Keith Rumble, outgoing CEO, Impala Platinum
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Impala rails against Zim pressures
David McKay
Posted: Tue, 27 Sep 2005

[miningmx.com] -- IMPALA Platinum has expressed its frustration at the business environment in Zimbabwe claiming its politicians acted like bullies.

Commenting on recent pressure by the Zimbabwean government to have Impala pay a withholding tax on dividends, Impala Platinum CEO, Keith Rumble, said: “It’s the behaviour of politicians that most concern us. They are too erratic and try to bully you. We thought we were exempt from withholding tax.”

Earlier in the week, Zimplats, a company in which Impala has an 87% stake, denied it wanted to close its mines in Zimbabwe in response to pressure to pay the dividend tax. According to an earlier agreement between the government and Impala, no tax was payable, but the Zimbabwean government appears to have altered its position.
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Speaking at the Denver Gold Forum, Rumble said the situation in Zimbabwe made further investment impossible. “We can’t invest by stealth and then when things go wrong we have egg on our face,” he said.

“We are simply not going to invest large sums of money in Zimbabwe and the government needs to see this.”

About 60% of Impala’s 215 million platinum resource base is in Zimbabwe and 10% of its 1.1 million oz/year production is from its holding in Zimplats and a further 50% investment in Zimbabwe’s Mimosa Platinum Mines.

As a result, Zimbabwe remains a major question mark over Impala’s long-term growth strategy.

In the short-term, however, Impala’s future production and resource replenishment is more secure. Rumble said the company had about five years of locked-in growth potential from its South African opeations, but Zimbabwe was like “a big fish caught in a net”.
It’s the behaviour of politicians that most concern us
Only one of four hurdles for additional investment in Zimbabwe outlined by the company in 2004 - the extension of existing mineral leases - had been met. Certainty on Zimbabwe’s black empowerment demands, a bilateral trade agreement with the South African government, and unhindered expatriation of profits are outstanding.

Impala has some R18bn worth of capital investment scheduled over the next 10 years and has roughly R4bn in cash and a debt free balance sheet. There have been calls for a resumption of a share buy-back programme in which 1.8% of shares worth R600m have already been repurchased, or a special dividend to shareholders.

However, Rumble said further clarity in Zimbabwe was needed, as well as an investment decision on the company’s 37.5% investment in the $2bn nickel project in Madagascar, Ambatovy, before electing to reward shareholders. “Absent those two factors, there is a case for a capital return,” he said.

Commenting on the platinum market, in which the platinum price has gained 18% in the last 18 months (and 8% since the beginning of the year), Rumble said he was surprised prices hadn’t gained further. “The fundamentals are supportive of the price of platinum and the energy crisis adds to the debate,” he said.