Tanzania, which has now been lifted, negatively impacted on the group’s revenues for the first quarter. Revenues decreased by 17% year-on-year to $78.7-million.

The Tanzanian government on September 28 agreed to allow Petra to resume the export and sale of diamonds recovered at the Williamson mine. This followed the seizure, by government officials, of a parcel of diamonds earlier in September, owing to allegations that the company had under declared the value of the diamonds to be exported.

Petra on Monday said it was yet to realise sales from Williamson for the current financial year and that it continued to engage with the Tanzanian government regarding a solution for the 71 654-ct parcel of diamonds that remains blocked for export.

A 40 000-ct parcel of diamonds recovered at the mine has been shipped to Petra’s marketing office for sale in the second quarter of the 2018 financial year.


Source: Mining Weekly

Tanzania turns up heat on overseas miners with State stake law

DAR ES SALAAM – Tanzania put more pressure on foreign mining companies on Tuesday by amending mining and tax laws to make it mandatory for the State to own at least 16% of mining projects, while also raising export royalties.

Parliament passed the bill unanimously, the State-run Tanzania Information Services said.

This followed two other laws passed on Monday giving the resource-rich East African nation the right to tear up and renegotiate contracts for natural resources like gas or minerals, and removing the right to international arbitration.

The bills were introduced on Thursday and rapidly passed, despite pleas for more time from an association representing mining companies.

“In any mining operations under a mining licence or a special mining licence, the government shall have not less than 16% nondilutable free-carried interest shares in the capital of a mining company,” the text of the new law says.

The government also left itself scope to further increase its stake in the companies.

“In addition to the free carried interest shares, the government shall be entitled to acquire, in total, up to 50% of the shares of the mining company commensurate with the total tax expenditures incurred by the government in favour of the mining company.”

There was no further explanation from the government, but industry sources said they believed the bill meant the government might take further shares in companies that it accused of owing taxes, in lieu of the money owed.

Government officials were not available for comment.

President John Magufuli has accused large mining companies of evading taxes. Charges they deny. At a public rally on Tuesday, he said Tanzania was fighting an economic war.

“We couldn’t wait to pass the laws because of the large scale theft taking place in the mining sector,” he said.

The new law also raises royalties from gold, copper, silver and platinum exports to 6% from 4%. It increases the royalty on uranium exports from 5% to 6%.

The law also allows the government to reject a company’s valuation if it believed the price was too low. The government would be entitled to buy the consignment of minerals at the price quoted.

“For the purposes of calculating the amount of royalties payable, the government shall be entitled to reject the valuation,” the text of the new law said.

“Where the government rejects the valuation, it shall have the option to buy the minerals at the low value.”

Tanzania’s largest miner Acacia, majority owned by Barrick Gold, said on Tuesday that notices of arbitration were served on behalf of companies that own its Bulyanhulu and Buzwagi mines, which have been hit by an export ban.

“The serving of the notices at this time is necessary to protect the Company,” Acacia said.



Source: Mining Weekly

Acacia Mining confirms start of negotiations with Tanzania govt

JOHANNESBURG ( – Tanzania-based gold miner Acacia Mining’s CEO Brad Gordon on Thursday said the company would leave any disputes around back taxes for resolution during negotiations with the country’s President John Magufuli.

During a teleconference, he added that the company was not prepared to comment on earlier media reports, wherein Tanzania’s presidency was quoted as saying Acacia’s parent company, Barrick Gold was willing to reimburse money that was owed to the government.

Following the release of reports by two Presidential committees that investigated mineral exports from Tanzania, Magufuli earlier accused the miner of failing to pay billions of dollars in taxes.

According to a Bloomberg report, Barrick chairperson John Thornton met Magufuli for talks in the commercial capital, Dar es Salaam, on Wednesday, with Barrick confirming the meeting but not the details of what, if anything, had been agreed.

“We are now focused on negotiations with the government to bring about a swift resolution to this situation and that’s the focus for the President of Tanzania as well,” said Gordon.

He added that a number of issues around the country’s operating environment would be highlighted during the negotiations. “We have always sought to maintain good relations with the government and we welcome the chance now that we can enter a dialogue on these outstanding issues.

“We will work with them as we always try to do; we have similar goals for economic development in the country and it is clear from the last few months that we do need to address the lack of trust between the government and Acacia,” said Gordon during the call.

Noting that it was a good first step, he pointed out that Barrick and Acacia would follow the same process in negotiations.

Reuters on Tuesday reported that apart from the Tanzanian government’s crackdown on the export of mineral concentrates, other sectors of the economy were also being affected. Disputes so far have included one that led to the temporary shutdown of a cement plant owned by Aliko Dangote, Africa’s richest man, and the cancelling of a $500-million sugar project planned by EcoEnergy Scandinavia of Sweden.

In March, Washington-based Symbion Power said it was seeking arbitration after the Tanzanian government terminated a power purchase agreement.

Gordon reiterated that Acacia would continue to operate in the country, while it sought dialogue with the government. “At this stage, we don’t intend to change that position. All three of our mines are still operating and will do so as long as a resolution is possible,” he noted.

However, he noted that employee relations have been strained. “The mood is not good; our employees have been accused of many things over the last few weeks and their integrity has been questioned. It’s difficult for them,” he stated.

Speaking on the ongoing export ban on gold and copper, Gordon pointed out that it was unlikely the ban would be lifted quite early in negotiations, “but we will see how that develops as negotiations continue”.

Source : Mining Weekly

Acacia disappointed in ‘unfounded’ second Presidential committee findings

JOHANNESBURG – Shares of LSE-listed Acacia Mining slumped 12% after “new unfounded” accusations of the under declaration of revenues and tax payments stretching into the tens of billions of dollars emerged against it following the release of a report by a second Tanzanian Presidential committee on Monday.

The Tanzania-focused miner on Monday “strongly refuted” the claims that it was short changing the government, claiming that the value of concentrates was overstated by more than ten times and that it was impossible to reconcile the findings that were based on more than 20 years of data.

The second Presidential committee’s report, which was presented to Tanzania’s President Dr John Magufuli on Monday, recommended the payment of outstanding taxes and royalties, the renegotiation of large-scale mineral development agreements, government ownership in the mines and the continuation of the gold and copper concentrates export ban.

“We reiterate that we have declared everything of commercial value that we have produced since we started operating in Tanzania and have paid all appropriate royalties and taxes on all of the payable minerals that we produce,” Acacia said in a statement.

The company said the findings of the second committee were based on those of the first Presidential committee that had investigated the export of gold and copper concentrates in May 2017.

Acacia had also disputed those findings.

Source : Mining Weekly

Tanzania signs $154m contract with Chinese firm to expand main port

Tanzania’s government signed a $154-million contract on Saturday with the state-run China Harbour Engineering Company(CHEC) to expand the main port in the commercial capital, Dar es Salaam.

Tanzania is seeking financing for infrastructure projects as part of its plans to transform the country into a regional transport and trade hub.

Under the contract funded by a World Bank loan, CHEC, a subsidiary of the state-run China Communications Construction Co, will build a roll-on, roll-off (ro-ro) terminal and deepen and strengthen seven berths at Dar es Salaam port.

Tanzania hopes expansion of the port will increase container throughput to 28-million tonnes a year by 2020 from around 20-million tonnes currently.

“Deepening and strengthening of the berths will allow big container ships to dock in Dar es Salaam. All these efforts are being done in order to increase competitiveness of the port,” works, transport and communications minister Makame Mbarawa said at the signing of the contract.

East Africa’s second-biggest economy wants to profit from its long coastline and upgrade its rickety railways and roads to serve the growing economies in the land-locked heart of Africa.

Big gas finds in Tanzania and oil discoveries in Kenya and Uganda have turned East Africa into an exploration hotspot for oil firms, but transport infrastructure in those countries has suffered from decades of under-investment.

Tanzania said in January it will receive a $305-million loan from the World Bank to expand its main port, where congestion and inefficiencies are hampering service delivery.

The port, whose main rival is the bigger but also congested port of Mombasa in Kenya, acts as a trade gateway for landlocked African states such as Zambia, Rwanda, Malawi, Burundi and Uganda, as well as the eastern region of the Democratic Republic of Congo.

The World Bank said in a 2014 report that inefficiencies at Dar es Salaam port were costing Tanzania and its neighbours up to $2.6-billion a year.

Chinese President Xi Jinping announced plans to plough $60-billion into African development projects at a summit in Johannesburg in 2015, saying it would boost agriculture, build roads, ports and railways and cancel some debt.

Source : Engineering News

Kibo sheds some Lake Victoria gold licences to narrow focus

JOHANNESBURG – Following a comprehensive technical and commercial review of its portfolio, Aim- and AltX-listed Kibo Mining has relinquished several early-stage noncore gold prospecting licences, licence offers and licence applications in the Lake Victoria goldfields, in northern Tanzania.

Kibo surrendered 79 licences covering an area of 800 km2 of “very early-stage” exploration blocks that no longer contribute towards the company’s strategic development objectives.

The move is in line with the Tanzania-focused mineral exploration and development company’s strategy to focus its resources on its Mbeya coal-to-power project (MCPP), the Haneti nickel project and the Imweru and Lubando gold projects under the new spin-off Katoro Gold.

The significant cost savings and additional availability of resources will be reassigned to the MCPP and Haneti nickel projects.

“The rationalisation was carried out as part of the process of facilitating the spin-out of Kibo’s key gold resource-based projects, Imweru and Lubando, in the region, to Katoro,” said CEO Louis Coetzee in an update to shareholders.

The Imweru and Lubando licence portfolios, through its majority interest in Katoro, were the sole remaining gold interests of Kibo in the region.

Source : Mining Weekly


Acacia Mining says would cost $30m to close Bulyanhulu mine

LONDON/BENGALURU – Acacia Mining said on Friday it would cost about $30-million to put its Bulyanhulu mine in Tanzania under care and maintenance as an export ban on the miner’s metals weighed.

Shares in the unit of Barrick Gold rose 4.7% after the company stuck to its full-year production guidance despite the ban.

Acacia is losing $15-million per month after Tanzania banned the export of all unprocessed ore in March, forcing the company to make contingency plans in case a resolution is not found.

Chief Executive Brad Gordon told a conference call on Friday it would cost $30-million to shut Bulyanhulu mine for layoffs and breaking contracts and between $2-million to $3-million per month in care and maintenance charges.

Tanzanian President John Magufuli fired his mining minister and the chief of the state-run mineral audit agency last week after an investigation into possible undeclared exports by mining companies, including Acacia, to evade tax.

A second audit of Acacia is now under way after the first audit committee last week said it found Acacia had 10 times more gold in its containers than the company had declared, as well as undeclared minerals such as iron and sulphur.

Acacia has denied any wrongdoing and said it still has not seen the report.

“If we get to a point following the release of the second report where we see an impasse in dialogue with the government then we would put Bulyanhulu on care and maintenance,” Gordon said, adding that the burn on cash could also be a trigger.

The ban mainly affects the Bulyanhulu mine which is a larger, newer mine that has higher running costs. Buzwagi mine is nearing the end of its life.

It said production for the year would still fall between 850 000 oz to 900 000 oz.

Acacia, which is also listed in Tanzania, said its cash at the end of May was $165-million.

Gordon said he was accompanied this week by Acacia chairperson and Barrick president Kelvin Dushnisky on a trip to Tanzania in an effort to resolve the ban.

Source : Mining Weekly

Mponeng being set up as new, cheap, ultra-deep mine – AngloGold

JOHANNESBURG ( – The global gold mining industry has reached a point where companies either need to reinvest to bolster their portfolios or turn to mergers and acquisitions, AngloGold Ashanti CEO Srinivasan Venkatakrishnan (Venkat) said on Monday, when he made it clear that AngloGold is firmly in the reinvestment camp, with a pipeline of high-return brownfields opportunities to improve the production mix.

The more immediate of its key long-term projects is the Mponeng Phase 1 project in South Africa, which together with Guinea’s Siguiri gold mine and the Democratic Republic of Congo’s Kibali joint venture, is giving the company line of sight to a better portfolio, backed by continued exploration successes.

Siguiri delivered a “knock-out” performance, demonstrating why the company is confident to invest a new plant there.

Equipment for Siguiri’s combination plant has been ordered, contractors are mobilised on site and mining of hard-rock material is set to start later this year.

On the West Wits, AngloGold will be spending $34-million this year on the Mponeng deepening project, taking in development under way on 123 level and 126 level in what is already the world’s deepest mine.

AngloGold COO Chris Sheppard said in response to Mining Weekly Online that production had already begun on 123 level as part of the first phase, with full ramp-up scheduled to take place through this year and next year.

He said that the so-called above-120-level ‘old mine’ would reach the end of its ore-reserve position within the next four years.

“So, within the next three- to four-year horizon, we’re going to see the entire production load for Mponeng being generated on the Phase 1 horizon,” Sheppard said, adding that what was called a Phase 2 project is being restudied to find the most optimal way of investing into the promising orebody.

He said that Mponeng was being set up as a new, lower-cost mine, with the company, according to its CEO, “redefining what is possible” at ultra depth.

Rather than using large capital investments, the company is continuing to pursue lasting operational improvement through innovation.

In the first three months of this year, AngloGold produced 830 000 oz at $813/oz, down on 861 000 oz at $702/oz in the first quarter of 2016, with costs pushed higher by lower grades and significantly stronger currencies in key operating regions.

With the exception of Mponeng, AngloGold’s South Africans mines had a poor start to 2017, but remedial steps to improve performance are “already bearing fruit”.

“We’ve identified issues to effect a recovery in South Africa,” Venkat said in a conference call in which Creamer Media’s Mining Weekly Online took part.

A 16% stronger rand drove up all-in sustaining costs in South Africa to “unacceptable levels”.

Mponeng remains the strongest asset in the portfolio, with Moab Khotsong a close second, despite its underperformance in the first three months to the end of March.

Below par performance also characterised the first-quarter of both the TauTona and Kopanang mines, which are being closely scrutinised to find a “more methodical resolution” to their issues.

But the collective South African effort has seen a month-by-month output improvement, with the 50 000 oz in January rising to 65 000 oz in February and 80 000 oz in March.

Apart from Mponeng, the balance of AngloGold’s South African underground portfolio requires the build-up of mineable face-length, which is now a top priority.

Once developed, additional face-length will improve volumes and provide the flexibility that is needed for consistent performance.

Operational focus areas going forward include South Africa’s production recovery, while holding on to safety gains and the advancement of high-return brownfields projects.

The company is progressing its plans to deliver better quality production that will add to margins, extend mine life and shape its international portfolio, which currently produces three out of every four ounces for the company.

While advancing lower-capital, quicker-payback projects on a self-funded basis, exploration for longer-term replenishment has been refocused on Guinea, Tanzania, Australia and Colombia.

On the safety front, the Johannesburg- and New York-listed operator passed 282 days without a fatal accident in South Africa, beating 2014’s record 242 days, while also maintaining full-year guidance prospects.

The South African operations have now exceeded five-million consecutive shifts without a fatality and the Sadiola, Yatela, Siguiri, Iduapriem, Obuasi gold mines in continental Africa plus Sunrise Dam in Australia ended the March quarter injury free.

Source : Mining Weekly