Firm calls off ZSE listing

Exchange after allegedly expressing concerns over indigenisation and economic empowerment regulations.
The firm planned to raise US$5 million to fund the development of its vast gold claims in Bembesi, Matabeleland North, about 80km west of Bulawayo.
Whetstone’s objective was to complete its secondary listing on the ZSE by the end of last year, but ran into problems.
This followed concerns raised by the Ministry of Youth Development, Indigenisation and Economic Empower-ment over certain aspects of its listing plans.
Herald Business understands Government was concerned at the firm’s plans to raise part of its targeted capital from the Toronto Stock Exchange.
Such an arrangement would have seen the bulk of the shareholding taken up by foreign shareholders at a time Government is “indigenising” mines.
Government sources said the listing of Whetstone on ZSE, expected to raise US$2 million, would mean locals would get only 26 percent.
The balance of US$3 million would have been raised on TSX – meaning the firm’s controlling shareholders would have been foreigners.
But the firm had made proposals to gradually reduce its shareholding to effectively localise its ownership.
But Government rejected this proposal.
Government also allegedly turned down the firm’s proposal as the firm reportedly wanted to take US$2 million to Canada to cover head office expenses.
“The firm has cancelled the plans to list on ZSE. The listing was supposed to raise US$2 million in Zimbabwe and US$3 million in Canada,” said a source.
Efforts to get a comment from the ZSE were unsuccessful yesterday as chief executive Mr Emmanuel Munyuki was said to be in meetings.
There also were concerns over the US$7 million price at which the firm’s more than 611 gold claims were acquired from another mining entity, Duration Gold.
This development comes as Government is pushing ahead with the indigenisation of the mining sector, seen as a strategy to mainstream locals into the economy.
Government has become increasingly concerned with a situation where billions of minerals are exported, but with little benefit to the fiscus and ordinary people.
Last week, Finance Minister Tendai Biti bemoaned the fact that out of the US$1,8 billion worth of minerals exported last year, the fiscus received only US$4 million.
It is against this background that the Government, notwithstanding the fact that mining is capital intensive, seeks to localise the ownership of mines.
Foreigners wishing to invest in the sector would only come in as partners with a maximum stake of 49 percent.
Government has also indicated that it will have a 100 percent ownership in all new alluvial diamond mining projects and at least 51 percent shareholding in all the other mineral exploitation activities.
Firms that have complied with requirements of the new Act will not be affected by the policy adjustments.
The Act compels all foreign firms with a net asset value above US$500 000 to sell 51 percent to locals.