Alternative Investment Market (AIM)-quoted miner, Caledonia Mining Corporation, says it has completed the acquisition of an additional 15 percent shareholding in Blanket Mine from Fremiro Private Limited (Fremiro), taking its interest from 49 percent to 64 percent.
Caledonia chief executive Steve Curtis, yesterday said Fremiro will now hold approximately 6,3 percent of the miner’s enlarged issued share capital following a US$16,6 million gross consideration for the 15 percent stake.
The deal was settled through the cancellation of a loan – which stood at $11,5 million as at June 30, 2018 – between Fremiro and Caledonia and the issue of 727 266 new shares in Caledonia.
“The company has concluded its transaction with Fremiro to increase Caledonia’s shareholding in Blanket to 64 percent.
“I am confident that Fremiro, now as a significant shareholder in the company, will continue to be supportive of Caledonia’s business going forward,” Mr Curtis stated.
Last year, Caledonia announced it had entered into a legally binding agreement with Fremiro to purchase the 15 percent stake in Blanket.
Fremiro acquired its shareholding in Blanket when Caledonia implemented transactions in 2012 to comply with the Zimbabwean Indigenisation and Economic Empowerment Act.
As part of the transactions, Caledonia sold 41 percent of Blanket to indigenous Zimbabwean shareholders.
At least 15 percent was sold to Fremiro, 16 percent went to the National Indigenisation and Economic Empowerment Fund, while the Blanket Employee Trust Services (Private) Limited received 10 percent.
The financing of these acquisitions was facilitated through approximately US$30 million of facilitation loans to the above parties apportioned pro rata between the parties based on shareholding.
In addition, 10 percent of Blanket was donated to the local community in the form of the Gwanda Community Share Ownership Trust.
Following amendment of the Indigenisation Act in 2018 to remove the 51 percent Indigenisation requirement for gold mining businesses, Caledonia and Fremiro agreed on a transaction whereby Caledonia would purchase Fremiro’s shareholding in Blanket.
The miner’s gold production during 2019 was approximately 55 182 ounces, ahead of revised production guidance of 53 000 ounces driven by improved power availability and grade control.
According to Curtis, in the quarter ended December 31, 2019, approximately 16 876 ounces of gold were produced – 24 percent higher than the previous quarter – exceeding a prior production record of 16 425 ounces set in the final quarter of 2017.
In 2020, Caledonia anticipates gold production to be between 53 000 and 56 000 ounces.
The mining firm increased its third quarter dividend by 9,1 percent to 6,875 cents per share on the back of improved financial performance, buoyed by higher production and better gold prices.
Caledonia – which recently completed a five-year investment programme at its Blanket Mine – now has more financial flexibility and its rate of capital expenditure is going to be reduced to give flexibility of cash reserves on an increased dividend.
It has been in an intensive capital expenditure drive with its latest investment being a US$44 million Central Shaft to be commissioned in fourth quarter of 2020.
The miner has been spending an average of USD$21 million per annum investing heavily in capital goods for efficiency.