Mwana Africa gets debt funding for Zimbabwe mine
Wed Nov 4, 2009 10:16am EST
LONDON, Nov 4 (Reuters) - Mwana Africa Plc (MWA.L) has gained approval for $10 million of debt funding to accelerate the expansion of the Freda Rebecca gold mine in Zimbabwe.
The company expects to get the first tranche, up to $4 million, of the loan before the end of the year, chief executive Kalaa Mpinga told Reuters in an interview.
The loan from the Industrial Development Corp of South Africa, a state-owned finance institution, will enable Mwana to accelerate the mine's refurbishment programme.
It plans to increase production to more than 50,000 ounces of gold a year on completion of Phase II.
"As things stand we aim to complete Phase II by next September," said Mpinga, adding that if the company is able to draw down the loan early it could complete the refurbishment ahead of schedule.
Operating costs for the mine are estimated at $650-700 an ounce and are anticipated to drop to about $500 per ounce on completion of Phase II, Mpinga said, noting that these figures were conservative.
The shares rose as much as 14 percent on Wednesday, and were up 8 percent at 13.5 pence at 1502 GMT.
"We believe this news should be taken positively since a key obstacle to delivering the expanded 50,000 ounce production was availability of finance, since commercial banks were always unlikely to stump up for Zimbabwe risk," said Liberum Capital in a note.
Mwana hasn't shied away from operating in higher risk countries. It has projects in the Democratic Republic of Congo, Angola, Ghana and Botswana.
(Editing by Victoria Bryan)