Caledonia gets majority stake in Blanket Mine
Shamiso Dzingire, Business Reporter
CALEDONIA Mining Corporation has gained a controlling stake at its subsidiary Blanket Mine after purchasing 15 percent shares from Fremiro Private Investments Limited.
Caledonia, which owned 49 percent shares of the business, entered into a Memorandum of Understanding (MoU) with Fremiro with the intention to purchase Fremiro’s 15 percent shareholding at the Gwanda-based mine.
The move is in line with previous public statements where Caledonia expressed interest in increasing its shareholding at Blanket Mine.
In a statement released on Friday, Caledonia chief executive Mr Steve Curtis said the group was pleased with the transaction, which remains subject to approval from various Zimbabwean regulatory authorities and the execution of a legally binding sale agreement.
“We are very pleased to increase our shareholding in Blanket to a majority stake, moving from 49 percent to 64 percent following this transaction. Blanket Mine 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,” he said.
“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.”
Government has reviewed the indigenisation laws by scrapping the 51/49 percent requirement on major natural resources’ investments except for diamond and platinum minerals. According to Mr Curtis, Caledonia will acquire Fremiro’s shareholding in Blanket for a gross consideration of $16,667 million to be settled through a combination of 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. On completion of the transaction, Fremiro will hold 6,42 percent of Caledonia’s diluted equity.
Fremiro acquired its 15 percent shareholding in Blanket when Caledonia implemented transactions in 2012 in compliance with the Indigenisation and Economic Empowerment Act. As part of the transaction, Caledonia sold 41 percent of Blanket Mine to other players. This saw Fremiro getting (15 percent), the National Indigenisation and Economic Empowerment Fund (16 percent) and the Blanket Employee Trust Services Private Limited (10 percent).
In addition, 10 percent of Blanket Mine was donated to the local community in the form of the Gwanda Community Share Ownership Trust.
Mr Curtis also highlighted that Blanket Mine is well-advanced in implementing the investment programme, 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, at a low cash cost. The investment plan is expected to extend the life of the mine by providing access to deeper levels for production and further exploration.
Mr Curtis said Caledonia is evaluating further investment opportunities in Zimbabwe.
“Such new opportunities, if they result in one or more transactions, are likely to be held directly by Caledonia and/or its subsidiaries rather than by Blanket. By moving its participation up from Blanket to Caledonia, Fremiro is well-positioned to participate with Caledonia in any further investment opportunities,” he said, adding that they look forward to evaluating further investment opportunities in Zimbabwe as they become available. Caledonia remains on track to achieve the production target of 80 000 ounces by 2021 at Blanket.