IAMGOLD puts delisting on hold

IAMGOLD puts delisting on hold | Friday September 24, 2010 00:00

According to BSE officials, the company had announced its intention to delist from the bourse, on which it has a secondary listing, as the counter was inactive due to liquidity constraints.

However, officials say the mining company, which owns Mupane gold mine in the Northern district, has put on ice their decision for now.

' They were planning on delisting their stock from the bourse due to low volumes traded. However, they have since written to us saying they have decided to put that plan on hold until further notice,' BSE CEO, Hiran Mendis told Mmegi this week at the announcement of their 2009 Annual Report.

However, Mendis said the company did not give reasons on why they have decided not to go ahead with the delisting but could only speculate that it could be because of the recently appointed CEO for the company.

Iamgold early this month appointed Stephen Letwin as president and CEO, effective November 1, following the shock resignation of Joseph Conway in January, who had led the firm for seven years.

Apart from Botswana where their operation is relatively small, the Toronto-based Iamgold miner has operations in Burkina Faso, Suriname, Canada and Botswana, as well as joint ventures of operations in Mali and Ghana.

Iamgold plans to delist comes shortly after another delisting by Sefcash two weeks ago.

Sefcash delisted from the bourse citing liquidity constraints as well as the high costs of having two listed entities that basically have the same main shareholders.

Sefcash was 80 percent owned by Sefalana, which is also a listed company on the BSE.

Mendis lamented liquidity shortages as one of the biggest problems faced by the Botswana stock market as active retail investors, which are mostly the individuals crowded out of the market by inactive investors which are mostly institutions such as companies, pension funds and asset managers.

There is also considerable rigidity in the market with only a limited number of stocks traded, implicitly resulting in a 'captive market' with little scope for investors to trade, given the few buyers and sellers.

The concentration of stock ownership, which limits trading, is also exacerbated by the rampant pattern of cross-shareholding on the bourse among some of the largest corporations.

For 2009, Mendis said, liquidity measured as a ratio of total equity turnover to domestic market capitalisation continuing the trend of the past few years where it was very low.

'For the year, institutional investors continued to dominate the market contributing the largest to the market turnover.

'Efforts are still being made to attract retail investors to come into the stock market and we have made some success in terms of individual investors opening up accounts in the Central Security Depository but the value of turnover from generated individual investors is still a cause for concern,' he said.

Going forward Mendis said the introduction of the CSD is set to attract individual investors as the manual systems of trading was not conducive for individual investments.

The number of accounts opened by investors as at the end of December was 7,499, an increase of 60 percent from the 4,707 accounts registered in 2008.

In terms of Dematerialisation of shares in the CSD, 34 percent of the domestic company shares had been dematerialised by December last year in comparison to 30 percent in the previous year.

On the other hand, 68 percent of the foreign company shares in the Botswana register were dematerialised and five foreign companies out of 11 were transferred to the CSD.