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DRC’s Miba to consider listing plan
David McKay
Posted: Tue, 06 Feb 2007

[miningmx.com] -- MWANA Africa, the £100m mining firm, said it would table formal proposals in about 30 days to the Democratic Republic of Congo (DRC) that it list its diamond company, Société Minière de Bakwanga, known as Miba.

“There have been informal discussions so far,” said Kalaa Mpinga, CEO of Mwana Africa, in an interview with Miningmx. “That is the strategy and it should be taking place over the next two to three months.”

Mpinga was speaking at a presentation arranged by the UK’s Numis Securities on the sidelines of the Indaba Mining Conference. Mwana Africa is listed on Britain’s Alternative Investment Market. It has 250 million shares outstanding trading at about 40p/share.

Mwana Africa bought a 20% stake in Miba, which owns the Mbuji-Mayi diamond mine, from Union Miniere for about $11m.

However, the mine was heavily under-capitalised and required approximately $50m in investment, said Mpinga. While Mwana was considering financing the mine’s recapitalisation through a convertible loan, it was uncertain what level of equity it should receive in return.

“There has been a lot of pressure from the World Bank about the ways mining deals have been conducted in the past in the DRC,” said Mpinga. “So the issue is to list Miba to ascertain a transparent, independent value.”

Mpinga said Mwana would commit to the recapitalisation and allow the market to decide the appropriate increase in equity it would receive. Miba is receptive to an IPO because it had seen other mining deals in the country where the listed value of projects is far greater than the acquisition cost from government, Mpinga said.

Mbuji-Mayi mine has produced average annual production of about six million carats since 2001. Oliver Baring, Mwana Africa’s chairman, said this should be sustainable annual production however.

“Production from the mine is on average at $17 to $18/carat including gemstones that are mined,” said Baring. The majority of output from the mine is for industrial use.

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The convertible loan proposal raises the prospect that Mwana Africa will seek additional finance.

Baring said the UK domiciled parent company held about £36m in cash additional to cash locked up in its Zimbabwean subsidiaries. It’s therefore possible, but unconfirmed by the company, that it would seek to issue shares for cash. Baring said the company’s float was relatively small.

There are reports other state-owned mining firms in the DRC are considering accessing the capital markets.

Newswire service, Reuters, last month reported that Okimo, the gold mining firm with holdings in the Kilo Moto region of the DRC, was considering an IPO.