Regulatory uncertainty impacts Mimosa Platinum

Published: 28 January 2014

Aquarius Platinum Limited, the world's fourth-largest platinum miner, which jointly own Mimosa Platinum with Implats said proposed tax changes and regulatory uncertainty in Zimbabwe had impacted its ability to plan future production levels and capital allocation for its Mimosa mine in the country.

"The continued regulatory uncertainty in Zimbabwe is of particular concern to us as it impacts Mimosa's ability to plan future production levels and capital allocation efficiently. Discussions with the Government of Zimbabwe continue and, seeing as we share the Government of Zimbabwe's vision for a healthy growing Zimbabwean platinum mining sector, we remain hopeful the matters could be agreed in due course," said the company in its second quarter 2014 production update.

Mimosa said it has noted amendments contained in the proposed Zimbabwean national budget for 2014 which, if implemented, will impact on the company.

These include royalties which is proposed will be non-deductible for income tax purposes (currently deductible) and an export tax on un-beneficiated platinum. The implementation of further taxes will have a significant negative impact on the profitability and cash flows of the entire Zimbabwean platinum sector, particularly in the current low price environment.

Mimosa management in consultation with the Zimbabwe Chamber of Mines said it will continue to engage with the Government of Zimbabwe in an effort to clarify the proposed changes to the fiscal regime, acknowledging that Aquarius and Mimosa share the vision of a growing platinum mining sector with the Government of Zimbabwe..

The decline in metal prices reversed after quarter end, albeit for the wrong reasons, as industrial action looms in South Africa and regulatory uncertainty continues in Zimbabwe.
- businessdaily