Modern Mining July 2023

FINANCE AND LEGAL

The Victoria Falls Stock Exchange: A pathway to success for junior mining companies in Zimbabwe By NSDV’s Methembeni Moyo: Lawyer Foreign Qualified Mining and Construction & Dominic Varrie: Candidate Attorney

Z imbabwe is renowned for its geological wealth, skilled mining labour force and a generally well-developed mining sector. With recent world class lithium discoveries and the seem ingly insatiable global demand for battery minerals, Zimbabwe should be poised to become a global mining superpower. However, progress is perenni ally obstructed by economic and political challenges which render Zimbabwe a high currency risk min ing destination. If the currency risk issues that affect Zimbabwe’s mining sector can be addressed, for eign and local investors will be more inclined to inject funding that could afford junior to mid-tier min ers the much-needed capital to take advantage of Zimbabwe’s vast natural resources. The mining sector is a critical feature of Zimbabwe’s economy, accounting for around 12% of the country’s gross domestic product (GDP) and around three-quarters of Zimbabwe’s export earn ings in 2022. While some economists are sceptical, the Zimbabwean government remains optimistic that the country’s mining output will reach US$12 billion by year end of 2023. Currency risk and economic challenges faced by miners in Zimbabwe The fundamental deterrent to investing in

Zimbabwe’s mining sector is unfavourable and uncertain exchange control, currency and fiscal policies. Investors need to be assured that they can put money into the country and take out their gains without undue restriction. Zimbabwe’s laws and pre vailing economic conditions do not provide investors that comfort. This makes raising foreign currency, externally or locally, for expensive capital-intensive mining projects difficult. Large multinationals operating in Zimbabwe’s established platinum sector, for example, have the balance sheet to mitigate Zimbabwe’s foreign cur rency risk. However, with mining costs on the rise due to inflation, junior to mid-tier miners are finding it challenging to raise the capital required to take advantage of the favourable commodities price cycle in precious metals and battery minerals. However, there are some innovative avenues available to junior and mid-tier miners to raise the much-needed funding to thrive in Zimbabwe’s chal lenging economic environment. The Victoria Falls Stock Exchange (VFEX) One such exciting innovation is the introduction of the Victoria Falls stock exchange (VFEX). The VFEX is an alternative stock exchange established in 2020 as a subsidiary of the main Zimbabwe Stock

Methembeni Moyo: Lawyer Foreign Qualified Mining and Construction.

Dominic Varrie: Candidate Attorney.

Caledonia raised US$7.8 million, used in part to fund a 12 MW solar PV plant.

32  MODERN MINING  July 2023