Padenga plans to move listing from ZSE to VFEX, enticed by new incentives and a chance at fresh capital

Stocks are up, and this is not a good sign (pic: A. Esa)

Padenga Holdings will move its listing from the Zimbabwe Stock Exchange (ZSE) to the US dollar-denominated Victoria Falls Stock Exchange (VFEX), to take advantage of new government incentives and attract fresh capital.

Shareholders of Padenga are to meet at an Extraordinary General Meeting on July 2 to decide on the proposal, the company said in a notice Friday.  

“The migration of the listing from the ZSE To the VFEX is driven by the need to benefit from the incentives articled by the Minister of Finance and Economic Development, and has not been initiated by any shareholder per se, and will not prejudice minorities,” Padenga said.

Exporters, including miners, currently keep 60% of their foreign earnings in hard currency, while 40% is sold to central bank at the official exchange rate.

In May, Finance Minister Mthuli Ncube said any miner that produces above its monthly average can keep 80% of what it earns from that increased portion. A bigger advantage was granted for companies that list on VFEX; they will be allowed to keep 100% of what they earn from the “incremental” output.

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According to Padenga: “The VFEX will allow Padenga to raise capital in foreign currency from a wider and deeper potential market, to expand existing business, acquire or establish new business and fund acquisitions for both the company and its gold mining subsidiary, Dallaglio Investments.”

Padenga’s investment in mining now accounts for the larger chunk of earnings, and its move to VFEX is further signal that the company sees Dallaglio as a key driver of its future.

Revenue from mining last year was US$40.4 million, making up 57% of the company’s revenue. Dallaglio made a profit of US$7.1 million. With gold prices forecast to remain firm in 2021, “this investment will continue to yield positive returns for the foreseeable future”, Padenga said in its earnings report released earlier.

Padenga says it has invested US$40 million in Eureka Mine and projects commissioning in July, reviving a mine that last operated two decades ago. Eureka is forecast to resume production at an average of 140kg of gold per month, ramping up to 200kg/month. Dallaglio also runs Pickstone Mine, a 60kg per month mine near Chegutu.

VFEX has struggled to attract new listings since launch, with its sole listing being Seed Co International. Caledonia Mining, which runs Blanket Mine, has said it is assessing a listing on VFEX after the incentive scheme was announced. CBZ, the country’s biggest bank, has also said it is considering the exchange.