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ACR has secured sufficient funding from a Zimbabwean source to start the development of the Pickstone-Peerless Gold Mine, following the failed acquisition of Dalny Mine earlier this year

Tinashe Makichi Business Reporter
African Consolidated Resources (ACR) will commission its first gold mine in Zimbabwe in the second half of next year as the company steps up efforts to consolidate its presence in the country’s gold sector.

Following the failed acquisition of Dalny Mine this year, ACR secured sufficient funding from a Zimbabwean source to start the development of the Pickstone-Peerless Gold Mine.

A new 50:50 joint venture company, Dallaglio Investments, was subsequently established by ACR together with Grayfox Investments.

According to the deal, Grayfox had the right to exchange its shareholding in Dallaglio for 288 million shares in ACR, which would result in the company taking 100 percent ownership of the project subject to indigenisation regulations of the project.

The current plant design for the joint venture is expected to suffice for the oxide gold cap, which has an estimated life of six years. During this period, expansion of the plant to treat the open cast sulphides, at a rate at least double the current monthly volume will be evaluated, including the Dalny Mine option. ACR chief executive Mr Roy Pitchford said the international resources sector remains extremely constrained and securing funding for new mines remains an enormous challenge.

He said reducing overheads and costs is still a major focus of management in order to ensure that available resources are sufficient until cash generation, which is expected in the second half of 2015.

“Mine commissioning is planned for the beginning of H2 2015 with first positive cash flows later in H2 2015.Future Zimbabwe operations will be administered through the AFCR Zimbabwe holding company.

“The reluctance of investors outside of Zimbabwe to fund the Dalny Mine/Pickstone-Peerless mine project resulted in its postponement pending further evaluation of how it may be resumed in the future,” said Mr Pitchford.

Meanwhile, Mr Pitchford said ACR had incorporated a wider development focus and a more significant presence in Romania on the back of the specific challenges it faced in Zimbabwe

He said the “attitude” of foreign investors towards injecting funds in Zimbabwe remains a challenge pointing out that ACR was unable to raise the $12 million required as a precondition to acquiring Dalny Mine from Falcon Gold.

Mr Pitchford said ACR’s “advantageous position” of securing good mining assets with limited competition in Romania prompted the company to accelerate the evaluation and acquisition of mining opportunities in the region.

In line with this, ACR secured a $2 million loan facility from Grayfox, with $1 million earmarked for projects in Romania and the balance to be used for general corporate purposes. In November this year ACR entered into an option to acquire, at its own discretion, a 68 percent interest in Mineral Mining, which owned the Baita Bihor polymetallic mine in Transylvania, Romania, for $1,6 million, of which $1,29 million was payable on a deferred basis. The company is also at an advanced stage of discussions to raise about $2,5 million, through the placing of ordinary shares, to finance the acquisition and bring the Baita Bihor mine back into production.