By Mining Reporter
HARARE (Mining Index) – SHAREHOLDERS of Padenga Holdings will vote on the firm’s proposed divesture into gold mining at an Extraordinary General Meeting set for tomorrow.
Padenga announced its intentions to divest into the sector earlier this month by acquiring a 50.1 percent stake in Dallaglio Investments for a sum of US$$20 million.
However of material interest to the proposed transaction is the potentially contentious involvement of HM Barbor which controls 20 percent of Padenga has 11 percent interest in Dallaglio. Furthermore, Micheal Fowler of HM Barbor is on the boards of both companies. In addition to this, HMD Investments has a 22 percent shareholding in Padenga and an effective 14 percent interest in Dallaglio. The Zimbabwe Stock Exchange (ZSE) has duly noted these inconsistencies and has barred interested parties from participating in the vote.
In a circular to shareholders, Padenga said divesting into to Dallaglio would reduce the company’s concentration risk, allowing it to spread its tentacles into an alternative hard currency generating venture.
“Padenga has significant client concentration risk with 79% of sales being ultimately to one luxury goods brand in Europe. Product and customer concentration risk is exacerbated by the nature of Padenga’s core product. In the interest of Padenga stakeholders, the Padenga board would like to diversify the company’s exposure away from a reliance solely on production of crocodilian skin.
“Padenga seeks to reduce this concentration risk through diversification into alternative export oriented businesses and has identified the gold mining sector as attractive from a long term perspective, particularly in respect to historic worldwide demand for gold and the capacity for gold to produce hard currency which is not readily available in the local Zimbabwe market,” read the circular.
Dallaglio owns Pickstone Peerless gold mine in Chegutu which currently produces 65kgs per month. Peerless operates an open pit mine with ore processed through a plant on site with a capacity of 33 000 tonnes per month. The ore body is not refractory in nature with an average recovery of approximately 87 percent.
The mine has a full complement of supporting infrastructure including staff housing, office, stores and grid power, boreholes and road infrastructure.
Furthermore, Dallaglio recently acquired Eureka mine in Guruve. Dallaglio is currently undertaking an extensive plant and infrastructure upgrading project with the aim of re-commissioning the mine in the second half of 2020. Dallaglio has invested heavily into Eureka mine; however further funding is required to take the mine into full production.
On commissioning, Eureka will be operated as an open pit mine with ore processed through an onsite plant boasting of a 100 000 tonnes per month and an expected recovery of 90 percent.
Long-term average gold production is expected to be in excess of 140kg per month. It is expected that Eureka will be significantly more profitable than Pickstone due to lower stripping ratios and mining costs per ounce.
Dallaglio also owns the giant gold mining claims which have a total measured indicated resource of 340 000 ounces. The mine is being taken as a medium to long term development opportunity for the mining concern. ENDS//