TIDMCMCL
RNS Number : 8341Y
Caledonia Mining Corporation PLC
24 August 2018
Caledonia Mining Corporation Plc
Caledonia increases its shareholding in Blanket Mine to 64 per
cent
(NYSE AMERICAN: CMCL; AIM: CMCL; TSX: CAL)
St Helier, August 24, 2018 - Caledonia Mining Corporation Plc
("Caledonia" or the "Company") is pleased to announce that it has
entered into a Memorandum of Understanding ("MOU") with Fremiro
Investments (Private) Limited ("Fremiro") with the intention to
purchase Femiro's 15% shareholding in Blanket Mine (1983) (Private)
Limited ("Blanket"). The transaction remains subject to approvals
from various Zimbabwean regulatory authorities and the execution of
a legally binding sale agreement.
Highlights
-- Caledonia has entered into an MOU with Fremiro to purchase
Fremiro's 15% shareholding in Blanket.
-- Caledonia will acquire Fremiro's shareholding in Blanket for
a gross consideration of $16.667 million to be settled through a
combination of:
o the cancellation of the loan between the two entities which
stood at $11.467 million as at June 30, 2018; and
o the issue of 727,266 new shares in Caledonia at an issue price
of $7.15 per share.
-- On completion of the transaction, Caledonia will have a 64
per cent shareholding in Blanket and Fremiro will hold 6.42 per
cent of Caledonia's diluted equity.
Background
Fremiro acquired its 15% shareholding in Blanket when Caledonia
implemented transactions in 2012 in compliance with the Zimbabwean
Indigenisation and Economic Empowerment Act (the "Act"). As part of
the transactions, Caledonia sold 41% of Blanket Mine to the
following indigenous Zimbabwean shareholders:
Fremiro - 15%
The National Indigenisation and Economic Empowerment Fund ("NIEEF") - 16%
Blanket Employee Trust Services (Private) Limited - 10%
The financing of these acquisitions was facilitated through
approximately $30m of facilitation loans to the above parties
apportioned pro rata between the parties based on shareholding.
In addition, 10% of Blanket was donated to the local community
in the form of the Gwanda Community Share Ownership Trust.
Following amendments to the Act passed in March 2018 which
removed the 51% indigenisation requirement for gold mining
businesses, Caledonia and NIEEF have agreed to enter into a
transaction whereby Caledonia purchases Fremiro's 15% shareholding
in Blanket.
On completion of the transaction, Caledonia will have an
effective 64% shareholding in Blanket with the constituent Blanket
shareholders as follows:
Wholly-owned subsidiaries of Caledonia - 64%
NIEEF - 16%
Blanket Employee Trust Services (Private) Limited - 10%
Gwanda Community Share Ownership Trust - 10%
In line with previous public statements, Caledonia has expressed
an interest in increasing its shareholding in Blanket, a strategy
of which the above transaction forms a key component.
Commenting on the transaction, Steve Curtis, Chief Executive
Officer, said:
"We are delighted to agree a transaction with Fremiro for the
purchase of their 15% stake in Blanket; they have been a supportive
shareholder of Blanket since 2012 and we welcome them as
shareholders in Caledonia.
"Blanket is well-advanced on 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. 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.
"We are also very pleased to increase our shareholding in
Blanket to a majority stake, moving from 49 per cent to 64 per cent
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.
"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.
"We look forward to evaluating further investment opportunities
in Zimbabwe as they become available".
Related Party Transaction
The acquisition of Fremiro's shareholding in Blanket constitutes
a related party transaction for the purposes of Rule 13 of the AIM
Rules for Companies. Accordingly, the independent directors of
Caledonia, being all of the directors, having consulted with WH
Ireland Limited, the Company's nominated adviser, have concluded
that the terms of the transaction are fair and reasonable insofar
as the interest of shareholders are concerned.
Strategy and Outlook
Caledonia remains on track to achieve the production target of
80,000 ounces by 2021 at the mine operated by its Zimbabwean
subsidiary, Blanket. The Company's strategic focus continues to be
the implementation of the Investment Plan at the mine, which was
announced in November 2014 and revised in November 2017 with an
extension to the Central Shaft project and is expected to extend
the life of mine by providing access to deeper levels for
production and further exploration. Implementation of the
Investment Plan remains on target in terms of timing and cost.
Caledonia's board and management believe the successful
implementation of the Investment Plan is in the best interests of
all stakeholders because it is expected to result in increased
production, reduced operating costs and greater flexibility to
undertake further exploration and development, thereby safeguarding
and enhancing the mine's long-term future. Caledonia's cash
position is expected to improve as a result of the implementation
of the Investment Plan; Caledonia will continue to assess new
opportunities to invest surplus cash.
Dividend Policy
A quarterly dividend of 6.875 cents is Caledonia's current
dividend policy which it is envisaged will be maintained.
For further information please contact:
Caledonia Mining Corporation Plc
Mark Learmonth Tel: +44 1534 679 800
Maurice Mason Tel: +44 759 078 1139
WH Ireland Tel: +44 20 7220 1751
Adrian Hadden/ Ed Allsopp
Blytheweigh Tel: +44 207 138 3204
Tim Blythe/Camilla Horsfall/Megan
Ray
Note: This announcement contains inside information which is
disclosed in accordance with the Market Abuse Regulation.
Cautionary Note Concerning Forward-Looking Information
Information and statements contained in this news release that
are not historical facts are "forward-looking information" within
the meaning of applicable securities legislation that involve risks
and uncertainties relating, but not limited to Caledonia's current
expectations, intentions, plans, and beliefs. Forward-looking
information can often be identified by forward-looking words such
as "anticipate", "envisage", "believe", "expect", "goal", "plan",
"target", "intend", "estimate", "could", "should", "may" and "will"
or the negative of these terms or similar words suggesting future
outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions or statements about future events or
performance. Examples of forward-looking information in this news
release include: production guidance, estimates of future/targeted
production rates, and our plans and timing regarding further
exploration and drilling and development. This forward-looking
information is based, in part, on assumptions and factors that may
change or prove to be incorrect, thus causing actual results,
performance or achievements to be materially different from those
expressed or implied by forward-looking information. Such factors
and assumptions include, but are not limited to: failure to
establish estimated resources and reserves, the grade and recovery
of ore which is mined varying from estimates, success of future
exploration and drilling programs, reliability of drilling,
sampling and assay data, assumptions regarding the
representativeness of mineralization being inaccurate, success of
planned metallurgical test-work, capital and operating costs
varying significantly from estimates, delays in obtaining or
failures to obtain required governmental, environmental or other
project approvals, inflation, changes in exchange rates,
fluctuations in commodity prices, delays in the development of
projects and other factors.
Securityholders, potential securityholders and other prospective
investors should be aware that these statements are subject to
known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from those suggested by
the forward-looking statements. Such factors include, but are not
limited to: risks relating to estimates of mineral reserves and
mineral resources proving to be inaccurate, fluctuations in gold
price, risks and hazards associated with the business of mineral
exploration, development and mining, risks relating to the credit
worthiness or financial condition of suppliers, refiners and other
parties with whom the Company does business; inadequate insurance,
or inability to obtain insurance, to cover these risks and hazards,
employee relations; relationships with and claims by local
communities and indigenous populations; political risk;
availability and increasing costs associated with mining inputs and
labour; the speculative nature of mineral exploration and
development, including the risks of obtaining or maintaining
necessary licenses and permits, diminishing quantities or grades of
mineral reserves as mining occurs; global financial condition, the
actual results of current exploration activities, changes to
conclusions of economic evaluations, and changes in project
parameters to deal with unanticipated economic or other factors,
risks of increased capital and operating costs, environmental,
safety or regulatory risks, expropriation, the Company's title to
properties including ownership thereof, increased competition in
the mining industry for properties, equipment, qualified personnel
and their costs, risks relating to the uncertainty of timing of
events including targeted production rate increase and currency
fluctuations. Shareholders are cautioned not to place undue
reliance on forward-looking information. By its nature,
forward-looking information involves numerous assumptions, inherent
risks and uncertainties, both general and specific, that contribute
to the possibility that the predictions, forecasts, projections and
various future events will not occur. Caledonia undertakes no
obligation to update publicly or otherwise revise any
forward-looking information whether as a result of new information,
future events or other such factors which affect this information,
except as required by law.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCPGUPURUPRGUC
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