Namib to spend up to $400M to restart Zimbabwe gold mines

[Ben Graham]

How mine in Zimbabwe. Credit: Namib Minerals

Namib Minerals (NASDAQ: NAMM) is looking to invest between $300-$400 million in order to bring two of its mothballed gold mines in southern Zimbabwe back to production, according to media reports.

In a statement to Reuters, chief executive Ibrahima Tall said the group plans to restart the Mazowe and Redwing mines, which were previously halted in 2018 and 2019 respectively due to adverse economic conditions.

Production could resume within 18 to 24 months of securing financing, Tall added, noting that the company has already been exploring various options for raising capital. The plan is to spend $300 million on the two operations.

A separate statement to Bloomberg confirmed the plan, but with a higher spend of $400 million over the next five years.

First production is expected to occur at Mazowe, which, as the higher-grade deposit, has relatively lower capital requirements, while the larger Redwing mine would need more time and investment.

Shares of Namib Minerals dropped 7% to $7.91 each on Tuesday morning, coinciding with the decline in gold prices. The stock had traded as high as $55 apiece since making its NASDAQ debut last month, but has since fallen by nearly 86%, taking its market capitalization down to $427.8 million.

Growing African gold producer

Namib was created through the merger of assets previously owned by Metallon Corp. and US firm Red Rock Acquisition Corp. With a pro forma combined enterprise value of $609 million, it was the largest African de-SPAC deal to date.

The company currently holds one producing asset: the How mine located near Bulawayo, Zimbabwe’s second-largest city. The high-grade mine has been in operation since 1940, producing nearly 2 million oz. of gold up until 2024.

The Mazowe and Redwing mines are located along the same greenstone belt as How, and hold a combined gold resource of 3.7 million oz.

Zimbabwe’s gold production has struggled for years due to currency and policy volatility, but is starting to see signs of recovery amid record-high gold prices.

Jersey-based Caledonia Mining last year secured backing from African development banks for its $250 million Bilboes mine north of Bulawayo. With an average annual production of 170,000 oz., it would become the biggest gold mine in the country.