REPORTS SAY RETAIL TANZANIA INVESTORS WILL MISS OUT ON A CHANCE TO BUY SHARES AND OWNERSHIP IN THE LARGEST GOLD MINING FIRMN IN THE COUNTRY.

Business News By Leo OIdera Omolo.

Reports emerging out of Dar Es Salaam say many Tanzanian retails investors might have probably lost a chance to buy shares in the country’s largest gold mining company.

This is so after the Tanzanian government is said to have failed to persuade the African Barrick Gold Mines {ABG} to offload its shares on the Dar Es Salaam Stock Exchange {BSE}.

Barrick Gold’s upcoming initial public offering will put 25 per cent of its enlarged share capital on the market as it bids to raise USD 1 billion to take its capitalization to USD 4 billion.

The firm started pre-marketing its IPO last Monday on March 8,2010 in Stock Exchanges in the United Kingdom, the United States, Australia, United Arab Emirates and Canada.

The Government of Tanzania, according to business sources in Dar Es Salaam, could have pressed for th IPO to be listed on the Dar Es Salaam bourse parallel to the London Exchange Stock Exchange, but is said to have been too slow off the mark.

ABG has mines in Burwagi, Bulyanhulu ,Tulawaka and North Mara, representing 9.8 per cent of the total production of the parent company.

The ABG expects gold production increased by 76-80 million ounces, net of the ABGIPO of lower total cash of USD 345, USD 455 per ounce lower net cash costs of USD 545-575 per ounce.

Tanzania export of gold continued to make up the bulk of total exports, accounting for 409 per cent in 2009.

However, now that the Bank of Tanzania has announced its relaxing of capital control rules in the IPO to allow Tanzanians to participate in the IPO, the focus is on “warehousing’”-whereby large fund managers such as the Unit Trust of Tanzania {UTT} acquire a chunk of shares at the London IPO for sale to Tanzanian citizens at a later date.

According to an article in the current edition of the influential EASAFRICAN, the Deputy Minister or Tanzania’s Ministry of Finance and Economic Affairs Omar Mzee has said the government is waiting to see the IPO prospectus before deciding on the country’s stance on the warehousing proposal.

The world’s top gold mine underwriters exercised in full their option to purchase as additional 14.21 million shares at a price of USD 36.95. The beprospectus was expected to be out last week and trading is pegged to last Monday.

Core Securities Ltd CEO George Fumbuka was quoted by the EASTAFRICAN as saying that the Tanzanian government should make it possible to enable local town councils surrounding the four gold mines to participate in the IPO in order to acquire a take in their own mineral resources.

UTT has already used warehousing in buying shares in the Tanzania Breweries Limited and also in Tanzania Cigarettes Company, which were later transferred to UTT’s collective investment scheme.

And the CEO of Orbit Securities Ltd, Laurian Malauri was also quoted as insisting that the Tanzanians government should warehouse the share offerings by buying a chunk of them on behalf of Tanzanians, using its own institutions, such as Umoja Trust Fund, and later selling them to citizens at placement prices.

“To avoid foreign exchange fluctuations, the share should be traded in local currency”, he added.

DSE listing will commence after the closure of the IPO in London and ABG will furnishing the Bank Of Tanzania {BOT} with a written commitment showing preparation or listing of the shares at DSE.

Ends

leooderaomolo@yahoo.com.

About the author,

Leo Odera Omolo is a veteran Kenyan journalist operating as a freelancer in the Lakeside City of Kisumu, but also occasionally covering events in both Uganda and Tanzania. He could be reached on phone numbers 0722 486 181 or 0734 509215 0r landline 0572500827.And by mail at PO BOX 833, KISUMU ,KENYA.