Karo Mining readies for bond listing this week

KARO Mining Holdings (KMH), a subsidiary of South Africa’s platinum producer, Tharisa, has expressed readiness to list its bond on the fast-growing foreign-currency-denominated Victoria Falls Stock Exchange (VFEX).

Unlike the listing of shares, listed bonds give a company the leeway to raise significant funds without diluting equity value.

Experts define a bond as fixed-income investment that represents a loan made by an investor to a borrower.

The bold move comes after the mining group garnered an oversubscribed bond issue of US$31.8 million worth of interest generated, exceeding the minimum requirement of US$25 million.

In a notice yesterday, the mining firm said it now awaits its bond listing on the VFEX on Wednesday after securing regulatory approvals.

It said the proceeds from the bond will be applied to partly fund the Karo platinum project in Mhondoro, a development stage, low-cost, open-pit platinum group of metals (PGM) asset, located on the Great Dyke.

“The Issuer has received applications to subscribe for Notes, as well as being advised of credit committee approval, subject to completing certain administrative processes, to subscribe for Notes, totaling US$31.8 million – exceeding the minimum requirement of US$25.0 million,” reads the notice.

“As such, applications have been granted in full and the Notes will be issued to applicants in terms of the timetable where the subscription proceeds have been received, or on receipt of the subscription proceeds where the funds are still to flow.

“Interest on the issued Notes will accrue from the date of issue thereof. The issued Notes will be listed on the VFEX on 16 December 2022 and, where issued subsequent to this date, on the business day following issue.”

The mining firm said that all submissions to Zimbabwe’s Insurance and Pensions Commission relating to the bond being conferred prescribed asset status have been lodged.

“Regulatory approval has thus far not been awarded. The Issuer is being advised by IH Securities (Private) Limited, the debt sponsor for the listing and a member of the VFEX. A further announcement will be made on receipt of all subscription monies.”

Karo’s bond listing this week will be the first such instrument on VFEX. The Government recently indicated an intention to launch a US$100million bond on that bourse as well.

VFEX has been growing rapidly since its founding in 2020. Recently, Simbisa Brands Limited, became the 6th counter.

simbisabrand

Its listing came a week after financial services group Nedbank Zimbabwe had joined the bourse, which has attracted giant seed producer and distributor, SeedCo International Limited, mining giant Caledonia Mining, skins and meat processor Padenga and Bindura Nickel Corporation.

Last week, retail and specialty distribution group Axia Corporation Limited announced plans to also join the growing list of VFEX listed firms. Already, its board of directors have approved the delisting process.

The establishment of the VFEX is one of the many initiatives implemented by the Second Republic to stabilise the economy and attract foreign direct investment.

Investors who participate in the VFEX benefit from the ability to move their capital and dividends in and out freely, low transaction costs, tax incentives that include a five percent dividend withholding tax for foreign investors and exemption from capital gains withholding tax for all investors and minimal currency risks.

The Karo US$4,2 billion project in Mhondoro has commenced operations with the first ore expected in the processing mill by July 2024.

The project is an upcoming tier PGMs mining operation situated on the Great Dyke. Being home to the world’s second largest known platinum deposits after South Africa, Zimbabwe currently has three active PGMs producers namely Zimplats, Mimosa Mining Company and Unki Mine.

Mimosa mine

Karo’s platinum project is only one of several multi-million and billion-dollar mining investments that have kicked started or are in the planning phases, which started after the Second Republic was born in 2017, including the giant Manhize steel plant in Chivhu.

Zimbabwe is envisioning a US$12 billion mining industry by 2023, which is a key enabler of Vision 2030 of achieving an upper-middle-income economy by 2030, while leaving no one and no place behind.-chronicle.c.zw