Blanket Mine shelves rights offer

Blanket Mine shelves rights offer
Published: 22 May 2018
CALEDONIA Mining Corporation says it has shelved plans to raise capital for its expansion projects at Blanket Mine through rights issue as funds to support such initiatives are coming through the Export Credit Incentive.

In the 2018 monetary policy statement, the Reserve Bank of Zimbabwe raised to 10 percent the Export Incentive Scheme (ECI) paid to all gold producers with a view to boosting the mineral's output. Before the upward review, the ECI scheme was pegged at 2,5 percent.

The Matabeleland South-based gold mine was investing $4 million in exploration and metallurgical test work on its satellite properties to boost output.

Caledonia owns a 49 percent stake in Blanket Mine, which was anticipating a $5,1 million additional income from ECI by the end of the year.

Recently, Caledonia announced that it had since received funds commensurate with the increased level of ECI for the yellow metal that was produced at Blanket in February.

"We don't need the money; you have seen from the results the business can sustain its capital investment projects quite easily," said Caledonia vice president for corporate development and investor relations, Mr Maurice Mason, in an interview posted on the company's website.

In the first quarter of the year, Blanket Mine produced 12 924oz up from 12 794oz during the same period in 2017.

"We have also benefited from an improved Export Credit Incentive, which the Government recently improved from 2,5 percent to 10 percent.

"The increase is quite substantial and effective in the reduction of the royalty rate for the business and that will mean we will have sufficient cash generation from Blanket to sustain the Central Shaft investment and exploration programme for the year," he said.

"So the rights issue is no longer necessary and that's the reason why it's discontinued."

As at December 31, 2017, Caledonia had estimated cash amounting to $12,5 million with the incremental revenue anticipated to have a material positive impact on Caledonia's forecast earnings per share for the year.

The mining group has revised its earnings per share guidance assuming the increased ECI is expected to be between 165 and 190 cents per share. Caledonia chief executive officer, Mr Steve Curtis, is on record as saying the increase in the ECI from 2,5 percent to 10 percent was a further significant step by the Government to boost investment and production in the gold mining sector.

The gold producer this year targets production levels of between 56 000oz and 59 000oz and by 2021 output is expected to increase to 80 000oz. Last year the mine produced 56 135oz.
- chronicle
Tags: Blanket,

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