Karo develops world-class mine on Zim’s great dyke
KARO Mining Holdings’ US$4.2 billion platinum project on Zimbabwe’s mineral-rich Great Dyke belt is a world-class platinum group metals (PGM) asset which will have a profound impact on Mhondoro and surrounding areas, as well as the economy, the company’s head of investor relations and communication, Ilja Graulich, says.
Addressing investors and corporate executives at a capital markets conference organised by Financial Markets Indaba with Bard Santner Markets Inc as a partner in London, United Kingdom, last week, Graulich said Karo was onto something big at the low-cost, open-pit mine.
“If you are looking for a world-class asset; this is one. We are located in Mashonaland West (province) of Zimbabwe, approximately 80 kilometres southwest of Harare and 35km southeast of Chegutu,” Graulich said.
“The project area covers 23 903ha located on the Great Dyke. It is located south of the Zimplats Selous Metallurgical Plant and north of the Zimplats Ngezi operations.”
Karo Mining Holdings plc, which owns the Zimbabwean platinum project, is owned 70% by South Africa’s Tharisa plc, while 30% equity is privately held by Leto Settlement Trust.
Tharisa plc is listed on the London Stock Exchange (LSE) and on the Johannesburg Stock Exchange, the largest bourse in Africa. The LSE is the second-largest bourse in the world after the New York Stock Exchange, the biggest globally by market capitalisation.
The Karo platinum project is run by Karo Zimbabwe Holdings, which is owned 85% by Karo Mining Holdings plc and 15% by Generation Minerals, a government special purpose vehicle.
Zimbabwe is the second-largest producer of PGMs after South Africa. Russia is third.
The project has an initial life of 17 years with less than 10% of the 23 903 hectares mining area having been utilised to cover this production lifespan.
Graulich said the project, whose first phase will cost US$400 million and employ 1 000 people, has a short construction period. It is due to deliver its first ore to the mill by July 2024.
Karo will eventually establish a large-scale vertically integrated PGMs mining complex in Mhondoro. It will design and construct fully integrated facilities to ensure the maximum extraction of value from mining through the value-chain to final base metal and precious metal refining.
The project is based on proven technologies and industry best practices,Graulich added.
The concession, measuring 23 903 hectares, was previously held by Zimplats under its special mining lease.
On 6 June 2018, Zimplats released the project concession area to the government, resulting in the company holding two separate and non-contiguous mining leases over the Selous
Metallurgical Complex area and the Ngezi area. Due to the vast size of the mining concessions that Zimplats held, the concession was never developed.
Zimplats had declared an indicated and inferred resource over the Karo project area, with the last declaration made in June 2017. It stated that the project area contains 96.4 Moz of PGMs (4E basis).
Karo acquired the project area in March 2018 and entered into the Investment Framework Agreement with government.
A comprehensive exploration programme and detailed implementation study were undertaken.
This resulted in a favourable outcome, with the study advocating the development of an open-pit mining operation with a proposed output of some 150 000 ounces of PGMs annually.
The initial exploration programme, comprising 238 diamond core boreholes totalling 32 483 metres, took place from November 2018 to April 2019.
This programme was followed by a second phase of drilling comprising 77 diamond core holes totalling 7 642 metres. The second phase of drilling was completed in December 2020.
It generated over 22 000 samples that were assayed by an independent laboratory.
The total number of drill holes completed were 315. The Karo Special Economic Zone was declared by the Zimbabwe Investment Development Agency in October 2019. Investor and development licences are valid for 10 years and can be renewed.
Incentives such as favourable corporate tax rate and exemptions from withholding tax have been gazetted for special economic zones.
The implementation studies, conducted by Tharisa plc, developed the following economic case: Initial Great Dyke open pit resource: 152 metric tonnes (mt) containing 9.97 Moz at 2.04 g/t (6E); 3PGE+Au (Pt 45.0%, Pd 42.0% Rh 4.0% and Au 9.0%) base metal rich – 0.10% Cu and 0.12% Ni; 20-year open-pit mine plan at an average grade of 3.0 g/t (6E) targeting average production of 150 kozpa (thousands of ounces per annum) of PGMs in concentrate.
Strong financials: Capex US$250m with peak funding of US$310 million. Project post-tax net present value 12.9 US$770.4 million, internal rate of return of 47.6% and return on invested capital of +47.0%.
At least US$33 million equity was invested for exploration and early works and US$135 million equity and quasi-equity funding.
The syndicated project finance is US$260 million. Of this, US$160 million supported by ECIC political and commercial insurance wrap. Then there is also the Victoria Falls Stock Exchange bond of US$37 million raised.
Zimbabwean PGM supply has gradually increased over the last five years. All three major PGM producers are operating on the Great Dyke.
Zimplats (owned by South Africa’s Impala Platinum) produces 580 kozpa; Unki (owned by Anglo Platinum) 190 kozpa and Mimosa (run by Sibanye Stillwater/Impala Platinum) 120 kozpa.
Zimplats has said it will invest US$1.8 billion, Unki invested US$48 million invested in 2021 and Mimosa is also investing to expand production capacity.
Mining earns up to 60% foreign currency receipts for Zimbabwe and contributes more than 12% to gross domestic product.
Mines minister Winston Chitando says the sector has the potential to generate US$12 billion annually by this year if the government addresses challenges such as persistent power shortages, foreign currency shortages, currency volatility and policy uncertainties.