CANADIAN mining group the Caledonia Mining Corporation (Caledonia) has taken a long-term view on Zimbabwe with an announcement to bulk up in Blanket Mine and plans to explore new opportunities for investment in the country’s mining sector.
BY FIDELITY MHLANGA
The Toronto Stock Exchange-listed resources company issued a statement last week saying it had entered into a memorandum of understanding with Fremiro Investments (Private) Limited “with the intention to purchase Femiro’s 15% shareholding in Blanket Mine”.
The acquisition deal will see Caledonia increasing its shareholding to 64% from 49%, making the mining firm continue assessing new opportunities to invest surplus cash.
“We are also very pleased to increase our shareholding in Blanket to a majority stake, moving from 49% to 64% following this transaction. Blanket has been an excellent investment for Caledonia since we originally invested in Zimbabwe in 2006 and we are delighted to be able to increase our shareholding in this outstanding asset,” Caledonia chief executive officer Steve Curtis said in the statement.
“Today’s transaction forms an important step in our stated goal of increasing our shareholding in Blanket since the Zimbabwean government removed the indigenisation requirement for gold mining businesses earlier this year.”
The transaction is subject to approvals from various Zimbabwean regulatory authorities and the execution of a legally binding sale agreement.
The mining house says it remains on track to achieve its gold production target of 80 000 ounces at Blanket by 2021 in line with its investment plan at Blanket, which was announced in November 2014 and revised in November 2017.
The company said its strategic focus continues to be the implementation of the investment plan at the mine.
“Implementation of the investment plan remains on target in terms of timing and cost. Caledonia’s board and management believe the successful implementation of the investment plan is in the best interests of all stakeholders because it is expected to result in increased production, reduced operating costs and greater flexibility to undertake further exploration and development, thereby safeguarding and enhancing the mine’s long-term future,” Caledonia said in the statement.
During the first half of 2018, the company produced 25 582 ounces of gold, up from 25 315 ounces in the comparative period last year.
Attributable profit for the quarter was substantially higher year-on-year at $2,6 million, boosted mainly by the increase in the export credit incentive compared to the same period in 2017.
The gold miner said an extension to the central shaft project is expected to extend the life of mine by providing access to deeper levels for production and further exploration.
The mining company said the cash position was expected to improve as a result of the implementation of the investment plan and would continue to assess new opportunities to invest surplus cash.