Kuvimba wants state diamond company to buy US$400m stake in stalled Darwendale platinum project

Development at Darwendale delayed by funding (G. Marawanyika/Bloomberg)

Desperate for capital after the pull-out of Russian investors stalled the Darwendale platinum project last year, Kuvimba Holdings wants state-owned Zimbabwe Consolidated Diamond Company (ZCDC) to put in US$400 million for a 33% stake in the operation.

Vi Holdings of Russia had hoped to build what would be Zimbabwe’s biggest platinum mine, but delays in raising funds, made worse by sanctions on Russia over Ukraine, forced the company to withdraw from the project last year. Vi Holdings then ceded its 47.8% stake to its local partners, Kuvimba Mining House and Fossil, who are unable to raise the capital needed on their own.

Now, controversially, Munashe Shava, who is both chief operating officer of GDI and chairman of ZCDC, has proposed that ZCDC put money into GDI, official documents show.  Finance Minister Mthuli Ncube has written to Mines Minister Winston Chitando authorising the deal.

“However, there is need to ensure that the necessary due diligence is exercised on the pricing of the shares as well as ensuring that the necessary approvals are granted as required by the (Public Finance Management Act’s) provisions,” Ncube wrote on February 3 this year.

Under Kuvimba’s proposal, ZCDC would pay US$111.3 million for the shares within a week of an agreement being signed. In total, together with other charges, ZCDC would have to ultimately pay US$400 million, a price that ZCDC management view as excessive.  

According to Kuvimba’s proposal, a valuation of GDI by SAF Oxford and Ernst & Young has valued GDI at US$923.2 million. However, a December 2020 transaction to sell a 4.4% stake for US$30 million to Fossil Mines valued GDI at US$680 million.

Before the Vi Holdings withdrawal, GDI had failed to reach its targets of financing US$665 million first phase development.

Needing funding, GDI reportedly tried to sell the project to Implats, which runs Zimplats. But Implats turned down the offer over concerns about the ownership of GDI, especially the involvement of Kuvimba. 

Simba Chinyemba, CEO of Kuvimba, recently said the strategy for the project has had to change because of funding demands.

“The original project was modelled on the possibility of underground mining,” Chinyemba said.  “After further exploration and analysis common to projects such as this, it is now believed that the orebody may be more amenable to an open-pit project. GDI is thus remodelling the whole Darwendale project in order to take this into account.”

ZCDC’s diamond sales fell to US147 million last year from US$227.5 million in 2021, after sales were disrupted by the Russia-Ukraine conflict.


Russian investor quits Darwendale platinum project as Ukraine sanctions end funding push

EXCLUSIVE | Zim govt is plotting to strip state mine assets to hide from US$467m in legal claims, but there’s resistance from within