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Wednesday, September 6, 2017
Tanzania: Small-Scale Mining - Tales From the Field


By Geofrey Kimani

Tanzanian miners
ieIt's an hour's drive from Katoro Town to Kihesa mining camp at Lwamgasa Village in Geita District.

Upon reaching the site, you are met with an environment that has almost been torn part. Hundreds of people are busy, a number of them in torn and dirty clothes.

A huge section of land has been cleared away. The mostly notable features are heaps of soil and open mouths of ditches.

The multitude here is seeking for only one thing--gold. Men and women of various ages are busy, some going into the ditches, others crushing stones that have already been collected and others moving here and there.

There are at least 2,000 artisanal miners who have invaded this area, according to village chairman Lumumba Salvatory.

He says the environment at Kihesa Camp is under a lot of stress due to the sudden surge of people starting from early July. Soil erosion, creation of sink holes, and loss of vegetation cover as miners need firewood for cooking and logs for getting into the mines.

Water sources are also in danger as both groundwater and surface water are threatned with contamination due to chemicals that miners use in separating gold from other impurities.

According to Mr Lumumba, River Kihesa, that over 20,000 people from the village depend on for their water needs has been contaminated, thus putting at risk lives of the villagers.

"For decades, this river has been the main source of water for villagers here. But, with the current development, people have turned to other sources, which are not safe," he says. In a very short time, tree felling has more than tippled
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Shanta Gold restructures to adjust to Tanzania legislation changes

Gold miner Shanta Gold Limited (LON:SHG) has launched a US$5mln cost cutting programme to offset increases in royalties and tax in Tanzania.

The government in the African country has passed new mining laws and a finance act recently that hasincreased royalty payments on gold exports to 6% from 4% and imposed a 1% clearing tax.

Shanta said the changes will cost it an extra US$3mln annually or US$39 per oz of gold, a sum the new cost savings will offset.

The company operates the New Luika mine in Tanzania, where underground mining has just got underway, and most of the costs will be saved through a reduction in external contractors working at the mine.

Shanta added it had paid US$67mln to the government since the mine was commissioned in 2013 and is owed US$15mln in VAT repayments.

In total, US$150mn has been spent constructing New Luika but spending should fall from now on, allowing the company to repay borrowings over the next two years, Shanta Gold said.

New Luika is on track to produce the bottom end of the 80,-85,000 oz guidance issued previously for the current year, at an all-in sustaining cost of US$800-850 while to 2023. total production should be 514,000oz.

Elsewhere, Shanta said it would evaluate the financing required to develop Singida, another gold asset in Tanzania, before making a decision on what to do next.

Management team changes were also announced with Scott Yelland promoted to chief operating officer, Luke Leslie to interim CFO while Honest Mrema will become general manager of the New Luika mine.

Eric Zurrin, Shanta’s chief executive, said that following the review the business is now well-structured to deliver long term value.

“The new value enhancement and cost saving initiatives will create a stable platform from which the company can prosper and grow sustainably under the new Tanzanian mining legislation.

“Shanta will boast a leaner cost structure, have a focus on increased cash generation, develop greater internal Tanzanian leadership and importantly deliver reduced financial risk.”
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Acacia buys $3.2m in put options to protect remaining revenue

By David McKay

ACACIA Mining sought to further minimise the impact of an export halt on minerals in concentrate from its Bulyanhulu and Buzwagi mines in Tanzania by buying put options for 210,000 ounces of gold at a strike price of $1,300/oz.

The UK-listed firm said today that the put options would provide a minimum price for the majority of its doré gold production for the next six months above the firm’s budgeted price of $1,200/oz. There was “full exposure” should the price continue to trade above $1,300/oz, it said.

Gold doré is largely produced at Acacia’s North Mara mine which is unaffected by the trading halt imposed by the Tanzanian government. The government alleged in April that Acacia had long under-estimated the value of its concentrate exports and therefore owes the state tens of billions of dollars in unpaid levies.

The options will expire in equal instalments of 35,000 ounces per month over the period. The total cost of the options was $3.2m, Acacia said.

Earlier this week, Acacia said it would cut back production from Bulyanhulu in order to protect its overall cash flows, a step that lowers group production 100,000 oz and affects up to 2,000 full-time employees and contract workers at the mine. Buzwagi would continue to operate as it neared the end of its economic life.

The cut in Bulyanhulu production would result in a 65% to 67% reduction in net income for the firm’s 2018/19 financial year, somewhat approximating the 60% fall in its market capitalisation since the concentrate ban started six months ago. “The cash bleed can now be contained, although the uncertainty remains,” said Investec Securities.

Commenting on the purchase of put options, Investec said: “A prudent strategy, particularly given the ongoing decline in the company’s cash position. Acacia has been running its budget at $1,200/oz and for a cost of $15/oz it gets to lock in its next month of dore sales at $100/oz more than this”.

Discussions between Barrick Gold, Acacia’s 64% shareholder, and the Tanzanian government began at the end of the previous month but have yet to yield any positive results.
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Tanzania: Government Lift Ban On Tanzanite Miners

Diamonds from Tanzania
By By Joseph Lyimo

Government has lifted a ban imposed on Gem & Rock Venture Mine and two mines operated by TanzaniteOne Mining Limited at Mirerani in Simanjiro District.

The mines which border one another, have been in constant conflicts following underground encounters. They were closed since July 29, 2017 after five days of fighting between the workers of the two companies, with each camp blaming the other for mining in its area.

Lembris Mbatia, 22, a worker with Gem & Rock Venture Mine was killed in the clashes and 13 other people were injured.

On lifting the ban, the government has ordered Gem & Rock Venture Mine to carry out extraction operations 600 meters from the Tanzanite one mine.

The order follows realization that the company has transcended in boundaries to the neighbouring mine, owned by TanzaniteOne Company.
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