2nd UPDATE: Zimplats: Zimbabwe Government Accepts New Indigenization Plan

South Africa's Impala Platinum Holdings Ltd. (IMP.JO) said Tuesday that it agreed to transfer a 51% shareholding in its Zimbabwe platinum joint venture to government-approved bodies, a move it had previously resisted.

Impala is the majority owner of Zimplats Holdings Ltd. (ZIM.AU), which is jointly developing the Mimosa platinum mine with Aquarius Platinum Ltd. (AQP.LN) in Zimbabwe.

After months of negotiating with the Zimbabwe government over the country's indigenization law, the mining company appeared to capitulate to the law that targets foreign companies.

Zimbabwe enacted the indigenization law in 2008, but only started to aggressively apply it in the past year. It requires foreign entities to dispose a 51% share of assets in the country to local black Zimbabweans or government approved entities.

Mining firms, the first to be targeted, have until now resisted agreeing to handing over an outright equity stake of as much as 51%. Impala's chief executive David Brown himself previously said 51% wasn't feasible.

Under the agreement settled "in principle" Tuesday, the minister of indigenization Saviour Kasukuwere said Zimplats' 51% breaks down to giving 10% of the shares to a community trust, 10% of the shares to the firm's employees and 31% to the National Indigenization and Economic Empowerment Fund.

"This is a game changing moment," said Anne Fruhauf, an analyst for southern Africa at Eurasia Group. "If this transaction really goes, it's a threat to other companies."

Impala isn't the only foreign mining company confronting potential changes to share ownership in Zimbabwe. Anglo American PLC (AAUKY, AAL.LN) also operates a platinum mine, while Rio Tinto PLC (RIO, RIO.LN, RIO.AU) owns 77.8% of a diamond mine.

Zimplats had argued that a return of land to the government in 2006 should count towards its 51%, but Kasukuwere previously said this would be dealt with separately. That ground given back to the government lays idle.

Neither the minister nor the company gave a value to the 51% transaction announced Tuesday. Kasukuwere has said the Zimbabwe government wouldn't pay for the stake in Impala's mining assets. The government is debt-ridden and already struggling to get financing from international institutions because of its record of not paying back loans.

Impala Platinum declined to comment further on the reasons for changing its stance or the value of the transaction. As of trading Tuesday, Zimplats had a market capitalization of $1.23 billion while Impala had one of $13.4 billion, according to data from FactSet.

The implementation of the plan will be done by a joint committee comprised of representatives from Zimplats, the indigenization ministry and the National Indigenization and Economic Empowerment Board. The agreement follows a letter sent to Zimplats last month threatening action against the miner if it didn't comply with demands.

Last month, Brown said an expansion investment is on track at Zimplats, but a third stage to grow output is on hold until there's more clarity around the indigenization law.

By 2014, Zimplats currently aims to produce 270,000 ounces a year, up 90,000 ounces from current output.

-By Devon Maylie and Farai Mutsaka, Dow Jones Newswires; +27 11 783 7848 devon.maylie@dowjones.com

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