HARARE – Zimbabwe has approved Canada-based New Dawn Mining Corporation (New Dawn)’s indigenisation plan.
The junior gold miner — which owns and operates several mines in three gold camps in Zimbabwe — last week announced that the Indigenisation and Economic Empowerment ministry had approved the company’s proposal.
“The implementation of the plan will require a number of steps and procedures, including amending the company’s capital structure to provide for the specific equity interests contemplated under the plan, and eliminating the current minority interests in the company’s Zimbabwe subsidiary, Falcon Gold Zimbabwe,” said New Dawn.
This comes after the Toronto Stock Exchange-listed miner last month shut down its Dalny Mine located in the Kadoma due to government’s two-year delay in approving the company’s indigenisation proposal.
Industry experts contend that a timely approval of the miner’s indigenisation plan had been expected to provide access to sufficient investment capital to fully fund the development of a cost efficient operation at the mine.
“After years of underdevelopment, had an investment programme in the Dalny Mine been implemented and completed as originally anticipated, the mine would have been positioned to maintain profitable operations in today’s environment of lower gold prices and increasing costs,” said advisory firm International Mining Consultancy.
In 2007 Zimbabwe crafted and passed as law the Indigenisation and Economic Empowerment Act that forces foreign-owned companies operating in the country to cede 51 percent of their shareholding to locals.
However, the evolving policy on indigenisation now appears to be focusing on seizing 51 percent controlling interests in foreign-controlled mines with compensation deemed to be the value of the minerals in the ground.
New Dawn said under the terms of the plan, four independent Zimbabwean indigenous investor groups and the National Indigenisation and Economic Empowerment Fund (Nieef) would acquire equity in New Dawn, which were initially not expected to result in significant capital to the company.
A second component of the plan entailed New Dawn giving away 10 percent equity in each of its subsidiaries in Zimbabwe to community share ownership trusts and five percent equity to employee share ownership schemes, for no monetary considerations.
New Dawn said in order to take account of the dilution of its interests in its Zimbabwe subsidiaries by the respective allocations of equity interests, in order to meet the additional effective 36 percent equity ownership in those subsidiaries to be acquired by indigenous Zimbabweans through investment in New Dawn, the total equity interest in the company that would ultimately be acquired by indigenous investor groups and the Nieef would be 42 percent.
The miner noted that the equity interests in the company’s Zimbabwe operating subsidiaries that would be transferred to the community and employee groups were expected to provide a direct and broad-based participation in its mining operations by indigenous Zimbabweans.
The junior gold producer’s main assets are the Turk and Angelus mines in Zimbabwe, as well as a portfolio of exploration properties in the region.
In 2007, Zimbabwe crafted and passed as law the Indigenisation and Economic Empowerment Act that forces foreign-owned companies operating in the country to cede 51 percent of their shareholding to locals.