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Risk averse investors sell off stocks
Dumisani Ndlela, Financial Gazette
April 01, 2011

http://www.financialgazette.co.zw/top-stories/7791-risk-averse-investors-sell-off-stocks.html

International investors with exposure to Zimbabwe-linked mines became flustered after the Zimbabwe government last Friday gave foreign-owned mining firms a 45-day ultimatum to comply with controversial indigenisation laws meant to transfer mine ownership to blacks. The move by the government, which worsened risk and heightened aversion to Zimbabwean mining stocks, rattled stock markets across the world, forcing a share tumble in stocks with significant exposure to Zimbabwean mines, particularly platinum.

Executives scrambled to re-assure investors and curtail a drubbing of share prices, indicating that discussions were underway to mitigate a potential crisis.

Reports indicated that Aquarius Platinum Ltd, which has a 50-50 joint venture with Impala Platinum (Implats) in Zimbabwean platinum miner, Mimosa Mining Company, fell the most in eight months in London trading after government gave foreign mine operators 45 days to explain their plans to meet government demands to sell stakes in Zimbabwe-based assets.

Implats, the world's second-largest producer of platinum with controlling interest in Zimbabwe Platinum Mines (Zimplats), which operates three underground mines and a concentrator at Ngezi, lost over five percent at one point to a 10-day low and was trading 3,55 percent lower at R190,56 around mid-day on Monday, the first day of trade after the Government Gazette of Friday, Reuters reported.

The Johannesburg bourse's platinum mining index was dragged down 3,43 percent on the day.

Aquarius, the world's fourth-biggest platinum producer, said in a statement its Zimbabwean mining unit had been in discussions with authorities to find out how to comply with the country's legislation.

Anglo Platinum Ltd (Angloplats), the largest producer of the metal with interest in the Unki platinum project that started production late last year, said on Monday it had been moved to within 30 percent compliance with the legislation.

Shares in Angloplats dropped marginally on the Johannesburg bourse by 2,6 percent to R661,60 but closed at R679,37 a share.

Toronto-listed New Dawn Mining Corp, a Zimbabwe-focused gold mining company, said it was "reviewing these new regulations in order to understand their potential impact on the company's Zimbabwe-focused mining operations and business plans, and will report to shareholders as more information becomes available".

Zimbabwe signed the Indigenisa-tion and Economic Empowerment Act into law on March 9 2008, and related regulations were gazetted as Statutory Instrument 21 of 2010 issued on January 29 2010.

The related regulations provide for non-indigenous companies operating in Zimbabwe to arrange for 51 percent of their shares or interests therein to be owned by indigenous Zimbabweans within five years, subject to an analysis based on information that was to be filed with the Minister of Youth Development, Indigenisation and Empowerment, currently the ZANU-PF legislator, Saviour Kasukuwere.

Friday's gazette insists that each non-indigenous mining company must submit an indigenisation plan within 45 days and thereafter dispose of 51 percent, less any percentage previously indigenised, to qualified indigenous Zimbabwean companies or investors.

The shares are to be disposed to a "designated entity" within six months thereafter, which may, in certain circumstances, be extended by a further period of not more than three months.

The Government Gazette defines a "designated entity" as any one of several specified State-owned or controlled entities or an employee share ownership scheme.

The value of the shares to be transferred to a designated entity will be calculated on the basis of a valuation agreed by the Indigenisation and Empowerment Minister and the non-indigenous mining company, and will take into account Zimbabwe's sovereign ownership of the minerals exploited or proposed to be exploited by the non-indigenous mining company.

New Dawn said each of its Zimbabwe operating subsidiaries, namely, Casmyn Mining Zimbabwe (Private) Limited, Falcon Gold Zimbabwe Limited and Olympus Mines Limited, were non-indigenous companies for purposes of the Act.

The company had filed the required information with Kasukuwere within the designated timeframe.

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