London-listed Kavango Resources has formed a new subsidiary in Zimbabwe, Kavango Mining, which will become its mining arm in the country.
Moreover, the company has signed its first contract to start immediate gold mining operations at the Hillside project, in Zimbabwe.
Kavango will take over existing mining operations at Hillside immediately, and will fund capital investment and receive 100% of revenue generated.
Gold production at Hillside has been consistently profitable for three years, the company points out.
Kavango informs that it aims to double current production to 1 kg of gold a month over the course this year.
Current revenue at Hillside is about $30 000 a month, which will be reflected in Kavango’s financial reporting from March 1.
Kavango will develop a mining ‘growth point’ at Hillside by upgrading the project’s plant and enhancing local community-led gold extraction to increase near-term production, the company highlights.
Separately, Kavango has an option to acquire Hillside (announced July last year), which the company is currently renegotiating terms on. The mining contract is not contingent on exercising this option.
“From this month, Kavango moves into revenue through gold production at Hillside. Following announcement of our maiden gold resource estimate at Nara, this is a second major milestone for the company this week,” acclaims CE Ben Turney.
“Current revenue at Hillside amounts to around $30 000 per month and the operation there is already profitable. Continuous production at Zimbabwe gold projects secures the ground and forms an important part of any long-term development plan.
“Our objective is to become a significant gold producer in this country, and this is our first step towards achieving this goal. If all goes well, there are other production opportunities we hope to bring to Kavango,” he outlines.
“Gold production at Hillside has been consistently profitable for the last three years, despite capital constraints. As with most projects in Zimbabwe, the lack of investment capital has held back growth.
“There are currently two stamp mills operating at Hillside. Our immediate plan is to add a third stamp mill and to start processing feed material from the four prospects our exploration team has identified here. We also plan to work towards small-scale underground mining to increase production,” Turney explains.