CMC's Zim Indaba Conference v.2
Nic Dinham
Zimbabwe Mining Conference: Caledonia Mining Corporation (CMC) hosted a Zimbabwe-focused conference on mining and exploration during Indaba Week in Cape Town. Nearly 200 people representing retail, institutional and corporate investors as well as corporate bankers attended.
Zim Senior Civil Servants: The conference assembled the highest echelon of Zimbabwean civil servants, including the Permanent Secretaries of the Departments of Mining (PSM), Finance (PSF), and a governor of the Reserve Bank of Zimbabwe (GRBZ). Their key points are summarised below.
BEE/Indigenisation Policy: The PSM stated that the Zimbabwean government has moved away from the aggressive BEE or Indigenisation policies of the past and expects mining growth and investment to benefit Zimbabweans through employment opportunities as well as higher tax revenues.
Mining Cadastre: Like SA, Zimbabwe does not have an accessible mining cadastre but, unlike SA, its implementation appears imminent and has been promised by the PSM by December 2026.
Royalty Creep: The Ministry of Finance (MoF) originally proposed increasing the royalty on gold from 5% to 10% when the gold price exceeded $2,500/oz – but has subsequently changed the trigger price to $5,000/oz.
Withholding Tax on Interest: The proposal to tax interest payments on foreign debt was withdrawn completely. The PSF explained that the Ministry reversed its proposals after receiving representations from the industry as to what the impact could be on current and future mining investments.
“Monocurrency”: The GBRZ stated that the government intends to return to a single Zimbabwean currency. A provisional date for its full introduction in 2030, is subject to certain conditions. The first of these was six months forex cover, and the second was to ensure that inflation was under control.
Two Major Mining Projects: The two major mining projects in Zimbabwe that are currently under construction, or being funded, are CMC's Bilboes project with a price tag of $585m and the Karo project with an estimated capex of $500m.
Conclusion: The conference provided encouragement that the country supports the mining industry. The country's GDP growth rate, which is expected to reach long-term highs of 8.5% p.a. with inflation of just 4%, is providing additional encouragement to investors.
Valuation: We have increased our FVVR from $29.05/s - $32.20/s to $30.72/s - $35.74/s, with a mid-point valuation of $33.23/s. The benefit of the increased spot gold price has been partly offset by the lower gold price output predicted for Blanket Mine. Our valuation does not include the potentially significant present value of Bilboes, which we will include when the funding cycle is complete.
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