ZCCM-IH | Renounceable Claw­back Rights Offer

RESULTS OF THE RENOUNCEABLE CLAW­BACK RIGHTS
OFFER

INTRODUCTION
ZCCM­IH shareholders are referred to the Declaration Announcement dated Friday, 11 April 2014, and the Finalisation Announcement dated Wednesday, 16 April 2014, as well as the Circular to Shareholders dated Monday, 12 May 2014, setting out the details of the ZCCM­IH Renounceable Claw­back Rights Offer of 8,920,957 “B” Ordinary Shares subscribed for by the National Pension Scheme Authority (“NAPSA”), on the basis of 4 (four) new Ordinary Shares for every 5 (five) Ordinary Shares already held as at the Record Date, Friday, 09 May 2014, at a subscription price of ZMW 29.23 per new Ordinary Share.
The Claw­back Rights Offer opened on Monday, 12 May 2014 and the closing date was extended from Friday, 13 June 2014 to Friday, 27 June 2014 following delays with the postal delivery of the Claw­back Rights Offer Circular document to shareholders. The extension was, therefore, necessitated by the need to ensure that all shareholders were given sufficient time and opportunity to take any one of the prescribed courses of action set out in the Circular.

RESULTS
The results of the Claw­back Rights Offer are as follows:

SUMMARY RESULTS Number of Claw‐Back
Rights Offer Shares
Percentage of Claw‐Back
Rights Offer Shares
Claw‐back Rights Offer Shares available for subscription 8,920,957 100.0%
Total Claw‐back Rights Offer Shares subscribed for by minorities 651,545 7.3%
Claw‐back Rights Offer Shares allocated to NAPSA 8,269,412 92.7%

ISSUE OF CLAW­BACK RIGHTS OFFER SHARES
The new Claw­back Rights Offer Shares will be issued on Friday, 25 July 2014 and listed on the Lusaka Stock Exchange (“LuSE”) on Monday, 28 July 2014.

Qualifying Shareholders registered as such on the Record Date (or their renouncees), who validly subscribed for Claw­back Rights Offer Shares, will have their LuSE Central Shares Depository accounts credited with the new Ordinary Shares by Monday, 28 July 2014.

Lusaka, Zambia ­ 24 JULY 2014

Metorex Chibuluma Mines to spend US$26 million for explorations, official

Metorex Mining Limited, the South African based mid-tier mining group plans to spend over US$26 million to undertake exploration activities at its Chibuluma mine in Zambia over the next two years, says a mine official.

General Manager Jack Sikamo said while the company already spent US$12.7 million in strategic capital expenditure from 2010 to 2013, more resources have been earmarked in capital expenditure for 2014 and 2015.

In a paper presented during a workshop in Lusaka for various stakeholders recently, Sikamo stated that the company is also looking for acquisitions, explorations and joint venture partnerships with local or foreign companies to expand its operations in the country.

However, the miner is facing key challenges in the operations of the mining companies, among others, falls of ground, copper price reduction and increasing cost of production.

Government legislation without engagement, current resources mined out by 2020, skills retention, underground collisions, men/machines, safety, supervisor safety culture, historically supervisor- dependent and equipment availability and reliability are other challenges facing Metorex Mining Limited, a company established in 1995.

Chibuluma mine, formerly under Zambia Consolidated Copper Mines (ZCCM) and which produced 18,000 metric tonnes of copper last year, is expected to ramp up production to 19,000 metric tons of the red metal this year.

Metorex, a fully, owned subsidiary of Jinchuan International, was created with a vision to expand and explore activities in African base metal industry, based primarily on copper and cobalt production.

The company employing over 3,700 employees, generated group gross revenue US$408 million on copper sales of 45,000 metric tons and 3,000 metric tons of cobalt in 2012. It seeks to increase its outturn despite the challenges faced.

Chibuluma Mines plc is a modern mechanized underground copper mine owned 85 percent by Jinchuan Group Company Limited and 15 percent by ZCCM-IH plc.

The planned extensive exploration work is expected to extend its mine life by several years and significantly increase its minable reserves of both cobalt and copper.

Metorex Mining Limited, the South African based mid-tier mining group plans to spend over US$26 million to undertake exploration activities at its Chibuluma mine in Zambia over the next two years, says a mine official.

General Manager Jack Sikamo said while the company already spent US$12.7 million in strategic capital expenditure from 2010 to 2013, more resources have been earmarked in capital expenditure for 2014 and 2015.

In a paper presented during a workshop in Lusaka for various stakeholders recently, Sikamo stated that the company is also looking for acquisitions, explorations and joint venture partnerships with local or foreign companies to expand its operations in the country.

However, the miner is facing key challenges in the operations of the mining companies, among others, falls of ground, copper price reduction and increasing cost of production.

Government legislation without engagement, current resources mined out by 2020, skills retention, underground collisions, men/machines, safety, supervisor safety culture, historically supervisor- dependent and equipment availability and reliability are other challenges facing Metorex Mining Limited, a company established in 1995.

Chibuluma mine, formerly under Zambia Consolidated Copper Mines (ZCCM) and which produced 18,000 metric tonnes of copper last year, is expected to ramp up production to 19,000 metric tons of the red metal this year.

Metorex, a fully, owned subsidiary of Jinchuan International, was created with a vision to expand and explore activities in African base metal industry, based primarily on copper and cobalt production.

The company employing over 3,700 employees, generated group gross revenue US$408 million on copper sales of 45,000 metric tons and 3,000 metric tons of cobalt in 2012. It seeks to increase its outturn despite the challenges faced.

Chibuluma Mines plc is a modern mechanized underground copper mine 85 percent owned by Jinchuan Group Company Limited and 15 percent by ZCCM-IH plc.

The planned extensive exploration work is expected to extend its mine life by several years and significantly increase its minable reserves of both cobalt and copper.


Source: Mining News Zambia

CEC sues KCM over US$30 million power debt

Copperbelt Energy Corporation, Zambia’s supplier of electricity to mining companies on the Copperbelt has dragged Konkola Copper Mines to court over a US$30 million debt it is owed based on an internal agreement, the Post reported.

Citing an affidavit filed before the Lusaka High Court, CEC wants KCM, a unit of London Listed Vedanta Resources Plc, to pay it US$30,923,091.92 being the amount due and owed to it for the supply of electricity power.

The power company also seeks the High Court’s indulgence to order KCM to pay the above amount with interest as well as costs arising from the court matter.

Lusaka High Court

The electricity power supply transaction, the paper adds, was done pursuant to the Power Supply Agreement made between the two parties on 31 March 2000, as amended. CEC had agreed to supply electricity and KCM also agreed to purchase all its electricity power requirements, the Post reported citing a claim accompanying the writ of summons.

In April this year, KCM obtained a restraining order for CEC not to restrict power supply to the mine by applying to the court.

Konkola Copper Mines Plc (KCM) is a major integrated copper producer in Zambia, primarily engaged in the exploration for mining, production and sale of copper. It is rated as one of the world’s wettest mines, yielding approximately 350,000 cubic metres of water per day from underground.

It is currently engaged in developing the more than IS$1 billion Konkola Deep Mine Project, in which it is expected to increase copper production to over 400,000 tons per annum when completed.


Source: Mining News Zambia 

ZCCM-IH | Trading Statement – Jul 2014

In accordance with the Lusaka Stock Exchange Limited (“LuSE”) Listings Requirements, the Board of Directors advises the Shareholders of ZCCM Investments Holdings PLC (“the Company”) that the earnings per share is expected to be 34% higher than that for the six months period ended 31 March 2013. It should however be noted that the total number of shares in issue increased from 89,296,428 to 160,800,286 on 29 March 2014. The weighted average number of shares in issue as at 31 March 2014 is therefore 90,488,159.

Shareholders are advised that the information contained in this trading statement has not been reviewed or reported on by the external auditors of the Company. The Company expects its results for the six months ended 31 March 2014 to be released on SENS and published in the local press on or about Friday, 11 July 2014. Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until publication of the results.

Lusaka, Zambia ‐ 09 July 2014

ZCCM-H shareholders to earn more

Zambia Consolidated Copper Mines Investments Holdings-ZCCM IH share earnings are forecast to rise 34 percent higher than the six months ending 31 March last year as total number of shares in issue almost doubled.

Stockbrokers Zambia, the agents for multi listed holding mining company, in a cautionary notice to shareholders and issued on behalf of the ZCCM IH board of directors, envisages the earnings per share to be 34 percent higher than that the price pegged for during the six months period ended 31 March 2013.

However, the total number of shares in issue rose to 160 800 286 from 89 296 428 shares on 29 March 2014. The average number of shares in issue recorded as at 31 March 2014 is therefore 90 488 159, the stockbroker adds in a statement.

The notice to shareholders is in accordance with the listing rules, regulations or requirement for all companies trading publicly or otherwise on the Lusaka Stock Exchange expected on any bourse (capital market) to comply.

“In accordance with the Lusaka Stock Exchange Limited (“LuSE”) Listings Requirements, the Board of Directors advice the Shareholders of ZCCM Investments Holdings PLC (“the Company”) that the earnings per share is expected to be 34 percent higher than that for the six months period ended 31 March 2013.

It, however, cautioned shareholders to trade carefully as the information contained in the trading statement has not been reviewed or reported on by the external auditors of the Company.

The Company expects its results for the six months ended 31 March 2014 to be released on SENS and published in the local press on or about Friday, 11 July 2014.

“Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until publication of the results.”

Last year ZCCM IH ZCCM-IH announced plans to offer shares to its existing shareholders to raise money to clear its debt and help clean its balance sheet for future investments.

ZCCM-IH, which holds stake on behalf of the government in privatised mines, is currently battling liquidity problems, which were hampering the company’s ambitious transformation programmes.

“The proposed rights offer has a number of critical and important objectives that include to de-gear the ZCCM-IH balance sheet by expunging government debt of approximately K1.998 billion about US3 million and thereby unlock the value of ZCCM-IH for the benefit of shareholders,” company secretary Chabby Chabala said.

“After the implementation of the rights offer exercise, the government debt will be eliminated or significantly reduced, leaving ZCCM-IH with a clean balance sheet and therefore in a better position to consider payment of dividends to all shareholders going forward.” He added.

Clearing the huge government debt would help ZCCM-IH acquire fresh capital, which the company would use for its strategic investments and developments.

“The GRZ indebtedness has severely constrained the balance sheet of ZCCM-IH in the recent past. In turn, this has affected valuation of the company by the market and limited the capacity of management to unlock value for the benefit of shareholders,” Chabala stated.

ZCCM IH board believed at the time that the urgent action was necessary and a new strategic direction for ZCCM-IH is required in order to improve its operational performance and unlock value for the benefit of all shareholders on the one hand and simultaneously have capacity to participate in new projects and opportunities in Zambia and beyond going forward.”

The balance sheet of ZCCM-IH for the year ended 31 March, 2012 carried total liabilities of K2, 352 million against total assets of K2, 302 million, resulting in a negative book value of K50.5 million.

The bulk of the liabilities constitute debt owed to the government carried over from ZCCM, an earlier financial report stated.

History of ZCCM-IH

It is one of Zambia’s prime investments holdings companies with the majority of its investments in the copper mining sector of Zambia. It is quoted (trades secretly) on the Lusaka, London and Euronext Stock Exchanges.

The Company’s shareholders are the Government of the Republic of Zambia (GRZ) with 87.6 percent shareholding and private equity holders with 12.4 percent. Minority shareholders are spread throughout the world in various locations. ZCCM-IH is a successor company to Zambia Consolidated Copper Mines Limited (ZCCM Ltd). Prior to privatization in 2000, ZCCM Ltd was a consolidated copper mining conglomerate which owned and operated a number of mining divisions which at privatization were sold off as independent mining companies.

ZCCM Limited was majority owned 60.3 percent by the Government of the Republic of Zambia, 27.3 percent by Zambia Copper Investments Limited (ZCI), an associate company of Anglo American Plc and 12.4 percent by private investors.

Since the privatization of the mines in the early 2000, the mines that have been privatized have generated US$8 billion in direct foreign investments.

Various reputable multinational companies including First Quantum Minerals Limited, Vedanta Resources and commodity trader, Glencore Xstrata, have all initiated new projects in addition to the units secured during privatization.

“They in all, have injecting over US$8 billion, which is envisaged to grow to US$15 billion in the next few years,” said chamber of mines president Emmanuel Mutati.

Source: Zambian Mining Magazine

ZCCM_IH | 2014 Annual Report and Financial Statements

Chairman’s Statement

The financial year ended 31 March 2014 was an exciting year for ZCCM Investments Holdings Plc (ZCCM-IH). Significant milestones such as the restructuring of the balance sheet through a Claw-Back rights offer were successfully completed. This development saw the Company’s balance sheet being strengthened in a significant way thereby placing the Company in a position to leverage this strength to continue with its growth strategy.

Global economy

The global economy grew by 2.9% at the end of December 2013 (2012: 3.2%). Global GDP was lower than 2012 reflecting an economic slowdown in the leading emerging economies of Brazil, Russia, India, and China. Growth in 2013 was a mix of modest improvements in economic conditions in mature economies of the United States and the Eurozone area and a stabilization of the slower growth rates in major emerging markets. During the first quarter ended 31 March 2014 global GDP rose to 3.4% (2013:3.25%)…

Financial performance

The Group recorded turnover of K1, 001 million (2013: K520 million) and operating profit of K871 million (2013: K376 million)…

Strategic and new investments

Recapitalisation of Ndola Lime Company (NLC)

The recapitalisation project at NLC continued. The Company obtained an additional shareholder loan of US$3.5 million from ZCCM-IH towards funding for the Ndola Lime Recapitalisation Project. Subsequent to the year end, ZCCM-IH extended a further US$5million loan to NLC…

Nkana Alloy Smelting Company Limited

The restructuring of Chambishi Metals Plc resulted in the formation of Nkana Alloy Smelting Company Limited (Nkana Alloy)…

Mawe Exploration and Technical Services Limited

On 12th April 2013 ZCCM-IH incorporated Mawe Exploration and Technical Services Limited, a wholly owned subsidiary…

Capital market

The ZCCM-IH share price on the Lusaka Stock Exchange closed the year at K27 (2013: K12.5). The market capitalisation as at 31 March 2014 was K4,341 million (2013: K1,116 million).The growth in the company’s share price is indicative of the growing confidence from the market.

Outlook

While global activity has generally strengthened and is expected to continue in 2014–15 on the back of growth coming from mature economies, emerging economies have seen increased financial volatility as well as increases in the cost of capital. These factors may dampen investment and growth.

Appreciation

I extend my gratitude to my fellow Board members, the Management and Staff of ZCCM-IH for their commitment and hard work during the past financial year. I further extend my gratitude to the investee companies for their efforts and contributions during the year.

Cosmas Mwananshiku Director


Download the full 2014 annual report and financial statements below:

ZCCM Investments Holdings Plc 2014 Annual Report and Financial Statements

Mining Companies in Zambia contest 28% energy tariffs

The revised 28.8% energy tariffs for mining companies in Zambia-Africa’s rich copper producer has taken a new twist with the chamber of mines contesting in the courts of law, that decision by the energy regulatory body effected on 2nd April this year.

The courts have since granted a judicial review to the chamber of mines of Zambia on the matter to allow for hearing and determination of the matter.

The chamber, a consortium of mining companies operating in the Southern African state, argue in their affidavit that the decision by the Energy Regulation Board(ERB) to revise the energy tariffs was incorrect arguing it was not the correct body to have done so, the Post newspaper reported citing an affidavit filed in the Lusaka High Court.

Chamber of mines executive officer, Maureen Jangulo, in her application made to seek judicial review of the decision before the court’s principal registry, on behalf of the mining companies, its members, contends that the ERB was not authorize by the Energy Regulation Act, Electricity Act or any other law to vary tariffs in the applicants’ Power Supply Agreements (PSAs).

The chamber contends further that the applicants in the matter stated that, among other mines, Lumwana Mining Company, Kansanshi Mining, Lubambe Copper Mines, Mopani Copper Mines, Chibuluma Mines, NFC Africa Mining and Chambishi Metals Plc, were companies incorporated under the companies Act and whose principle business was mining.

According to the provisions of section 8 of the electricity Act, then the respondents and the supplier of the electricity were required to notify and offer applicants a hearing on the proposed tariff adjustment before the decision of vary the electricity tariff was made.

Both affected parties were not afforded a chance to have a hearing on the matter before the decision to review tariffs was made, Jangulo argued in her affidavit.

Additionally, the chamber acting on behalf of the mining companies-its members argues that Lumwana Mine and Kansanshi Mines entered into PSAs with Zesco limited while the other copperbelt companies had agreements with the Copperbelt Energy Corporation (CEC) for the supply of the electricity for their respective mining operations.

According to the PSAs signed by the mines with Zesco, Jangulo contends, Lumwana Mining company and Kansanshi Mining Plc, electricity tariffs to be paid by the two applicants were supposed to be adjusted by indexation or in reference to the terms agreed by the parties either through tariff reviews to be held by the parties every three to five years, or through the terms agreed to by the parties pursuant to an industry wide tariff adjustment, the affidavit reads in part as cited.

The Lusaka High Court has since granted the chamber of mines judicial review against the ERB’s decision to adjust the tariffs for foreign mining companies operating in the country.

High Court Isaac Chali granted leave to the chamber of mines to commence judicial review and set 28th July this year to commence hearing.

On 2nd April, the ERB announced a 28.8% power increase for mining companies, a move which the mining companies contended had come amid low copper prices on the international metal market.

Chambers of Mines of Zambia Chief Executive Officer, Jangulo had earlier argued that the ERB power tariff increases were done unilaterally.

The chamber had then argued further that while the mines understand the need for utilities to earn a fair return on investment to be able to efficiently and sustainably operate and maintain the infrastructure, cognizance must be taken of the long-term nature of the mining business.

Due to the long-term nature of mining investments, corresponding long-term planning from a policy and regulatory perspective is necessary to attract and retain investment in this sector.

She pointed out the fact that power supply to mining companies is governed by commercial contracts entered into mutually by ZESCO and respective companies.

This was taking into account the full commercial circumstances prevailing at the time of entering into such contracts, and anticipated to occur over the life of the contract.

Jangulo had added that the mining sector had agreed to extra ordinary tariff increases of 35% in 2008 and 30% in 2011 outside existing contracts on the understanding that investments would be made to improve the quality of power being supplied to the industry.