Gold producers are re-starting shut mines in Zimbabwe after new rules allowed them to sell gold directly on world markets, but uncertainty is likely to block big new mine investments for years.

"It's going to take a long time to build people's confidence to invest in the country," said analyst Cailey Barker at RBC Capital Markets in London.

"In terms of a big rush into the country, I think there are far better opportunities in other countries that people are not even doing because of the rest of the problems with debt and capital markets."

A key stumbling block to mining investment in Zimbabwe -- which has the world's second-biggest platinum reserves and hefty deposits of diamonds, coal and nickel -- is a law limiting foreign ownership of mines to 49 percent.

Gold producers already in the country have jumped at the opportunity presented by the central bank, which in February relinquished its role as sales agent for gold, allowing firms for the first time to sell the metal and keep all the proceeds.

This is a far cry from the previous scenario where they got 40 percent of proceeds in Zimbabwean dollars, a currency made worthless by hyper-inflation.

Zimbabwe's central bank, which owes gold miners millions of dollars, plans to repay this in special foreign currency bonds.

A wave of gold firms that had shut down mines leading to near halt in output are now seeking funds to resume business. They had shut their mines in the face of sharply rising costs, frequent power cuts, equipment and foreign currency shortages.

The country's biggest gold producer, Metallon Gold, London-listed Mwana Africa and Canada's New Dawn Mining Corp are all planning to re-open their gold mines within months.

"Gold producers there were scraping the bottom of the barrel in terms of profits," Johannesburg-based gold analyst David Davis of Cr edit Suisse Standard Securities said.

"If the rules are relaxed even further, we could see more exploration of gold, platinum and so on, and this is what hasn't happened yet."

Analysts said opportunities in Zimbabwe at the moment were mainly for those already established in the country.

Chief Executive David Brown of the world's No. 2 platinum producer Implats, which has the biggest mining investments in Zimbabwe, has vowed to pump more cash into the country only if the political and economic situation improves.

Brown met Mugabe this month in Harare and invited him to the launch of Implats' $340 million mine expansions in the country.

A new rule revoking a special concession that allowed platinum and diamond miners to keep offshore foreign currency accounts, has also caused uncertainty.

The miners must now keep such accounts with local banks. But so far this rule has not deterred some key players.

"We have had support from government and we are definitely not planning to wind up business in Zimbabwe," Brown said.

Rival Anglo Platinum, the biggest in the sector, is also forging ahead with its planned 150,000-ounce a year platinum project in the country.

Business hopes Tsvangirai's faction of the government can change the laws which limit foreign ownership to 49 percent as it had promised during Zimbabwe's elections.

"It doesn't appear as though they are willing to use their parliamentary majority to repeal this legislation," economic analyst John Robertson said, referring to Tsvangirai's party.

But Zimbabwe's wealth of mineral resources could attract some daring investors, analyst Nick Hatch at ING in London said.

"If you are prepared to take a long-term view and you don't bet every dollar in your portfolio, then it makes sense to buy in Zimbabwe," he said.

Such investors were keeping Zimbabwe in their sights.

"We have definitely seen an increase in conversation around Zimbabwe," said Thys Terblanche, London-based head of mining and metals at South Africa's Standard Bank,

"Now with the relaxing of the regulations, the hope certainly is that when equity markets return, when banks start
lending again and there are more funding resources available, a lot of it will go into Zimbabwe."--mw