Cypriot miner Karo Resources on Tuesday broke ground on its $4,2 billion platinum mining and refinery operation in Zimbabwe, an investment which President Emmerson Mnangagwa said showed the country’s readiness to open up for foreign investment.
The deal, which will be the largest mining investment in the southern African country’s history, will also be the biggest integrated platinum mining and refinery operation capable of producing 1.4 million ounces a year of PGM metals at the end of five years, officials said.
Located in the Mhondoro-Ngezi platinum belt, west of Harare the project will include a coal mine and a 300 megawatt solar power station which director Sawn McCormick said was enough to meet Karo’s needs.
The original agreement had specified a 600MW coal-fired power plant.
Karo will own 50 percent of the platinum unit, Karo Platinum while the remainder will be owned by Zimbabwe Investment Company, a government-owned vehicle.
However, Karo will own 75 percent of the coal mining, power generation and the refining units.
Karo will fund the project using either project finance, equity or debt from shareholder Tharisa Minerals. Tharisa last month acquired a 26,8 percent stake in Karo for $4,5 million, adding to its interests in both platinum and coal mining in the country.
Tharisa said it had also provided Karo with an $8 million repayable debt facility to finance initial geological exploration and sampling work.
“We will be looking at a number of ways of finance. The first financing will come through Tharisa. Tharisa has recently acquired a 26,8 percent stake of Karo Resources and it will invest the first $8 million. That $8 million has been approved by the Tharisa board and will and it will invest the first $8 million,” Tharisa chief operating officer, Michelle Taylor told journalists.
“Once we have a feasibility study there will be a number of avenues for finance. They would be either project finance through project level, it maybe through third party investment at each of the project level or alternatively it could be from further finance from Tharisa.”
Karo expects the first platinum output from the first of four open pit mines in 2020 and the last in 2023. The base and precious metal refineries will have capacity to toll refine 600,000 ounces.
Last month, Phoevos Pouroulis, chief executive officer of Tharisa and the son of Karo founder Loucas Pouroulis, said the investment, initially estimated at $4.2 billion, could be lower with spending spread over eight years.
As well as heading Karo, the senior Pouroulis is chairman and founder of Tharisa, in which his family has a 45 percent stake.
Tharisa, which has chrome and platinum operations in South Africa’s Bushveld, has made clear its interest in the potential of Zimbabwe, which holds the world’s second-largest platinum deposits after neighbouring South Africa.
Mnangagwa official launched the project at the ground breaking ceremony.