25th Mar 2009 07:00
Mwana Africa PLC
Intention to restart gold production at the Freda Rebecca mine in Zimbabwe
London, 25th March 2009 - Mwana Africa PLC ("Mwana" or the "Company") today announces its intention to restart gold production at the Freda Rebecca gold mine, approximately 90km north east of Harare in Zimbabwe. Mwana acquired a 100% interest in the mine in April 2005, and has committed to sell a 15% stake to a local investor.
The Exchange Control Directive issued by the Reserve Bank of Zimbabwe ("RBZ") on 23rd February 2009 set out revised export procedures for gold produced in Zimbabwe. Under the new procedures, gold producers may themselves make arrangements for the refining and sale of gold, and are entitled to receive a price based on that prevailing in the international market for bullion, thereby removing the historic surrender requirements to the RBZ. Companies are also authorised to operate foreign currency accounts. Furthermore, the National Budget presentation on 18th March 2009 announced the termination of the requirement to submit a proportion of foreign currency earnings to the RBZ for conversion to Zimbabwe dollars.
These developments, together with sustained strength in the gold price, enhance the economic potential of the Freda Rebecca gold mine.
Mwana has appointed geological, mining, and engineering consultants to plan and evaluate a ramp up programme for the plant. Based on current assumptions, it is estimated that approximately a further $6 million will be required to bring the first phase of the plant back to production within four to six months. Following a review of Mwana's expenditure plans, a portion of the Company's existing cash balances have been reallocated to restarting production at the Freda Rebecca gold mine. In parallel, the Company is evaluating the availability of external debt financing.
Since acquiring the mine, Mwana has invested over $7 million at Freda Rebecca, including refurbishment of the mining fleet, drilling equipment, crushers, mill circuit and leach tanks, and electrical and control systems. Further investment will be required to complete the mining fleet, and commission the number one mill circuit. At present, the mine is partially flooded, and a dewatering programme has commenced.
In 2002, production from Freda Rebecca reached 98k oz gold. However, mine output declined subsequently due to pricing and operating difficulties. The mine was placed onto care and maintenance in 2006. Further information on Freda Rebecca, including reserves and resources, can be found in Mwana Africa's annual report, and on the Company's website, www.mwanaafrica.com.
Kalaa Mpinga, Chief Executive Officer of Mwana Africa, commented on the announcement:
"We are pleased that the improved business environment in Zimbabwe allows us to implement a programme to restart gold production at a time when the gold price is strong and when gold supply is constrained. The Freda Rebecca Mine has a long and successful history and we plan to restore that tradition and get the mine back into profitable gold production as soon as possible. This is a good time to be increasing the emphasis of Mwana on gold."
"We are also pleased to be expanding our investment in the refurbishment of the Freda Rebecca Mine at a time when support for jobs, suppliers and the local economy is so important. Getting people back to work in Zimbabwe is a vital step in rebuilding the economy, and we are pleased to be playing our part in this process"
Enquiries:
Kalaa Mpinga, CEO Tel: 020 7654 5580
Oliver Baring, Executive Chairman
Mwana Africa PLC
Tom Randell / Anca Spiridon Tel: 020 7653 6620
Merlin
Mike Jones / Ryan Gaffney Tel: 020 7050 6500
Canaccord Adams Limited
This press release includes 'forward-looking statements'. Words such as 'anticipates', 'expects', 'intends', 'plans', 'forecasts', 'projects', 'budgets', 'believes', 'seeks', 'estimates', 'could', 'might', 'should' and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this press release, including, without limitation, those regarding Mwana Africa's business strategy and plans and objectives of management for future operations and acquisition opportunities, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of Mwana Africa or the markets and economies in which Mwana Africa operates to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements, including, without limitation, political, regulatory and economic factors. Factors that would cause actual results or events to differ from current expectations include, among other things, political risks in the DRC and Zimbabwe (including whether the power sharing agreement will be successfully implemented), changes to regulations affecting Mwana Africa's activities, and the other risks involved in the mineral exploration industry. Mwana Africa believes that the assumptions inherent in the forward-looking statements are reasonable; however, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. Mwana Africa does not assume any responsibility to update any of such forward-looking statements, save as required by relevant law or regulatory authority.
-ENDS-
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