Metallon Gold Corporation chairman Mzi Khumalo has offered the group’s employees a stake in Mazowe Mine to offset liabilities in salary arrears running into hundred of thousands, sources told Business Times this week.
Metallon—whose local units include How Mine, Mazowe Mine, Shamva and Redwing Mine—has been facing massive operational challenges. As a result only one of its mines; How Mine, is operating viably.
Sources close to the developments told Business Times that the issue of liabilities has stalled talks between Metallon and Canadian suitor, B2Gold. B2Gold has expressed interest in acquiring a controlling stake in the group.
“B2Gold has set a condition that they are not going to buy Metallon Gold Zimbabwe with its liabilities and that has delayed the conclusion of the deal. Mzi is offering value of Metallon to B2Gold without incorporating liabilities and once liabilities are factored, the value of the group will be negative. To offset the liabilities he has since offered Metallon employees a shareholding in Mazowe Mine, among other creditors but the challenge at the moment is that the mine is as good as dead,” said the source.
Efforts to get a comment from Metallon were fruitless as they did not respond by the time of going to print.
Metallon has been facing operational challenges which saw the miner putting its mines, Mazowe and Shamva under care and maintenance. The gold producer, according Khumalo, is also considering paying mining-equipment suppliers in gold because a cash shortage in Zimbabwe is hampering its plan to ramp up output.
Metallon holds the largest gold reserves in the country of about eight million ounces which potentially could also increase.
The halting of operations at Mazowe Mine owing to operational challenges rendered most of its employees jobless, and also opened up opportunities for illegal miners to invade
underground tunnels in search of the precious mineral.