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Mining Stocks Sector Close-up on African Gold Mining (CSE: $ZBR.C) (OTC: $ZNZBF) (NYSE: $GOLD) (TSX: $ABX.TO) (NYSE: $AU) (NYSE: $TRX)
Point Roberts, WA and Delta, BC - May 31, 2019 (Investorideas.com Newswire) Investorideas.com, a global investor news source covering mining stocks releases a snapshot looking at the recent developments in the African Gold mining sector, specifically in Tanzania.
In Tanzania, revenues from the country's mineral resourcesare on the rise , thanks to government efforts to curb smuggling and strengthen the Mining Commission's capacity.
The March 2017 government's decision to ban the export of mineral concentrates has led to increased mineral production and exports, and by March this year, the country had earned nearly $244 billion from minerals, representing 78.63 percent of the year's $310 billion collection target.
Minerals Minister, Doto Biteko, tabling the ministry's budget estimates for the 2019/2020 fiscal year, told the National Assembly that out of the collected amount, $223.5 billion, which is 72 percent of total collections, was from royalties and inspection fees.
The remaining 20.5 billion, he said, was from other sources of revenues, including annual fee and geological survey fees. Minister Biteko assured that by the end of this fiscal year on June 30, the ministry will meet the collection target.
Zanzibar Gold Inc. ( CSE: ZBR ) ( OTC: ZNZBF ), a junior mineral exploration company, that engages in the acquisition, exploration and development of natural resource properties in Canada and Tanzania recentlyreportedthat its consultants have initiated their exploration evaluation of the Mkuvia Gold Property in the Nachengwea area of southern Tanzania.
The Mkuvia property has had small scale local placer operators mining gold from the property since 2005. In 2009, a 43-101 Compliant Reserve report was calculated on the central portion of the main gold producing area which outlined an inferred reserve 6 million grams of gold.
The initial assessment is to determine that the identified reserve is intact, and the purity of the gold being recovered. A field visit to the property and the collection of the alluvial gold for analysis is being completed by the report's original author.
"This work will determine how much of a gold bullion inventory can be established for the company by a low cost placer operation," Company President S.A. Farrage outlined, "As well as enabling the company to evaluate other gold prospects in the region."
Tanzania has moved from an insignificant gold producing country in the last century to a 50 tonne per year producer in the early part of the 21st century with AngloGold Ashanti's Geita Gold mine (7 million ounces produced since 2000 with reserves estimated at 7.7 million ounces) and Acacia's (Barrick gold) Buylanhulu (initial reserves 17 million ounces) as the forefront operations.
Tanzania as a country seems well aware of the increased gold mining interest and has begun picking and choosing its partners havingrecently announcedit will no longer allow Acacia Mining Plc to manage its mines in the country and will only work with the company's parent, Barrick Gold Corp. ( NYSE:GOLD ) ( TSX:ABX ), to resolve a two-year impasse that has stymied operations.
"We will no longer work with Acacia," Hassan Abbasi said Tuesday by phone. "Under no circumstances can Acacia be a party to the agreements, or have any role in the operation or management of the Barrick mining subsidiaries in Tanzania. The ball is now in Barrick's court."
Acacia has been at odds with Tanzania's government since July 2017, when the state handed the London-listed gold producer a $190 billion tax bill, saying it under-declared bullion exports. Barrick has since led discussions with the government and, in an effort to solve the impasse, surprised the market last week with an informal plan to buy out Acacia's minority shareholders.
Abbasi said the government of Tanzania will continue to try to resolve the dispute based on a previous tentative agreement with Barrick.
"The initial agreement that we reached with Barrick in October 2017 is the one that is guiding the negotiations," Abbasi said.
In a 2017 meeting between Tanzania's President, John Magufuli and Barrick Executive Chairman John Thornton, it was tentatively agreed that Acacia would pay $300 million to the government to settle tax claims and would split future returns from operations with the country. At the time, Acacia criticized the move and blamed Barrick for its worsening relationship with Tanzania after Thornton took over negotiations.
Last week, Barrick said the government of Tanzania had made clear it won't negotiate a settlement with Acacia. Barrick Chief Executive Officer Mark Bristow has repeatedly spoken about the breakdown of the relationship between the two companies, and between Acacia and the government.
President Magufuli has vowed to secure more revenue from the country's resources. His government is targeting boosting income from minerals by half in the 2019-20 fiscal year to 470.9 billion shillings ($205.1 million), according to the Mines Ministry.
While some are looking at new prospects in African Gold mining, others like AngloGold Ashanti ( NYSE: AU )recently announcedthat it was embarking on a process to review divestment options for its remaining South African assets. This process will consider all ownership options, with a view to maximizing the value and future prospects of these assets. This is in line with AngloGold Ashanti's ongoing review of its portfolio and a disciplined approach to allocation of capital and other resources to ensure it generates maximum value for all its stakeholders.
AngloGold Ashanti has dedicated significant time and resources over the past few years to restructure its South African operating portfolio into a more focused business with enhanced operating and financial metrics. The successful completion of the restructuring has resulted in this portfolio comprising a single underground mine, Mponeng, a surface rock dump processing business and a mine waste retreatment operation, Mine Waste Solutions. These assets are now better positioned for the future, with the potential for further enhanced production growth, profitability and free cash generation from the significant remaining ore reserve base of 16.8 million ounces.
Mponeng is ramping up production from the Below 120 Level project, which is expected to give it a lifespan of around eight years, with improved margins from anticipated higher grades within this new mine area. In the medium term (starting in around two years), Mponeng will require additional capital investment to further extend its life and to realize the full potential of this operation.
"We believe that under the right ownership, our South African assets offer a compelling long term value proposition that may allow for an extension to Mponeng Mine's current life," Chief Executive Officer Kelvin Dushnisky said. "The investment to extend Mponeng's life beyond eight years has very strong competition for capital and other scarce resources from a host of other projects in our portfolio, which at current planning assumptions are more attractive, generating higher returns and quicker payback periods - we have therefore decided to review divestment options for our South African business."
This process is at an early stage and may not ultimately result in any change to the ownership of the South African business. AngloGold Ashanti's priority is to ensure that the process is conducted with the appropriate thoroughness to ensure the best possible outcome for all stakeholders.
Tanzanian Gold Corporation ( TSX: TNX ) ( NYSE:TRX )announcedthe first set of assay results from its deep level diamond core drilling program at the Buckreef Project, aimed at better defining potential mineralized zones below the open pit as reported and published in the June 2018 Pre-Feasibility 43-101 Technical Report. Infill drilling within the open pit is continuing, highlights from which will also be announced.
Assay results for a third mineralized zone at depths below 450m are expected soon from the assay lab. The drill-hole was drilled to a depth of 555 meters, one (1) meter is equal to 3.2808 feet for a total depth of 1,820 feet, all diamond core.
Mr. Jim Sinclair, Chairman (TRX) commented, "We are pleased with the first results from our deeper drilling below the open pit using core drilling to better define more robust mineralized zones that may extend below the pit bottom." Mr. Sinclair also noted, "Our in-fill drilling program in the open pit area has passed the mid-point of planned drilling, and, I believe, that the results will help move Inferred Resources into the Measured and Indicated categories."
A recentCNBC articlediscussed how gold has had some of its best days in nearly three months, due to market turmoil triggered by China announcing that it will retaliate over levies imposed by the Trump administration.
This rise in gold stocks, as well as new government regulations in the African mining community could bring renewed interest into the region, and the companies already looking for new opportunities in growing production regions like Tanzania may benefit from this recent gold surge.
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