By Tawanda Musarurwa

HARARE - Players in Zimba-bwe's gold sector say they requires $600 million in cap-ital investment over the next four years to boost capacity and output, a new survey shows.

According to the Zimbabwe State of the Mining Indus-try Report 2015, which was compiled by The University of Zimbabwe (UZ) in conjunction with the Chamber of Mines Zimbabwe, respondents said they require $600 million in capex that will see output in the gold sector rising to 35 tonnes by 2020.

Last year, the gold sector pro-duced 20 tonnes.

Presenting the outcomes of the survey this morning, lead researcher on the survey, UZ

senior lecturer in the depart-ment of economics Dr Albert Makochekanwa said:

"We found that in terms of the gold sector's capital require-ments, for rump and develop-

News Update as @ 1530 hours, Thursday 28 January 2016Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

Gold sector requires $600 million capex

2 NEws

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ment they need $191 million, for staying in business they need $410 million, and for further investment they need $601 million.

"And we asked them if they received the stated capi-tal requirements in terms of output is there going to be any significant change and they projected that output would shift from the current 20 tonnes to 35 tonnes," he said.

Zimbabwe's gold sector cur-rently constitutes 40 percent of mining output in terms of exports, 25 percent of

employment in the mining industry and accounts for 3,6 percent of gross domestic product (GDP).

In terms of the other key outcomes of the survey, a 25 percent of the sampled (gold) mines have plans to under-take exploration around their mines in the next five years, while 50 percent reported that they had plans to do both late stage and Greenfields exploration programmes.

It was also shown that around 80 percent of the producers in the gold industry said they would undertake expansion

projects in the next five years to increase output.

And that weighted average capacity util isation in the gold industry increased to an esti-mated 77 percent last year, up from 71 percent in 2014. Capacity util isation, however, varied across mining houses, ranging from as low as 30 percent, to 100 percent.

Notwithstanding the improved capacity util isation in the sector, 2015 was a tough year for gold producers generally as the survey showed that profits were diminished dur-ing the period under review.

"The gold industry was on average on a loss making position in 2015, with 90 percent of the respondents indicating that they failed to break even," said Dr Makochekanwa.

Addressing the same event Mines and Mining Devel-opment Minister Walter Chidhakwa said the decision to make Fidelity Printers and Refineries the sole buyer of gold in the country had contributed to the country's increased gold output last year.●

BH243

By Munesu Nyakudya

HARARE – Innscor's quick service restaurant business, Simbisa Brands, last year made capital investments amounting to $4 million

This came out during the launch of the subsidiary's Drive-through in Greencroft where Industry and Com-merce Minister Mike Bimha appreciated the company's growing footprint in Zimba-bwe.

"I am advised that the com-pany’s capital investments in Zimbabwe for the year ended June 30, 2015 amounts to around $4 million," he said.

And over the past six months, Simbisa has opened new out-lets in Masvingo, Bindura, Kwekwe, Gweru and Bula-wayo.

He also noted the company's contribution to employment creation and engagement of

downstream indigenous play-ers in the local economy.

"It is pleasing to note that Simbisa Brands, through its various brands and third party licensing, directly employs a total of 2 500 in Zimbabwe compared to 2 800 in 5 other countries where the company is operating.

Employment creation is one of the key thrust of ZIMAS-SET and such initiatives like this which create employment

are commendable," he said.

"The Government is cognisant of efforts by your company to support other industry play-ers through local procure-ment. This is evidenced by local purchases of raw mate-rials and finished goods to the tune of about US$57 mil-lion made by the company for the year ended 30 June 2015.

"Being an agro-based econ-omy, Government appreci-ates support rendered to

local farmers and agro-based industries through provid-ing a market for their com-modities and products. Once again, this is in support of the value addition and bene-ficiation pillar as enunciated in the ZimAsset blueprint."

Simbisa Brands financial director Mr Salim Eceo-laza said the comapny will be opening another drive-through in Bulawayo in the next few days.

"Since listing on the Zim-babwe Stock Exchange on 6 November 2015, Simbisa has opened two other drive throughs, one in Kenya Nai-robi and the other in Mauri-tius.

"This Greencroft site is our third drive through in the group, but our first drive through in Zimbabwe. In the next few days we will open another drive through in Bul-awayo," he said.●

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simbisa invests $4 million in 2015

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By Funny Hudzerema

HARARE - Mines and Mining Development Minister Wal-ter Chidhakwa says he will present three Bill aimed at improving the long-term via-bility of the local mining sec-tor to Parliament soon.

Minister Chidhakwa said the bills are the Pan African Uni-versity for Science and Tech-nology for value addition Bill, the Conversion of Minerals Marketing Corporation of Zimbabwe into an exploration company and the Mines and mineral amendment Bill.

“The aim of these legislations is to foster the issues of skill development because the key thing when we want to benefit from mining is through skill development on how to har-ness the minerals,” he said.

It has been observed that some of the country's mining legislation is not suitable to contemporary mining trends

since they are now out dated.

He said there was need to establish a mining institu-tion to cater for research and

innovation in the sector.

“We must have an institu-tion that does research of the mining sector bringing new

ideas and advanced technol-ogies which are being used in the mining industry,” he said.

He added that companies must invest in the explora-tion for them to benefit in the mining industry.

The State of the Mining Indus-try Survey 2015, which was launched today outlined that there is need for a restructur-ing of mining laws and invest-ing into research in order for the country to effectively exploit all its minerals.

The report suggested that amendment of Mines and Minerals Act should deal with challenges affecting the min-ing sector today and include clauses on small-scale and artisanal miners, rural com-munities affected by mining activities, corporate social responsibility by mining com-panies and rehabilitation of the environment after mining activities.●

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3 mining legislation to be presented to Parliament: Chidhakwa

Minister Chidhakwa

BH247

BH24 reporter

HARARE –Zvishavane based platinum miner, Mimosa plat-inum recorded a 2,7 percent increase in ore blasted dur-ing the second quarter ended December 31, 2015 to 651 629 tonnes from 634 396 tonnes in the previous quar-ter as production was well ahead of guidance.

Mimosa was Aquarius mine’s second highest producer after Kroondal, which recorded its highest Q2 production since 2011

According to Aquarius Plat-inum Limited, which jointly owns the mine with Impala platinum, most teams mined through poor ground con-ditions during the quarter resulting in preparation con-straining the ore generation cycle.

Hoisted tonnage for the quar-ter at 656 844 tonnes was 0,4 percent above previous

quarter`s tonnage of 654 127 tonnes.

“Hoisting performance is expected to improve in line with the anticipated improve-ment in the amount of blasted ore, Aquarius said.

Milled tonnage however declined 5 percent to 638 652 tonnes from 671 507 tonnes achieved in the previous quarter.

“Tonnes milled were lower

in the quarter as a result of plant stoppages associated with the rainy season mainly lightning which often results in power dips as well as a breakdown of the plant mill motor,” Aquarius said.

Platinum recovery at 79,1 percent was slightly less than the 79,2 percent achieved in the previous quarter with 4Es recovery at 78,6 percent slightly less than 78,7 per-cent achieved in the previous

quarter.

“The Process Team contin-ues to focus on initiatives to improve recoveries further,” the platinum company said.

Total capital expenditure for the second quarter amounted to $10,8 million with most of it being spent on mobile equipment, support & drill rigs and LHDs, the conveyor belt extension, down dip development and ventilation walls.

Commenting on the results, Aquarius Platinum CEO Jean Nel said: “The fact that both Kroondal and Mimosa’s PGM unit costs are lower today than 3 years ago despite steep increases in labour, electricity and other costs is testimony to excellent opera-tional management for which Rob Schroder and Winston Chitando and their teams deserve credit.”

.●

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Mimosa production 'well ahead of guidance'

BH249

HARARE - The main-stream industrial bucked losses over the past cou-ple of trading sessions to recover by 0.35 to close at 102.65.

Giant telecoms Econet bumped $0,0261 to trade at $0,2239, while stara-fricacorporation added $0,0020 to $0,0080 while

giant retailer OK Zimba-bwe added $0,0005 to settle at $0,0376.

On the downside, Hippo lost $0,0125 to close at $0,3575 and beverages manufacturer Delta shed $0,0100 to $0,5300.

Also losing ground was Fidelity Life which dropped

$0,0024 to trade at $0,0950, Simbisa which shed $0,0005 to $0,1590 while Willdale dropped $0,0004 to $0,0015.

The mining index was flat at 19.53 as Bindura, Fal-gold, Hwange and RioZim all maintained previ-ous price levels - BH24 Reporter ●

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MANYAME RURAL DISTRICT COUNCIL

TENDER INVITATION

Tenders are invited from registered companies for the tenders listed below:

TENDER NO. DESCRIPTION TENDER COST

HRD 1/2016 Service of computers, printers, laptops and photocopiers $50

HRD 02/2016 Tender for delivery, Management of Wide Area Network, Internet services, Website and $50

Manyame Domain

FIN01/2016 Insurance $50

RW01/2016 Vehicle Service tender $50

RW02/2016 Earthmoving Equipment service tender $50

Tenders must be enclosed in sealed envelopes and clearly endorsed on the outside with the advertised tender number. Tender documents

can be obtained at Manyame RDC Beatrice offices upon payment of a non-refundable tender fee of $50.

Manyame Rural District Council does not bind itself to accept the lowest or any tender and reserves the right to accept the whole or part of any

tender.

Tenders should be accompanied by the following:

Ÿ Company Profile

Ÿ Certified Copy of Current VAT Clearance Certificate and Certified VAT Registration certificate

Ÿ Physical and Postal address

Ÿ Proof of registration with State Procurement Board

Ÿ Certified copy of Certificate of Incorporation

Ÿ CR14

thYour submission should be hand delivered to the following address by 0900hours on 29 FEBRUARY, 2016.

The Chief Executive Officer Manyame Rural District Council

Manyame Rural District Council Beatrice Head Office

P. O. Box 99 54km along Harare/Masvingo Road

Beatrice

OR

TARI-D

I353390-D2

11

MovERs CHANGE TodAy PRiCE UsC sHAKERs CHANGE TodAy PRiCE UsC

Starafrica 33.33 0.80 WILLDALE -21.05 0.15

ECONET 13.19 22.39 HIPPO -3.37 35.75

OK ZIM 1.34 3.76 FIDELITy -2.46 9.50

DELTA -1.85 53.00

SIMBISA -0.31 15.90

iNdEx PREvioUs TodAy MovE CHANGE

INDUSTRIAL 102.30 102.65 -0.35 points -0.34%

MINING 19.53 19.53 +0.00 POINTS +0.00%

12 ZsE TABlEs

ZsE

iNdiCEs

stock Exchange

BH2413

14 diARy oF EvENTs

The black arrow indicate level of load shedding across the country.

PowER GENERATioN sTATs

Gen Station

28 January 2016

Energy

(Megawatts)

Hwange 427 MW

Kariba 285 MW

Harare 30 MW

Munyati 25 MW

Bulawayo 24 MW

Imports 0 - 300 MW

Total 1348 Mw

—28 January 2016 – Chamber of Mines Zimbabwe state of the Mining industry Report 2015 launch; venue: Rainbow Towers; Time: 0730hrs -1300hrs

—10 February 2016 - Nampak Zimbabwe Annual General Meeting: venue 68 Birmingham Road, southerton, Harare: Time 12:00

—18 February 2016 - 70th Annual General Meeting of the members of CAFCA ; Place: Boardroom at the company’s registered office at 54 lytton Road, workington, Harare; Time: 12:00 hours

—23 February 2015 - 38th Annual General Meeting of the members of Powerspeed Electrical limited; Place: Powerspeed Board-room, Gate 1, Powerspeed Complex, Corner Cripps Road and Kelvin Road North, Graniteside, Harare; Time: 1100 hours

THE BH24 diARy

JoHANNEsBURG - Lonmin today said it would continue to review its services and reduce costs, mainly through job cuts, as the sl iding price of platinum bites further.

The company said labour costs fel l 194 mil l ion rand ($11.8 mil l ion) in the last three months of 2015 after it shed 5 077 jobs, or 84,6 per-cent of its planned reduction in headcount.

"Progress continues with the restructuring programme due to the new benchmarked operating model and removal of high-cost production to ensure the business remains viable," Lonmin said in a statement.

It is targeting savings of 700 mil l ion rand in 2016.

Hurt by a 2014 strike, rising costs and a plunging plat-inum price, Lonmin raised $400 mil l ion through a cash call in December which fai led to f ind favour with share-holders and priced shares at about a penny each.

Some of the proceeds of the rights issue were used to pay down debt, leaving the com-pany with $69 mil l ion in cash at end of December.

The miner said production of refined platinum reached 171 441 ounces in the three months to the end of Decem-ber, up 22,6 percent from a

year earl ier.

The price of platinum has been on the decline for about five years. It fel l 26 percent last year and is trading at less than half its 2011 peak.

Shares in Lonmin have lost nearly al l of their value over the last year. It was the

worst-hit of three top plat-inum miners by the 2014 five-month labour stoppage.

Lonmin maintained its ful l-year production guidance of 700,000 platinum ounces and its capital expenditure plan of $132 mil l ion despite projecting sustained weaker metal prices.- Reuters●

REGioNAl NEws 15

Platinum producer lonmin cuts jobs and costs

Oil traded near $32 a bar-rel after US crude stockpiles expanded for a third week to a record, exacerbating a global glut.

Futures were little changed in New york after gaining 2,7 percent on Wednesday. Inventories rose to 494,9 million barrels last week, the highest in weekly data from the Energy Information Administration that started in August 1982. Russia talked down the prospect of working with OPEC to cut output after the country’s energy minister met with heads of the nation’s biggest oil companies to dis-cuss co-ordinating with the group.

Oil is down about 13 per-cent this year as volatil ity in global markets adds to concern over brimming US stockpiles and the outlook for increased Iranian exports after the removal of interna-tional sanctions. The world-wide surplus will decline this year even after Iran adds an expected 500,000 barrels a day of output, United Arab Emirates Energy Minister Suhail Al Mazrouei said.

“The overall U.S. inventory situation hasn’t changed, they are stil l high,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “The higher oil climbs without any improvement in produc-tion or stockpiles, the more vulnerable prices are going to be to that inexorable supply pressure.”

West Texas Intermediate for March delivery lost 1 cent to $32,29 a barrel on the New york Mercantile Exchange at 7:51 a.m. London time. The contract rose 85 cents to

$32,30 on Wednesday. Total volume traded was about 13 percent above the 100-day average. WTI has risen more than 20 percent from the low-point in the downturn earlier this month, meeting the com-mon definition of a bull mar-ket.

Cushing stockpiles

Brent for March settlement, which expires Friday, gained 7 cents, or 0,2 percent, to $33,17 a barrel on the London-based ICE Futures Europe exchange. Prices

gained $1,30 to $33,10 a bar-rel Wednesday. The European benchmark crude traded at premium of 92 cents to WTI. The more-active April con-tract increased 10 cents to $34.03.

Crude supplies at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, dropped by 771 000 barrels to 63,4 mil-lion through Jan. 22, the EIA said in a report Wednes-day. Stockpiles declined for the first time in 12 weeks. Nationwide inventories rose by 8,38 million barrels.

Russian Energy Minister Alex-ander Novak and the heads of the nation’s biggest oil companies discussed the pos-sibility of working with the Organization of Petroleum Exporting Countries, the min-istry said Wednesday. Presi-dent Vladimir Putin’s spokes-man Dmitry Peskov told reporters earlier in the day that while consultations with other producing countries were regular, there wasn’t any “specific discussion on coordination of actions” on output. - Bloomberg●

iNTERNATioNAl NEws 16

oil trades near $32 as Us crude stockpiles expand global glut

By Aishetu Fatima dozie

The private equity or financial sponsor industry centred on sub-Saharan Africa (exclud-ing SA) has had an unprec-edented fund-raising boom in recent years, driven by attractive returns realised on investments in the region.

But the role of the indus-try and its developed mar-ket investment approach may need to be re-examined and tailored to better suit current economic realities and invest-ment opportunities.

While once alluring sovereign growth prospects have dimin-ished in the face of falling commodity prices and cur-rency devaluations, capital continues to chase the few big deals meeting traditional investment criteria.

Established funds with demonstrated track records in the region, such as The Abraaj Group, African Cap-ital Alliance, Development Partners International, Helios

Investment Partners and oth-ers, have raised bill ions of dollars in capital targeted towards growth investments in Africa.

Global private equity jug-gernauts The Carlyle Group and General Atlantic Part-ners and sovereign wealth funds such as Temasek have either set up dedicated Africa funds or hired teams to iden-

tify high-return investment opportunities. Last year, the industry closed funds having raised up to $4bn in new cap-ital commitments. The mes-sage is clear — Africa is an attractive investment des-tination for discerning and intelligent capital providers.

Looking at economic and financial market activity in sub-Saharan Africa (exclud-

ing SA) in 2013-14, the region enjoyed high real gross domestic product (GDP) growth rates of more than 5.7%, versus global GDP growth of less than half that over the same period.

A big driver of the economic boom was the commod-ity price rally benefiting the oil-producing nations of Nige-ria and Angola, whose econo-mies jointly represent half of the region’s GDP.

However, oil prices have since dropped precipitously by more than 70 percent fol-lowed by a sharp decline in real GDP growth, with Nigeria expected to grow by a modest 3,3 percent and Angola 3 per-cent last year.

Both economies have insti-tuted capital controls and devalued their currencies several times to stem the flow of reserves from their central coffers. Nigeria, which became the biggest econ-omy in sub-Saharan Africa on a GDP rebasing in 2013,

17 analysis17 ANAlysis

Africa appeals to the discerning

18 analysis18 ANAlysis

has seen its foreign currency reserves drop to $29bn, from close to $50bn in mid-2013.

The region needs all the for-eign direct investment it can get to climb its way out of the malaise.

That big pools of private equity capital are dedicated to investing in sub-Saharan Africa is encouraging. But is it also the case for African firms in need of capital to fund cap-ital expansion plans and meet their operating challenges?

Most of the new funds being raised are channelling capi-tal towards growth opportu-nities. Private equity invest-ments are considered to be growth or expansion capital as they deploy resources to profit-generating businesses that seek capital to expand.

These forms of investment are instrumental in private sector development, which leads to economic growth and advancement. The more that private equity firms invest

in Africa and leverage their global relationships for sourc-ing economies, knowledge transfer, strategic alliances and other benefits, the better for such businesses and their economies.

Deals include Actis investing more than $60m in Sigma Pensions in Nigeria; Helios Investment Partners acquir-ing a 70 percent stake in Telkom Kenya from Orange; and DPI exiting its stake in Mansard Insurance to Axa. These transactions have sent a signal that smart money is looking at opportunities in Africa and getting deals done.

But is this enough? Private equity firms want to focus on investment opportunities, where the minimum cheque is $50m-$100m. For sub-Saha-ran Africa, this is a sizeable investment only applicable to a few companies.

Evidence suggests there are fewer than 2,000 firms with revenues beyond $50m in sub-Saharan Africa, half in

SA.

Capital needs to flow to the less established businesses in greater need of this and other benefits provided by private equity investors.

Sub-Saharan Africa needs to see more private equity firms looking at investments of $5m-$15m. This would require investors to deal with the management expertise gap, where private equity firms have excellent expe-rience. Sub-Saharan Africa needs smart, catalytic capi-tal, as sometimes money on its own is not enough.

The developed market approach does not work in all instances. Moreover, most of the funds raised in the past few years have been in US dollars, which demand high-return hurdles from their limited partners. Given the economic headwinds facing the region and the resultant steep currency devaluations/depreciations, private equity firms will need to be cautious

as they evaluate new growth investment opportunities.

One idea would be to see these firms tap the local asset management industry to raise domestic currency funds. This would help reduce the single biggest impediment to private equity investments in sub-Sa-haran Africa — concern over currency volatil ity.

It would reduce pressure on the funds’ expected returns as well as ease the anxiety of the entrepreneur or business that requires the investment.

A change in the quantum of investment towards smaller chunks of capital, realistic talent and management guid-ance, patience, and a bit of courage, would have a sig-nificant effect on the growth and development of smaller businesses in the region. - Bdlive●• Dozie is the co-head of investment banking in West Africa at Rand Mer-chant Bank Nigeria