The Sunday News
Gabriel Masvora, Business Editor
CYPRUS based mining group Tharisa has agreed to avail $8 million for the development of massive platinum mine and concentrate in the Great Dyke in Zimbabwe.
The company announced on Wednesday that the money will be availed after Tharisa acquired a 26.8 percent stake in another Cyprus company Karo Mining Holdings in a $4.5 million deal.
Karo Resources, in March signed a $4.2 million deal with the Government to develop platinum mine that is expected to produce 1.4 million ounces of platinum group metals, concentrators, smelters, a base metal and precious metals refinery, as well as power generation capacity for the operations with surplus energy capacity made available to the Zimbabwe power grid.
Under the deal, Tharisa will access 23 903 hectares on the Great Dyke of Zimbabwe, containing an estimated platinum group meals (PGM) resource of some 96 million ounces.
Tharisa, which is also listed on the Johannesburg Stock Exchange, announced on Wednesday that its entry into Zimbabwe was prompted by the improved political environment in the country.
“Tharisa was not previously involved in Zimbabwe due to political uncertainty in the country. Recent improvements in the political landscape have precipitated a decision by Tharisa to explore geographic diversification opportunities in Zimbabwe, renowned for having the world’s largest PGM deposits outside of South Africa,” the company announced.
The company announced that the $8 million will also be used to undertake initial geological exploration and sampling work in the License Area to determine a compliant mineral resource which will enhance the value of the investment in Karo Holdings.
“Tharisa will also manage the exploration and oversee a subsequent bankable feasibility study.”
The company added that there is an option to de-risk the investment by starting on a smaller scale and increasing production over time.
“The mine is open pittable and Great Dyke PGM projects are typically low-Cost. Tharisa’s management team has a proven track record of developing mines from the prospecting stage through to steady -state production and this experience can be applied to the development of Karo Platinum .”
Unpacking the Karo $4.2 billion deal
Karo Platinum (Pvt) Limited (‘Karo Platinum’), an indirect 50 percent held subsidiary of Karo Holdings applied for and was awarded PGM rights under a special grant (the ‘License Area’) under the Zimbabwe Mines and Minerals Act, covering an area of 23 903 hectares.
The License Area is situated on the Great Dyke in the Mashonaland West District of Zimbabwe. This area of land had recently been released by Zimbabwe Platinum Mines (Pvt) Ltd (‘Zimplats’) from its mining lease area in support of the Government of Zimbabwe’s efforts to enable participation by other investors in the platinum mining industry in Zimbabwe.
In terms of the special grant, Karo Platinum will be entitled to mine PGMs situated within the License Area.
Karo Platinum will be responsible for the mine development and mining operations which will deliver run of mine ore to Karo Refining (Pvt) Limited, (‘Karo Refining’). Karo Refining, 75 percent owned by Karo Holdings, will build, own and operate the concentrators, smelters, as well as the base metal and PGM refinery.
The remaining 50 percent shareholding in Karo Platinum will be held by an investment company wholly owned by the Republic of Zimbabwe and registered under the company laws of Zimbabwe and under the auspices of the Ministry of Finance and Economic Development (‘Zimbabwe Investment Company’).
The special grant was issued in terms of Part XIX of the Zimbabwe Mines and Minerals Act and authorises Karo Platinum to carry out mining operations over the License Area for a period of 60 months, with the right of annual renewal on the expiry of such period on 90 days prior application.
Karo Platinum intends applying within 12 months for a mining lease in terms of Part VIII of the Zimbabwe Mines and Minerals Act over the Licence Area valid for the life of mine.
In terms of the Investment agreement, Karo Holdings, through its 75 percent held subsidiaries, Karo Coal Mines (Pvt) Limited (‘Karo Coal’) and Karo Power Generation (Pvt) Limited (‘Karo Power’) respectively agreed to identify and establish a coal project with a focus on metallurgical coal and a power generation project. The original agreement contemplated the construction of a coal fired power station, however, in consultation with the Ministry of Energy and taking into consideration the power mix requirements of Zimbabwe, the agreement was amended to include the phased development of a renewable energy source of 300MW of solar power, to be fed into the national grid. Technical and financial partners have been identified for this project.
Karo Holdings, through its wholly owned subsidiary Karo Holdings Zimbabwe (Pvt) Limited (‘Karo Zimbabwe’), will initially hold a 50 percent interest in Karo Platinum and a 75 percent interest in Karo Refining ,Karo Coal and Karo Power (collectively referred to as ‘Project Companies’ or individually as a ‘Project Company’). Zimbabwe Investment Company will hold a 10 percent direct shareholding in each of the Project Companies (other than for Karo Platinum in which it retains a 50 percent shareholding).
The remaining 15 percent shareholding in the Project Companies (except for Karo Platinum) will be allocated to the community and employees.
In the event that the current indigenisation requirements are reduced within 18 months of the signing of the Investment Agreement, Karo Holdings’ equity interest in Karo Platinum may, at its election, directly increase to either the level as the law will then provide or to 75 percent in line with the Project Companies shareholding structures, at no cost to Karo Holdings.
It is intended that the Project Companies will apply for National Project Status and for the projects to be contained within a Special Economic Zone, which will provide the projects with enhanced economics through concessions granted by the Zimbabwe Government. (additional information from http://www.tharisa.com/)