Low production costs keep profits up

Vimbai Chakanetsa‚ an executive with Goldsearch Technical Services‚ a gold mining and consultancy company, which has gold mines in Zimbabwe as well as elsewhere in Africa‚ said that gold producers were being limited by capital and power constraints.

Experts say apprehensive investors are delaying expansion and further exploration activities in Zimbabwe. But the gold producing sector in the country has largely remained unscathed by falling prices of the precious metal due to its low production costs.

"Gold mining is not that bad. What is affecting us is the capital needed to mine‚" said Chakanetsa.

Mwana Africa is forging ahead with the Freda Rebecca gold mine and has been having good production results. "Operationally Freda Rebecca continues to perform well‚" the company said.

Officials said cash costs for the Freda Rebecca gold mine had gone down to US$883/oz from the previous contrasting period's cash costs of US$1‚021 per ounce while recoveries over the period improved from 75% to 81% with head grades up from 2.28 grams per ton to 2.64 g/ton".

Other mines doing well

Other gold miners in Zimbabwe include Metallon Gold‚ which has five producing mines‚ New Dawn Mining and local mining conglomerate RioZim which owns the struggling but potentially lucrative Renco gold.

There has been a general decline in commodity prices on world markets but Zimbabwean gold miners are recording large increases in production as concerns around the sustainability of prices in some mining areas such as SA and Australia grow.

Gold prices tumbled 23% during the April to June quarter. Analysts said on Tuesday (2 July) that gold's decline in the past quarter was the worst in several years.

Although "we came into the year with a view that investors should maintain a benchmark weight to gold‚ we would now suggest trimming that position‚" said Russ Koesterich‚ global chief investment strategist at BlackRock in a review note sent to clients on Monday (1 July).

Toronto listed Caledonia Mining Corporation‚ whose stake in the flagship Blanket gold mine in southern Zimbabwe has reduced to 49% following its compliance with indigenisation laws‚ said bullion output from the mine had climbed nearly 11% to 11‚592oz compared with the 10‚472oz produced in the first quarter.

The Blanket mine had production of 22‚064oz of gold‚ a 6.5% increase in gold production in the first half of the previous year. Freda Rebecca produced 65‚350oz of gold in the 12 months to March this year.