CMC's Zim Indaba Conference
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, and 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 equity-based 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 to increase the royalty on gold from 5% to 10% when the gold price exceeded $4,500/oz – but has subsequently changed the tigger price to $5,000/oz.
Withholding Tax on Interest: The proposal to tax interest payments on foreign debt by 15% was withdrawn completely.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 GRBZ stated that the government intends to return to a single Zimbabwean currency after the failure of the first two. A provisional date for its full introduction is 2030, subject to several conditions. The first of these was 6 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 in construction, or being funded, are CMC's Bilboes project with a price tag of $585m and the Karos project with a price tag of $500m.
Conclusion: The conference provided encouragement that the country supports the mining industry and that the policy mistakes of the past will not reoccur. 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: Our FVVR has increased from $29.05/s to $32.20/s to $30.72/s to $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 a lower gold output predicted for Blanket Mine. Our valuation does not include the potentially significant present value of Bilboes, which will be included when the funding cycle is complete.
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