Shuka Minerals ended a two-year drought on the JSE’s Alternative Exchange with its debut last Wednesday. It’s the first miner to list on the exchange since Copper 360 in April 2023, not to mention the first listing at all for the entire bourse this year – a worrying fact that speaks to the larger problems facing the JSE.
Bulking up the mining index – with a minnow, and a secondary listing at that – is a far cry from the days when the exchange was home to hundreds of mining companies; it now hosts just 35.
Still, “South African investors understand mining – it’s in their DNA,” says Shuka Minerals CEO Richard Lloyd.
The share price has certainly had a convincing start. From its debut listing closing price of R1.50, Shuka stock has gained 16.67%, to trade at about R1.70. From its pre-listing price of 75c it’s up nearly 125%.
Lloyd modestly describes it as a “great first week”. The stock volume on day one was 60,000 and has averaged 45,000 shares a day since.
The catalyst for the post-listing jump was the announcement that the company will restart production at its Rukwa coal mine in western Tanzania. The mine historically produced about 4,000 tonnes of washed coal per year, but production has been on hiatus “awaiting funding and restart plans and also addressing weather issues in the area”, says the company.
The plan is to get Rukwa active by June, with a projected output of 500 tonnes per calendar month. This will cost the company about $12,600, which it is hoping to raise from the stock market.
“The restart of Rukwa is essential to return some operational cashflow to Shuka Minerals,” Lloyd explains. “The asset has lacked the care and funding required to have a meaningful operation. However, a methodical approach to capex planning and budgeting, as well as benefiting from the sales of stockpiles, will breathe life back into the operation.”
With further capex of about of $132,600 for equipment such as loaders and excavators, Rukwa’s monthly output can be increased to about 5,000 tonnes by 2027.
‘A game-changer’
This is not Shuka’s only project – the company is hoping to complete its acquisition of Zambia’s (in)famous Kabwe mine any day now.
Shuka is fiercely keen on this purchase – Lloyd contends there is about $6bn worth of unmined metals in Kabwe. These include zinc, lead, silver and vanadium, as well as other minerals not yet exploited.
“The current resource of Kabwe that we know of is 6.8-million tons at about 13% zinc and 3.5% lead. Now, that is with 1960s and 70s drilling,” Lloyd says enthusiastically. “It is a game-changer for Shuka.”
The Kabwe mine was first opened in 1906. At its peak, it was one of the largest lead producers in the world. Kabwe was nationalised in 1971 and controlled by ZCCM, Zambia’s state-owned mining company. It was closed down in 1994.
The mine is currently owned by Leopard Exploration & Mining, which has long been in talks with Shuka Minerals to sell the mine. Completion of the deal has been pushed out to June 11.
Lloyd refuses to say what the asking price is; only that it’s “confidential”.
Kabwe is also embroiled in a nasty class-action lawsuit with Anglo American. Members of the Kabwe community are suing the miner for environmental pollution and widespread lead poisoning. Anglo contests that it was not the outright owner of the mine during the time of alleged contamination. According to Human Rights Watch, Kabwe is one of the most polluted towns in the world.
Yet Shuka Minerals isn’t spooked. It argues that the litigation stems from the historic actions of Anglo American relating to Kabwe’s surface tailings and dumps, but it will only be assuming ownership of underground workings.
“I am sure Anglo American are defending this vigorously,” Lloyd tells Currency. Nonetheless, Shuka Minerals says it will still carefully review the baseline environmental issues and work to improve the situation for all parties involved.
Lloyd says this could come in the form of “education, testing, medical support, environmental consideration, etc. But we will engage with the community and officials at all levels in Kabwe and Zambia to achieve this.”
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