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BMI View: Tanzania's gold sector will remain pressured by low gold prices, which will discourage
production growth over coming years. Beyond our forecast period to 2020, the country's mining sector
could diversify as various miners are looking to invest in the country's nickel, coal and uranium resources.
Latest Developments & Structural Trends
? Tanzania, currently Africa's fourth-largest gold producer, will see modest growth in output due to mine
closures and a limited number of projects in the pipeline. Ongoing labour unrest, illegal mining, power
shortages and gold price weakness will also temper the sector's production outlook. Acacia Mining
(formerly African Barrick Gold) and Resolute Mining have ceased production at two mines due to
depleted reserves. Acacia Mining and AngloGold Ashanti have warned about impending job cuts in the
north of the country. Given that Tanzania relies upon gold for over 40.0% of its exports, the downturn in
the sector is likely to have serious repercussions for the economy as a whole.
? Despite this, a number of new projects will ensure the country's production growth remains positive over
the coming quarters. For instance, CATA Mining's Mara gold mine, the second largest project in the
region, following Acacia Mining's North Mara gold mine, is expected to begin production in Q316. The
miner has invested over USD54mn to develop the project. Further, Shanta Gold recorded gold
production of 24,522 ounces (koz) at its New Luika gold mine in Tanzania in Q315. The record
production was benefited from a 33% q-o-q improvement in gold ore grade efficiencies and a 25%
increase in tons milled during the quarter.
? Shanta Gold has laid out a five-year mine plan for its New Luika mine in Tanzania. The new mine plan,
which will include underground mining and an ongoing surface mining and tailings recovery project,
estimates an average production of 84koz annually over the next five years. An underground extension to
the mine will produce 310koz and add USD72mn to the project value. The underground development is
estimated to have an up-front cost of USD38mn. Under the plan, the open pit will run until 2018. New
Luika is expected to produce a total of 443koz of gold during the 2016-2022 period, of which 310,000oz
will be from underground, 133koz from open pit and 19koz from the tailings project..