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New Dawn signs memorandum for Zimbabwe indigenisation plan

New Dawn Mining (TSE:ND) announced Friday it signed a memorandum of understanding (MOA) with the Ministry of Youth Development, Indigenisation and Economic Empowerment through the National Indigenisation and Economic Empowerment Board (NIEEB) in Zimbabwe.

The Zimbabwe-focused, Toronto-based company has three major gold camps in Zimbabwe, and wholly owns three of the six mines on the properties, with a majority stake in the remaining three.

New Dawn's stock on the Toronto Stock Exchange was trading up 6% at $1.40 as of 9:47 am EDT.

The confidential MOA establishes a broad framework for the structuring and implementation of New Dawn's proposed indigenisation plan.

Earlier this year, the government of Zimbabwe established a new Indigenisation and Economic Empowerment Act that requires the state to control 51% of non-indigenous mining companies.

The Act stipulated that each non-indigenous mining company must submit an "indigenisation plan" within 45 days, and dispose of 51% of its shares to a "designated entity" within six months, which can be extended by a period of no more than three months in certain circumstances.

According to New Dawn, the announcement defines a "designated entity" as a state-owned or controlled company, or an employee share ownership scheme.

The value of the shares that will be transferred will be calculated based on a valuation agreed by the Zimbabwe ministry and the said non-indigenous mining company.

The Indigenisation and Economic Empowerment Act was signed into law in March 2008, and originally stated that non-indigenous companies operating in Zimbabwe must arrange for 51% of their shares or interests to be owned by indigenous Zimbabweans within five years.

Each of New Dawn's Zimbabwe operating subsidiaries, namely Casmyn Mining Zimbabwe, Falcon Gold Zimbabwe, and Olympus Mines, is a non-indigenous company.

New Dawn's first indigenisation plan was rejected. However, the company said the new MOU exhibits its continuing efforts to comply with the Act.

The company's new plan involves engaging directly with indigenous sources of capital in Zimbabwe. It is also considering a secondary listing on the Zimbabwe Stock Exchange, and an employee and community share ownership program.