ZCCM-Investments Holdings Plc (ZCCM-IH) has announced the approval of the conversion of its shares in First Quantum Minerals’ subsidiary Kansanshi Mine.
Last year, the state owned copper mining asset holding company announced that it has reached an agreement to turn its shares into royalty income which led to outcries.
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But on Monday, ZCCM-IH Corporate Affairs Manager, Loisa Mbatha, said in a statement that shareholders have approved the Kansanshi Mine royalty conversion where it is assured of 3.1 percent of Kansanshi’s total revenue.
The royalty revenue will be paid on a quarterly basis over the entire life of the mine of Kansanshi that currently extends to the year 2045.
The approval was reportedly given at the Shareholder’s Extraordinary General Meeting (EGM) held in Kitwe on March 31, 2023.
Mbatha said the royalty income stream replaces the former model of unpredictable and unguaranteed dividend pay-outs.
And ZCCM-IH Board Chairperson, Dolika Banda, said the conversion of shares would result in a far healthier cash flow for ZCCM-IH.
“We are convinced that the loyalty arrangement will give ZCCM-IH consistent and stable income thereby fundamentally changing the financial health of ZCCM-IH,” Banda said.
The board chairperson said ZCCM-IH’s ambition was to make investments throughout the mining value chain from exploration, through to value addition.
“The comparison of actual dividends received from Kansanshi since 2009 with estimates for future royalty rates showed that not only would overall revenue be far greater under the royalty model but the revenue flow would be more predictable and consistent,” she stated.
Banda said a royalty would see ZCCM-IH benefit from future high copper prices, in the likely event of a price recovery from recent market turmoil.
Despite stakeholders misgivings, she maintained ZCCM-IH would continue to hold 20 per cent of the shares in Kansanshi Mining Plc, retain two out of 10 board seats, and thus continue to participate in the governance of Kansanshi and having full visibility of Kansanshi operations.
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