Special Report: When most companies are struggling to raise cash in the current difficult market, Invictus Energy has caught the eye of a strategic Zimbabwe institutional investor keen to tip in funds to the junior gas explorer — and at a hefty premium to its share price.  

Though it’s probably not surprising given the importance of Invictus’ Cabora Bassa gas project to Zimbabwe.

The government has recognised the importance of the project by earlier this year declaring it a priority development project for the African nation.

Now, Mangwana Opportunities Fund, backed by noted Zimbabwean businessman Joe Mutizwa, has agreed to subscribe to a cornerstone placement of 12.5 million shares at 3.5c apiece, adding an extra $440,000 to Invictus’ coffers at a big premium.

Mangwana Opportunities Fund is an investor-owned, closed-end investment company managed by Mangwana Capital. It is funded by Zimbabwean institutional investors, including pension funds, and invests primarily in the fields of agriculture, mining and tourism with an investment horizon of 10 years.

Mutizwa describes Invictus’ Cabora Bassa gas project as “a potential game changer for the country which can bring about significant economic benefits and energy security to the entire region”.

“Our fund investors comprise a broad range of Zimbabwe’s institutional investors and our investment in Invictus will ensure that they share in the success of the company,” he said.

And the deal is not just a one-off either — the placement agreement makes provision for a further equity investment by Mangwana for the project over the next 12-24 months.

The issue price of the current placement is a 91 per cent premium to the prior five-day volume weighted average price of shares and a 40 per cent increase on the last closing price.


Strengthening Zimbabwe connections

As part of the investment, Mutizwa will join Invictus’ board.

He served 10 years as chief executive of Delta Corporation, one of Zimbabwe`s largest listed companies, before taking early retirement in 2012.

Mutizwa currently sits on the Presidential Advisory Council, a body appointed by Zimbabwe President Emmerson Mnangagwa, which is comprised of experts and leaders drawn from diverse sectors to advise and assist the president in formulating key economic policies and strategies in the country.

Invictus managing director Scott Macmillan said the investment by Mangwana Opportunities Fund strengthened the company’s investor base and in-country presence through the appointment of Mutizwa to its local subsidiary board.

“Our partnership with Mangwana will assist the company in advancing key objectives in

country and provide exposure for local investors to our world class Cabora Bassa project,” he said.

The additional cash will be used advance the Cabora Bassa project, including on the ground activity and preparatory works in the project area, Invictus’ Corporate Social Responsibility (CSR) program within the Muzarabani and Mbire Districts and other in country activities.


Big demand for supply

Invictus is making swift progress on its Cabora Bassa project, having already locked in two lucrative supply deals.

Just before Christmas the company inked a non-binding MoU with Tatanga Energy to jointly investigate the economic and commercial viability of supplying gas to Tatanga’s proposed 500-megawatt (MW) plant that will supply electricity to the national grid and captive clients in Zimbabwe, Zambia and Mozambique.

Minimum gas supply covered by the MoU is about 11 billion cubic feet (Bcf) per year and could be increased to about 36.5Bcf per annum.

Invictus also previously secured an MoU to supply Sable Chemical Industries with 70 million cubic feet of gas per day for a 20-year period to replace imported ammonia for the production of fertiliser.

Demonstrating just how prospective the Cabora Bassa project is, the maximum gas supply of 730Bcf covered under the most recent MoU represents just 8 per cent of the project’s potential.


NOW WATCH: 90 Seconds With… Scott Macmillan, Invictus


This story was developed in collaboration with Invictus Energy, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.