By Tendai Sahondo
SHAREHOLDERS of Padenga Holdings yesterday approved the firm’s proposed divesture into gold mining, which will see the firm acquiring a 50.1% stake in Dallaglio Investments.
In line with the deal, the listed crocodilian skin producer is now expected to deliver mining equipment worth $20mln to Eureka mine in Guruve. The divesture is expected to minimise the company’s concentration risk, allowing it to spread its tentacles into an alternative hard currency generating venture.
Padenga has significant client concentration risk with 79% of sales being ultimately to one luxury goods brand in Europe. Product and customer concentration risk is exacerbated by the nature of Padenga’s core product
Dallaglio owns Pickstone Peerless gold mine in Chegutu which currently produces 65kgs per month. Peerless operates an open pit mine with ore processed through a plant on site with a capacity of 33 000 tonnes per month. The ore body is not refractory in nature with an average recovery of approximately 87%. The mine has a full complement of supporting infrastructure including staff housing, office, stores and grid power, boreholes and road infrastructure.
Furthermore, Dallaglio recently acquired Eureka mine in Guruve. Dallaglio is currently undertaking an extensive plant and infrastructure upgrading project with the aim of re-commissioning the mine in the second half of 2020. Dallaglio has invested heavily into Eureka mine; however further funding is required to take the mine into full production. On commissioning, Eureka will be operated as an open pit mine with ore processed through an onsite plant boasting of a 100 000 tonnes per month and an expected recovery of 90%. Long-term average gold production is expected to be in excess of 140kg per month. It is expected that Eureka will be significantly more profitable than Pickstone due to lower stripping ratios and mining costs per ounce.
Dallaglio also owns the giant gold mining claims which have a total measured indicated resource of 340 000 ounces. The mine is being taken as a medium to long-term development opportunity.