eBusiness Weekly
Tawanda Musarurwa
Toronto Stock Exchange-listed Caledonia Mining Corporation says it has signed a legally binding deal with Fremiro Investments to acquire its 15 percent stake in the Gwanda-based Blanket Gold Mine.
This will effectively bump Caledonia’s equity stake in the Zimbabwean gold producer to 64 percent after the Government last year moved to review the Indigenisation and Economic Empowerment Act to allow mining companies to hold more than 49 percent equity in a local project.
“Further to the announcement made by Caledonia Mining Corporation Plc on August 24, 2018 concerning the entry into of a memorandum of understanding with Fremiro Investments (Private) Limited with the intention to purchase Femiro’s 15 percent shareholding in Blanket Mine (1983) (Private) Limited, Caledonia is pleased to announce that it has now entered into a legally binding sale agreement with Fremiro,” said Caledonia in a notice to the TSX.
“The agreement reflects the terms of the MoU as detailed within the Announcement. The conditions to completion of the purchase include, amongst other things, approvals from various Zimbabwean regulatory authorities. Caledonia will make an announcement about completion of the transaction in due course.
“As a reminder, Caledonia has agreed to purchase Fremiro’s 15 percent shareholding in Blanket for a gross consideration of $16,667 million to be settled through the cancellation of the loan between the two entities, which stood at $11,467 million as at June 30, 2018; and the issue of 727 266 new shares in Caledonia at an issue price of $7,15 per share, being the closing price on the NYSE American at August 17, 2018.
“On completion of the transaction, Caledonia will have a 64 percent shareholding in Blanket and Fremiro will hold 6,42 percent of Caledonia’s diluted equity.”
Prior to the deal, Caledonia currently held a 49 percent stake in Blanket gold mine after complying with the then Indigenisation Act in 2011.
The constituent Blanket Mine shareholders are as follows: Wholly-owned subsidiaries of Caledonia (64 percent), NIEEF (16 percent), Blanket Employee Trust Services (10 percent), and the Gwanda Community Share Ownership Trust (10 percent). Gold continues to be one of the key minerals in Zimbabwe accounting for circa 50 percent of mineral exports (employing in excess of 25 percent of formal employment and over 300 000 involved in artisanal gold mining).
And some observers see the deal as a positive development in encouraging capital inflows that can assist in unlocking the country’s gold production potential. Caledonia is currently well-advanced on implementing its investment programme in the Blanket Mine, which commenced in early 2015 and is expected to result in Blanket achieving an annual production rate of at least 80 000 ounces per annum by 2021.
Meanwhile, the group has said its operations are continuing despite the foreign currency challenges that have affected other miners.
“Caledonia notes recent media reports which refer to certain Zimbabwean gold miners having suspended production due to the lack of foreign exchange to purchase key inputs. Caledonia confirms that, although the availability of foreign exchange in Zimbabwe appears to have reduced in recent weeks, production at the Blanket Mine has continued without interruption.
“The monetary situation in Zimbabwe is receiving the highest levels of attention from Zimbabwean monetary and government authorities with whom Caledonia are actively and constructively engaged on a regular and ongoing basis.”
