Caledonia waits for approval to increase Blanket Mine stake

0
221

TINASHE MAKICHI

New York Stock Exchange-listed Caledonia Mining Corporation is still awaiting regulatory approvals for the finalisation of its proposed dilution of minority shareholders at its Zimbabwean gold mining unit, Blanket Mine.

The miner is proposing to increase its shareholding to 64 percent from the current 49 percent.

The move came after Government amended the Indigenisation and Economic Empowerment Act to make the 51-49 percent threshold only applicable to platinum and diamond mining.

Blanket Mine was one of the first companies to receive their certificates of compliance on indigenisation from Government in 2012, after it signed a conditional agreement to sell a 16 percent stake in Blanket Gold Mine to the National Indigenisation and Economic Empowerment Fund for $11,74 million.

This agreement was in addition to the conditional agreements that were signed in accordance with the terms of the February 2012 Memorandum of Understanding.

These included an agreement signed for the sale of 10 percent of Blanket for a consideration of $7,34 million to the Blanket Mine Employee Trust that was established for the benefit of the present and future managers and employees of the mine.

Following the amendment of the law, Caledonia Mining Corporation is looking at increasing its stake in Blanket Mine, diluting local shareholders in the process. Caledonia and Blanket however have since agreed to implement a rights issue at Blanket to raise approximately $4 million which will be underwritten by Blanket Mine. “In November 2018, Caledonia announced that it had signed a legally binding sale agreement to increase its holding in Blanket Mine to 64 percent subject to receipt of, amongst other things, regulatory approvals.

“Caledonia’s shares are listed on the NYSE and on the Toronto Stock Exchange and depositary interests representing the shares are traded on London’s AIM,” said the miner.

Blanket will use the proceeds of the rights issue to advance work on certain of its satellite properties. Assuming that Blanket’s indigenous shareholders do not subscribe for shares in accordance with their rights, it is expected that, subject to the terms of the rights issue, Caledonia’s shareholding in Blanket will increase to 64 percent from 49 percent. “It is our intention to retain the shareholders representing employees and the local community (both of which currently hold 10 percent each) as long term shareholders of Blanket,”

Caledonia Mining Corporation chief executive Steve Curtis told this publication last year.

Any transaction by the miner will reflect the value of the indigenous shareholders’ holdings in Blanket after deducting the value of their outstanding facilitation loans and would be subject to a mutually agreed valuation of the holdings in Blanket. Blanket Mine plans to increase production to approximately 80 000 ounces by 2021 from 56 136 ounces of gold in 2017. Blanket Mine’s target production for 2018 is 54 000 to 56 000 ounces.