Malawians would have a chance to own stakes in two mining companies which recently signed Mining Development Agreements (MDA) with the government as the firms are bound to list on the Malawi Stock Exchange.
The two, Lotus Resources Limited and Lancaster Exploration Limited, have been given 36 months to July 2024 to list on the local bourse.
This is one of the binding conditions for their respective deals.
The pacts will see the government holding 15 percent and 10 percent stakes in each of the two firms.
The agreement with Lotus Resources Limited would see resumption of operations at the Kayelekera Uranium Project in Karonga while Lancaster Exploration’s agreement is for rare earth mining at Songwe Hills in Phalombe.
A statement published by the Ministry of Mining last week indicates that despite the government having 156 shares, representing a 15 percent equity interest in Lotus and 10 percent of the shares in Lancaster, members of the public will have a chance to own shares in the companies.
“Given that these two companies will be listed on the Malawi Stock Exchange, the public is hereby informed about the opportunity and encouraged to become shareholders once the companies issue their shares to the public through Initial Public Offering (IPOs),” the statement, signed by Secretary for Mining Joseph Mkandawire, reads.
In a recent interview, mining expert Grain Malunga said seeking local participation in ownership of the firms brings about financial and economic stability.
He said this is also good for investments into related sectors.
MSE Chief Executive Officer John Kamanga said the move entails that the economy is bound to benefit.
“Let us allow them to be part and parcel of participating in the actual fortunes of those companies, in the process enhancing wealth creation, as well as job creation, to the general public,” Kamanga said.
Stockbrokers Malawi Limited Equity Research Analyst Kondwani Makwakwa said extending this requirement to other sectors could bring substantial benefits to the market and Malawians in general.
“This diversity allows investors to better match their investment strategies with their risk tolerance and sector preferences.
“Moreover, having more companies listed will promote price discovery, ensuring that stock prices more accurately reflect their fundamental values,” he said.
He said increasing the number of listed companies on the local bourse will enable them to raise capital more effectively.
MSE has 16 counters from banking, property and real estate, hospitality, insurance and telecommunication sectors.
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