FIRST Quantum Minerals offer to buy the Zambian government’s stake in Kansanshi Mine is illegal as no cautionary notices were issued as per stock exchange rules, a source has disclosed.
On Monday, Bloomberg News reported that Vancouver-based FQM has offered to buy the Zambian government’s 20 per cent stake in Africa’s biggest copper mine for as much as $700 million.
According to the report, First Quantum already owns 80 per cent of the Kansanshi Mine in North-Western Province, while state-owned ZCCM Investments Holdings Plc holds the rest. The proposal, which was submitted last year, includes $300 million to $400 million in cash, and an equal amount in special royalties, over more than 10 years.
“The deal would also include ZCCM-IH dropping a $1.4 billion legal claim against First Quantum over a loan the company received from Kansanshi,” reported Bloomberg, adding that the government is still considering the proposal.
“There are multiple unsolicited offers on the table, including from FQM, which are based on preferential share conversions,” a Ministry of Finance spokesman is reported as saying. The offers relate to the ministry’s 17 percent holding in ZCCM-IH and a sale would be subject to cabinet approval, it said
However, a source told The Mast yesterday that such a proposal since neither FQM nor ZCCM-IH had issued cautionary notices, meant they had contravened stock exchange rules.
“ZCCM-IH and FQM are both publicly listed companies and if what finance minister Margaret Mwanakatwe says that she has received unsolicited bids, then it’s illegal and in contravention of stock exchange rules at Lusaka Stock Exchange, the London Stock Exchange and the Toronto Stock Exchange where FQM is listed,” said the source.
Last year, the Zambia Revenue Authority handed FQM a $7.9 billion tax bill, while an increase in royalties this year prompted First Quantum to announce plans to fire 2,500 workers. The company has since backtracked on the proposal.
Kansanshi is First Quantum’s biggest mine and accounted for more than half the company’s revenue in 2017.