21 February 2018

Zimbabwe: Sabi Mine to Clear $27m Debt

Zvishavane-based Sabi Gold Mine is implementing various strategies aimed at clearing its $27 million debt, which has accumulated since 2014. Sabi has since returned to profitability and has started paying dividends amid indications it will soon exit judicial management.

Sabi, which falls under the Zimbabwe Mining Development Corporation portfolio, was put under the judicial management of Dr Wesley Sibanda. It has since turned around its operations after a local investment consortium, Chandiwana Mining Corporation, invested funds into the miner.

"The gold miner's operations have normalized and we have been implementing several plans to make sure our debt is cleared. The $27 million debt has been outstanding since 2014. After paying our creditors then I will leave the company to operate on its own," said Sabi judicial manager Dr Sibanda.

The mine plans to ramp up gold output to 70kgs per month, but only if it can access $6 million from the Reserve Bank of Zimbabwe (RBZ), with which it seeks to purchase key consumables. Sabi is currently producing between 25kgs and 30kgs since the coming in of Chandiwana Mining Corporation.

Before the coming in of the judicial manager, Sabi needed recapitalisation to the tune of $15 million to increase its capacity to produce 45 kgs of gold per month. This is above the mine's break-even point of 26 kgs per month.

The Sabi mine deal is, however, part of ZMDC's bigger plan to revive all gold mines within its portfolio. The mining group plans to introduce a phased recovery approach towards the revival of its three gold mines that were either shut down or put under care and maintenance.

ZMDC has also been looking for $6 million for recapitalisation of Jena Mine which had remained operational despite challenges affecting the group.

Sometime this year, ZMDC invited interested investors to file bids for Jena and Elvington gold mines, Lynx Graphite Mine in Karoi and Sandawana Mines in Mberengwa. Sandawana has potential to produce emeralds, gold, tantalite, beryl, iron ore, silver, niobium, lithium, chrome, tin and slate.


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