Thursday, January 17, 2013

(SUNDAY MAIL ZW) Locals to pay $I53m to Zimplats

Locals to pay $I53m to Zimplats
Sunday, 13 January 2013 00:00

Locals that include the National Indigenisation and Economic Empowerment Fund (NIEEF), Zimplats employees and members of the community that will benefit from the indigenisation of Zimplats are expected to pay $153 million to the miner for the ground that it was forced to release by Government in 2006, according to the Indigenisation Implementation Plan (IPP).

The IPP forms part of the term sheets signed between Government and Zimplats on Friday. On May 24 2006 Government and Zimplats signed the Release of Ground Agreement (ROGA) through which the platinum miner ceded claims that were not covered under its long-term expansion programme.

At the time, it is claimed that the ground had 36 million ounces worth of resource.

Last week, Government and Zimplats concluded a term sheet in respect of the proposed indigenisation of Zimplats’ operating subsidiary Zimbabwe Platinum Mines (ZPM) in a deal valued at $971 million.

Under the agreement, 31 percent of ZPM will be sold to the NIEEF, while an employee share ownership trust for the benefit of all full-time indigenous employees and the Zimplats Mhondoro-Ngezi-Chegutu-Zvimba Community Share Ownership will be offered 10 percent each, translating into a 51 percent holding for the locals.

Locals will be entitled to appoint directors to the board.
However, Zimplats will retain the balance of 49 percent of ZPM but will continue with the management of the mine.

The Australian Stock Exchange (ASE)-listed company announced last week that it will release the shares only after they have been “fully paid for”.

“Zimplats will facilitate the transaction by providing vendor funding to the indigenous entities at an interest rate of 10 percent per annum. The vendor financing will be repayable from 85 percent of the dividends declared by ZPM.

“The proceeds, as and when received by Zimplats, will be declared as a dividend to shareholders or used as future funding for ZPM.

“Zimplats will hold as collateral against the Indigenous Entities debt any Indigenisation Shares not fully paid for,” said the company in a regulatory filing made to the ASE last week.

As part of some curious conditions set by Zimplats, it expects to be exempted from withholding tax on the interest that will be paid by locals to Zimplats for vendor financing.

Also, the miner is pushing the Government to amend the 2012 Mining Regulations so as to slash the rentals payable by Zimplats, including the level of Additional Profit Tax (or windfall tax) and the royalty rates it pays.

These amendments are expected to be made by June 30 this year.

“It was further agreed that by 30 June 2013 the Government would use its best endeavours in the utmost good faith to, amongst other things, amend the 2012 Mining Regulations in such a manner so as to reduce all ground rentals payable by Zimplats to the same levels as were in force immediately prior to the promulgation and coming into force of the 2012 regulations and amend the Mining Agreement and fiscal terms currently applicable to Zimplats such that Additional Profits Tax and royalty rates are no worse than those granted or provided to any other Platinum Group Metal mining entity operating in Zimbabwe,” added the filing.

Last year, Government through Statutory Instrument 11 of 2012 increased application fees for platinum claims — for both ordinary and special prospectors — from $200 to $500 000. Registration fees for the metal also jumped from US$500 to $2,5 million.

For a long time, Zimplats has been haggling with the Government over a US$34 million tax bill accrued Additional Profits Tax, which are triggered when a company makes windfall profits. It, however, eventually conceded liability of the $34 million tax bill.

Meanwhile, the company’s executive director and chief finance officer, Mr Patrick Maseva-Shayawabaya, is set to step down in March this year.
His successor will be appointed soon.

“Zimplats announces the resignation of Patrick Maseva-Shayawabaya as an executive director and chief finance officer of the Zimplats group of companies with effect from March 31, 2013.

“Patrick’s resignation has been accepted with regret and a successor will be announced in due course.

“Having joined the group in 2001 and been appointed to the board in 2004, Patrick has made a significant contribution to the group over many years and his fellow directors and management thank him and wish him well for the future,” the company said in a statement.

Mr Maseva-Shayawabaya becomes the second key official to leave the company after board chairman and non-executive director Mr David Brown in June last year.

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