Tinashe Makichi
The Competition and Tariff Commission (CTC) has approved the take-over of Delta Gold Zimbabwe (Private) Limited by Dallagio Investments (Private) Limited.
The transaction involved the acquisition of 100 percent shareholding in Delta Gold Zimbabwe (Private) Limited, former owners of Mashonaland Central based Eureka Gold Mine by Dallagio Investments (Private) Limited.
Dallagio Investments (Private) Limited – the acquiring company is an investment holding company incorporated in Zimbabwe whose aim is to invest in mining industry.
“The transaction was classified as a horizontal merger. The transaction was approved without conditions,” said CTC.
Delta Gold Zimbabwe (Private) Limited, which owns Eureka Gold Mining Project, has not been able to establish a full-scale mining operations from 1999 to 2011 due to financial constraints. Both parties are in the mining sector.
The mine was officially reopened Eureka Gold Mine in Guruve, last year in a move expected to see the mine producing at least 1,5 tonnes of gold annually when it reaches full production capacity in the next 18 months.
The reopening of the mine was after Delta Gold had injected $60 million into operations.
The mine — which had ceased operations 15 years ago — has plans to employ at least 400 people when operating at maximum capacity.
The gold mine was re-opened after the acquisition of a majority stake in its parent company Delta Gold Zimbabwe by AIM listed, Vast Resources Plc through its 25 percent-owned Dallaglio. The Gold Mine was acquired for $4,5 million.
Previous shareholders were Alpha Resources Ltd and Industrial Development Corporation of South Africa Limited. The transaction provided Vast with an indirect 23, 75 percent interest in Eureka.
Eureka mine had historical investment in excess of $30 million in the late 1990s. It was developed as a modern gold mine in 1999 designed to produce approximately 70 000 ounces of gold per annum from an open pit before an underground operation was established. The mine was operated during 1999-2000 after which operations were suspended.
The acquisition of the Eureka Gold Mine was regarded as an “exceptionally cheap acquisition”, according to a United Kingdom-based independent research company, Equity Development.
The $4.485 million purchase price of the gold mine was financed by a loan from sub-Sahara Goldia Investments (SSGI) toDallaglio.
However, analysts at Equity Development say the deal was cheap and there was anticipation for an easy recovery of the mine as well as significant benefits accruing to the major shareholder, Vast Resources.
