The confirmation of commercially viable oil and gas deposits in Zimbabwe will be an energy sector and economic game changer for the country and its economic revival prospects, Australia Stock Exchange listed mining concern – Invictus Energy Limited, has said.
The firm also announced plans to list on the Victoria Falls Stock Exchange (VFEX) in a bid to increase participation by local investors.
The Australian behemoth, through its local entity, Geo Associates (Pvt) Ltd, is exploring for oil and gas in Muzarabani area under Special Grant 4571 and the prospect has so far passed all “stop and go” exploration stages.
Exploration started with desktop work up to the current stage where the miner is now set to drill two wells to further define and quantify the potential of the prospect.
To date, all pointers are that there is a compelling case for commercially viable deposits and it is against this background that the firm is on the verge of injecting up to US$40 million in two oil and gas test wells that are expected to give a definitive answer on the prospect’s potential.
Speaking at a technical briefing for journalists in Harare on Wednesday, Invictus Energy chairman Stuart Lake, said a positive drill will be a boon for Zimbabwe as has been the case in other parts of the world where success drills have been done.
“Oil and gas will be a game changer for the country going forward. We have seen how African countries elsewhere nearby have seen oil and gas found in recent years and that completely has been a game changer,” said Lake.
Speaking at the same event Geo Associates managing director Paul Chimbodza, said there is a need for patience as the miner meticulously goes through all the exploration processes that should precede the drilling of test wells.
Chimbodza said the average gestation period of oil and gas exploration is usually five to eight years, but also noted he was upbeat Geo Associates will be able to finish the process in a much shorter period of time.
“The gestation period for such a project is usually five to eight years but I must note that we are working a tight schedule from our stakeholders and Government and we hope to do it in an even shorter time,” said Chimbodza.
In a bid to increase local investor participation, Chimbodza said the company was in talks with the Zimbabwe Stock Exchange in a bid to get the much needed “hand-holding” towards listing on the Victoria Falls Stock Exchange.
Mines and Mining Development Minister Winston Chitando who attended the event together with his Energy and Power Development Counterpart Soda Zhemu, said Government was pleased with the progress that Geo Associates are registering and had since extended the miner’s Special Grant.
This comes as Government has adopted a new policy of issuing short term grants to investors in a bid to avoid speculative mineral rich land hoarding.
Investors are now compelled to show considerable work on the ground before they can get long term access to mineral rich concessions.
Geo Associates has thus accelerated its exploration work and is expecting to have, by 2021, people on the ground in Muzarabani to lay the ground for drilling work which should culminate in the establishment of fully developed two oil test wells.
“With re-interpretation of (exploration) data taking place, with the geophysics work taking place, I am happy that we have key milestones that are being achieved, so the project is going on very well,” said Minister Chitando.
“We have a milestone that the ZIDA license has been granted, we have the EIA, which has been approved, the special grant over the area has been extended by a further three years.
“The strategy we have now as a country is where we have mining concessions, we minimise the period or the duration of special grants so that they are performance related and make sure that work is going on the ground.
“So initially we gave with Geo Associates a limited timeframe on their special grant and they managed to convince us that they are doing sufficient work and as a result, the tenure has been extended by three years,” he said.
The VFEX
The establishment of the “VFEX” is now on an advanced stage as the bourse was granted a license to operate a securities exchange by the Securities and Exchange Commission of Zimbabwe recently.
Victoria Falls Stock Exchange Limited, which is a subsidiary of the Zimbabwe Stock Exchange (ZSE), is the one that will be running the securities exchange in the resort town of Victoria Falls.
The VFEX is the brainchild of the ZSE.
In a statement recently the Victoria Falls Stock Exchange Limited announced the granting of the license in accordance with the Securities and Exchange Act, Chapter 24:25.
The company said it was “now finalising the listing and membership requirements, setting up of the trading and depository systems as well as modalities on the clearing and settlement of transactions.”
“The completion of these processes, which is imminent, will enable VFEX to be launched. The market will be updated on the exact date when VFEX will go live,” reads part of the statement signed off by chief executive officer, Justin Bgoni, who is also CEO of the ZSE.
The granting of a license comes at a time when foreign currency liquidity challenges have raised risks for investors in the country.
Authorities believe that VFEX will help lure investors and have proposed that the settlement and clearing of transactions consummated on the VFEX should be settled according to international best practices including offshore.
Bgoni said the main objective of the new bourse, which will trade in foreign currency only, is to assist export-oriented companies to raise capital for growth.
In a statement accompanying the ZSE’s annual report, Bgoni said the VFEX will target main sectors in the economy such as mining, tourism, horticulture, tobacco, and finance.
“It is estimated that the sectors require more than US$20 billion to resuscitate the industries,” he said.
In preparation for the new bourse, the ZSE has covered some ground and has already called for an expression of interest to participate on VFEX.
To date, an aggregate of 80 firms in the financial and capital markets, have expressed interest to participate.
Victoria Falls is the country’s prime tourist destination that receives millions of global visitors, mainly affluent businesspeople holidaying_Business Weekly