Karo launches $4.2 billion Zimbabwe project, has several funding options

MHONDORO-NGEZI, Zimbabwe (Reuters) – Zimbabwe’s Karo Mining Holdings has a range of options for securing funding for its $4.2 billion platinum mining venture, a company official said on Tuesday, citing bank finance, equity or money from shareholder Tharisa Plc.

Located in the Mhondoro-Ngezi platinum belt, west of Harare, where Impala Platinum Holdings has operations, the project will include a coal mine and power station and should employ 15,000 people when fully implemented.

The mining project officially launched on Tuesday will create Zimbabwe’s largest integrated platinum mining and refinery operation. President Emmerson Mnangagwa sees it as a flagship investment that underscores Harare’s readiness to open up to foreign investors following the end of Robert Mugabe’s 38-year rule.

Michelle Taylor, Tharisa’s chief operations officer, said Karo would decide on an actual funding model once it completes a feasibility study to quantify the platinum resources next year.

She, however, said Karo would replicate Tharisa’s funding model in South Africa, which was made up of bank loans and equity.

“We will have many avenues of finance that will be either through project finance, it maybe through third party investors at each of the project level or alternatively it could be further funding from Tharisa as the group company,” Taylor said.

Karo Mining is chaired by investor Loucas Pouroulis, the founder of London-listed Tharisa, which has chrome and platinum operations in South Africa’s Bushveld. Tharisa bought a 26.8 percent shareholding in Karo to increase its exposure in Zimbabwe.

Under the investment agreement, Karo Mining Holdings will own 50 percent of the platinum company, Karo Platinum, while the remainder will be held by a government-owned investment vehicle.

Karo will also own 75 percent of the refining, power generation and coal mining units.

Karo’s country manager Josephat Zimba said after discussions with Zimbabwean government, his company would now build a 300 megawatt (MW) solar power plant near its operations instead of a 600 MW coal-fired plant as initially announced.

Karo will open its first of four open pit mines in 2020 and at its peak expects to produce 1.4 million ounces of platinum, more than twice Zimbabwe’s current total output. The base and precious metal refineries will have capacity to toll refine another 600,000 ounces.

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