ZCCM-IH shareholders approve Kansanshi royalty transaction
SHAREHOLDERS in the Zambia Consolidated Copper Mine Investment Holding (ZCCM-IH) have approved the Kansanshi royalty conversion where the Company will now receive 3.1 percent of Kansanshi Mining Plc’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 given at the Shareholder’s Extraordinary General Meeting (EGM) held in Kitwe last Friday.
ZCCM-IH Board chairperson Dolika Banda says the royalty income stream replaces the former model of unpredictable and unguaranteed dividend pay-outs.
Ms Banda says this is because a royalty is predictable and guaranteed as it will be charged at 3.1 percent of the company’s total revenue (from sales of Copper, Gold, and all other metal products) as per the Royalty Agreement.
“This therefore guarantees a steady income stream for ZCCM-IH, as long as there is production at Kansanshi,” says Ms Banda in a statement.
She said this will result in a far healthier cash flow for ZCCM-IH which will in turn make it far easier for the Company to raise financing and pursue its ambitious investment strategy.
Ms Banda further states that the royalty arrangement will give the company consistent and stable income, and fundamentally change the financial health of ZCCM-IH by so doing.
“Our ambition is to make investments throughout the mining value chain – from exploration, through to value addition – so that we may help to create national economic success stories for the benefit of all Zambians; and for our shareholders, value creation and a return on their investment,” she further said.
She stated that a comparison of actual dividends received from Kansanshi since 2009 with estimates for future royalty rates shows that not only will overall revenue be far greater under the royalty model, but the revenue flow is also more predictable and consistent.
She said in addition to that, a royalty will see ZCCM-IH benefit from future high copper prices, in the likely event of a price recovery from recent market turmoil.