Caledonia to regain 80% stake in Blanket Mine

Published: 29 May 2018

AIM-listed Caledonia Mining Corporation says employees at its Blanket Mine and the Gwanda community, from which it operates, will retain their shares as the firm plans to increase its stake in the Matabeleland South-based gold producer to 80 percent.

Following the recent amendments to the Indigenisation and Economic Empowerment Act by Government, Caledonia has announced plans to increase its stake in Blanket Mine.

In 2012, Blanket Mine became the first fully indigenised Zimbabwean gold miner complying with the Indigenisation and Economic Empowerment Act, which stipulated that foreign investors should cede 51 percent of their shareholding to locals.

This saw Caledonia controlling 49 percent shareholding in Blanket while 16 percent shares were sold to the National Indigenisation and Economic Empowerment Board, 10 percent to Blanket's mine management and employee trust and 15 percent to identified indigenous Zimbabweans.

Caledonia also donated 10 percent shares to the Gwanda Community Share Ownership Trust.

In a presentation posted on its website, Caledonia vice president Mr Maurice Mason said the amendment of the Indigenisation Act was in their view another way by Government to make the country investor friendly.

"And if these discussions are successful, this will see us owning 80 percent shares in the mine, hopefully this year.

"We will keep the local ownership of the workers and the community and not obviously for legal reasons but because we believe it's good business practice and it gives us tremendous community relations and worker relations.

"We are dealing with negotiations currently with the Government and with some of our local partners to buy back on a willing buyer willing seller basis . . . we have made public statements that we are currently in discussions," he said.

Mr Mason said it was their view that the waiver of the Indigenisation Act was another measure the Government was taking to make the country more investor friendly.

"This legislation has been scrapped completely; it no longer applies to the gold mining industry," he said.

Previously under the Indigenisation Act, all foreign-owned businesses worth more than $500 000 were required to cede 51 percent of their shares to locals.

However, the law at the moment is applicable to the diamond and platinum sectors only.

In a production update for the quarter ended March 31, 2018, Caledonia chief executive officer Mr Steve Curtis announced that his company had been encouraged by the level of support that the new political leadership has shown for the mining sector and the Zimbabwean economy at large.

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

The mine's full year production in 2017 stood at 56 135oz and the gold producer this year targets output levels ranging between 56 000oz and 59 000oz. By 2021 output is expected to increase to 80 000oz.
- chronicle

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