Zimbabweans seek split from Guyana Gold after profit dispute

State-owned Zimbabwe Mining Development Corp. (ZMDC) is seeking to back out of its partnership with Guyana Gold (GUY-T) in the Sabi gold mine.

The Vancouver-based junior holds a 55% interest in the underground mine, while ZMDC holds 45%. Guyana acquired its interest in April 1995 at a cost of US$9 million. The partnership had committed to upgrading production to 20,000 tonnes per month over a 3-year period at a projected cost of US$10 million.

Annual production currently stands at 12,000 oz. gold. Cash costs have increased to US$270 per oz. during the first year of the upgrade program.

The upgrading is designed to raise annual production to 40,000 oz. Hal Hemmerich, president of Guyana Gold, says ZMDC is reported to be displeased with the allocation of US$1 million in profit from the Sabi mine. ZMDC wants to take its share out of the partnership, while Guyana wants the money to be put toward development of the mine.