- Record Gold Output: highest half-year output, reaching 1,351 kilograms
- Surpassing Industry Giants: surpassed Caledonia and RioZim
- Significant Revenue Growth: revenue approached $100 million
Harare- Padenga Holdings Limited, Zimbabwe's third-largest gold producer, has recorded a 25% increase in gold output for the half-year period to June 30, 2024, to 1,351 kilograms, the highest in half-year performance.
The performance was firmed by better ore grades at Eureka Mine, better recovery and higher plant throughput at Pickstone Mine.
As a result, Padenga edged closer to 100 million US dollars in revenue at US$99.2 million with the mining arm contributing US$87.68 million.
The company’s mining arm, Dallaglio, has spent US$46 million on Guruve’s Eureka Mine, which it revived in 2021 after it had been dormant for over two decades. The company has also spent US$26 million on developing an underground mine at Chegutu’s Pickstone and US$14 million on plant upgrades.
During the year, Padenga is projecting a capex of around US$28 million compared to US$36 million that was spent in the prior year.
Out of that, US$16 million is expansion capex that is going towards developing Pickstone, which is transitioning from an open pit mine to an underground operation which involves re-equiping and developing the mine below Level 5 allowing access to higher grade ore by Q2 2025 while the thickener project at Eureka is expected to be completed by the end of December.
Commercial production from Pickstone’s underground mine started in September 2023 and a second phase has begun. Padenga bought the mine from Vast Resources in 2019.
The half-year output was the largest gold contribution among listed companies surpassing both Caledonia and RioZim.
In half year 2024, Caledonia produced 1072.41 kgs while RioZim is yet to release its performance. However, we project it to be lower as this half year performance surpassed RioZim’s FY2023 performance.
Caledonia’s gold output started reducing in 2023 when Bilboes was put on maintenance as costs where outperforming gains.
The top four producers of gold are Kuvimba Mining House, Caledonia, Padenga and RioZim. However, RioZim is losing it bit by bit, chiefly because of internal mismanagement gaps which are failing to increase production and meet challenges head-on.
At the pace of Padenga’s output, it is targeting between 80k to 85k ounces this year against 74k to 78k ounces by Caledonia and an upper limit of 75k by Kuvimba after 73k ounces last year.
This will take Padenga to the helm of gold production in the country.
The lag of Caledonia being surpassed by Padenga is largely due to the placing of its Bilboes mine under maintenance which it seeks to recapitalise with US$309 million. In the short term, Padenga will benefit and take on the hedge.
Once Bilboes is back in operation, it will take Caledonia’s output to approximately 7 tonnes becoming the largest gold asset in Zimbabwe.
However, Padenga is also cooking something new in the pot. Work on phase two for Pickstone is underway. With Padenga expecting 100k ounces going forward with only Eureka and phase 1 Pickstone, phase two will add more but it will not however be enough to surpass 7 tonnes.
The future of mining leaders is open that it lies on Padenga and Caledonia.
Resilience demonstrated by the companies shows that when government reduces taxes, lowers costs, Zimbabwe has the chance to be in the top 5 gold producers in Africa.
Electricity charges are high, eroding 20% of miners’ income while the 25% surrender portions eats up nearly 12.5% of miners’ revenue as they are given back in local currency at a formal overvalued rate, which will be half of the market determined rate.
Large scale miners, who produce 40% of the country’s gold output can do much given taxes are reduced including electricity costs and export surrender portions. In July, VAT on tax was removed which saw a surge in gold output.
The government has also started tracking gold delivery from mine to market by the end of 30 September, a measure we believe will bear fruits if autonomy and corruption are checked.
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