State mining firm wagers on floundering Tulawaka mine
Mining operations at the then-ABG-owned Tulawaka Gold Mine in Biharamulo, Kagera. Yesterday, African Barrick formally handed over the troubled asset to a mining investment company owned by the Tanzanian government. PHOTO | AFRICAN BARRICK GOLD
What you need to know:
- In an unprecedented development in the country’s mining history, Stamico will also own and manage the fund set up to rehabilitate Tulawaka.
- The establishment of the rehabilitation fund is part of the plan to close the mine that became operational in 2005.
Dar es Salaam. The State Mining Corporation (Stamico) has acquired Tulawaka Gold Mine from African Barrick Gold (ABG) in a $4.5 million (about Sh7.2 billion) deal closed yesterday in Dar es Salaam.
Under the pact, Stamico is required to make an initial payment of $3.5 million to ABG and the remaining balance nine months after commencing operations.
In the unprecedented development in the country’s mining history, Stamico will also own and manage the fund set up to rehabilitate Tulawaka.
The establishment of the rehabilitation fund is part of the plan to close the mine that became operational in 2005.
Speaking at the function to close the deal, Mr Deo Mwanyika, the vice president of African Barrick Gold, said the mine had been sold because the remaining assets could only be viably managed by a medium scale company
“Our feasibility studies showed that gold deposits at Tulawaka were still available but in a minimal amount which could be unprofitable for a big company like ABG to continue with its operations,” said Mr Mwanyika.
Under the agreement, Stamico will continue using all the existing facilities and infrastructure to operate the mine.
In March 2013, Tulawaka Gold Mine, which is in Kagera Region, ceased mining operations after its gold reserves became economically inviable to extract and refine for a big mining concern.
The mine is 100 per cent owned by Tulawaka Joint Venture in which ABG has a stake of 70 per cent and the remaining 30 per cent is owned by MDN Mines.
Mr Mwanyika said after the closure of the mine in the second quarter of this year, many local and international companies showed interest in acquiring it.
However, the government recommended that Stamico be approached for a possible takeover.
Its director general Gray Mwakalukwa, said the mine would require a work force of 450 people, and to start with, all its former workers will be recruited.
The minister for Energy and Minerals, Prof Sospeter Muhongo, who witnessed the conclusion of the deal, said Stamico had taken over the ownership of Tulawaka on behalf of Tanzanians.
He said the plan was to sell shares of the mine to the people as part of the government’s initiative to empower Tanzanians economically and make them owners of the economy.
After disposing of Tulawaka, ABG, a subsidiary of Barrick Gold of Canada, it now remains with three mines in the country. They are Bulyanhulu, Buzwagi and North Mara.
The Tulawaka mine is said to have a life span of 25 years and the potential to produce about 500,000 ounces per annum.
Proved gold reserves at the moment are put at between 100,000-200,000 ounces, which at the current gold price in the world market amounts to about $130 million and $260 million.
