Unlocking investment potential in Zimbabwe

An image of NSDV foreign qualified mining and construction Lawyer Methembeni Moyo and candidate attorney Dominic Varrie

NSDV foreign qualified mining and construction Lawyer Methembeni Moyo and candidate attorney Dominic Varrie

14th July 2023


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With the potential to become a global mining superpower, construction and mining focussed law firm NSDV says progress in Zimbabwe’s mining sector is perennially obstructed by economic and political challenges, rendering Zimbabwe a high currency risk mining destination.

NSDV foreign qualified mining and construction lawyer Methembeni Moyo and candidate attorney Dominic Varrie report that if the currency risk issues that affect Zimbabwe’s mining sector can be addressed, foreign and local investors would be more inclined to inject funding that will afford junior to midtier miners the much needed capital to take advantage of Zimbabwe’s vast natural resources.

An “exciting innovation” in that direction, they say, is the introduction of the Victoria Falls Stock Exchange (VFEX) – an alternative stock exchange established in 2020 as a subsidiary of the main Zimbabwe Stock Exchange (ZSE), operating out of the Victoria Falls Special Economic Zone.

The bourse incentivises listings with the prospect of raising capital in hard currency. These incentives include that all the cash inflows raised on VFEX are considered free funds and can be kept in Financial Conduct Authority investment foreign currency accounts.

Zimbabwe is renowned for its geological wealth, skilled mining labour force and a generally well-developed mining sector.

With recent significant lithium discoveries and “seemingly insatiable” global demand for battery minerals, Moyo and Varrie say that the mining sector is a critical feature of Zimbabwe’s economy, accounting for around 12% of the country’s gross domestic product and around three-quarters of Zimbabwe’s export earnings in 2022.

While some economists are sceptical, Moyo and Varrie point out that the Zimbabwean government remains optimistic that the country’s mining output will reach $12-billion by the end of this year.

The fundamental deterrent to investing in Zimbabwe’s mining sector are unfavourable and uncertain exchange control, currency and fiscal policies.

Moyo and Varrie explain that investors need to be assured that they can put money into Zimbabwe and take out their gains without undue restriction; however, they say Zimbabwe’s laws and prevailing economic conditions do not provide investors that comfort.

“This makes raising foreign currency externally or locally for expensive capital-intensive mining projects difficult,” Moyo and Varrie assert in a statement.

Large multinationals operating in Zimbabwe’s established platinum sector for example, have the balance sheet to mitigate Zimbabwe’s foreign currency risk.

However, with mining costs on the rise owing to inflation, junior to midtier miners are finding it challenging to raise the capital required to take advantage of the favourable commodities price cycle in precious metals and battery minerals.

Nonetheless, Moyo and Varrie point out that there are some innovative avenues available to junior and midtier miners to raise much needed funding to thrive in Zimbabwe’s challenging economic environment.

They highlight that the VFEX has provided an avenue for international investors into Zimbabwe without the associated currency risk.

The success of the VFEX is “undeniable”, state Moyo and Varrie, pointing to the bourse’s over 400% increase in market value in the past year, which currently sits at $1.4-billion.

The value of stocks traded on the VFEX during the first quarter of this year amounted to more than $13-million.

Junior Focus

Moyo and Varrie note that the VFEX has created a procedure for listing specifically applicable to junior mining companies.

A junior mining company is a company whose principal activity is that of mining but which does not qualify to list on the main board, but qualifies to list on the junior board.

The criteria for the listing of junior mining companies on the VFEX prescribes that they must have a subscribed capital of $250 000; not less than five-million equity shares in issue; a satisfactory profit history for the preceding three financial years, if applicable; and at least 20% of each class of equity shares must be held by public shareholders, unless otherwise agreed with the VFEX.

Caledonia on VFEX

The listing of Caledonia Mining Corporation on the VFEX in 2021 demonstrates the funding potential of the VFEX, state Moyo and Varrie.

Caledonia received “incredible” support from Zimbabwean investors who oversubscribed by more than 50% for the Caledonia depository receipts, with Caledonia raising $7.8-million – more than double the originally targeted $3-million.

The capital Caledonia raised was used, in part, to fund a 12 MW solar photovoltaic plant that became operational in November 2022 to reduce on-mine costs.

Edited by Creamer Media Reporter



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