Caledonia plans Zimbabwe expansion
LONDON – Caledonia Mining plans to buy gold assets in Zimbabwe and increase its stake in the Blanket mine after the removal of the country's tough ownership rules.
Keen to attract investment to revitalise the country's struggling mining industry and economy, Zimbabwe has revised its laws since the departure of former President Robert Mugabe to allow foreign firms to fully own operations, with the exception of diamond and platinum mines.
Previously mines had to be 51% owned by Zimbabweans.
Caledonia, which operates the Blanket mine in southern Zimbabwe, has been encouraged by its investors to look at expanding in Zimbabwe for the first time in years, head of corporate development Maurice Mason told Reuters.
At the end of December Caledonia had a cash balance of $12.8-million.
Mason said it was ready to tap equity markets for cash for larger deals, but in the meantime the company will focus on low-cost acquisitions. It plans to target mines that had previously been forced to shut because of a lack of investment.
"There were many mines that closed because the operating environment was too tough," Mason said, adding that Caledonia was evaluting a few mines.
"With (new) capital they could produce far more gold."
One stumbling block to M&A activity in Zimbabwe was the valuation gap between buyers and sellers, Mason said.
London-listed Caledonia is also investing $4-million over the next 18 months to explore the area around Blanket in an effort to boost output to about 80 000 oz/y by 2021, from 56 000 ounces last year.
Zimbabwe is emerging as the "last frontier for gold mining in Africa", Mason said.
Gold output is falling in neighbouring South Africa because of soaring costs while Tanzania's top gold producer, Acacia Mining, has also cut production after a row with government over taxes.
Caledonia will probably increase its 49% stake in Blanket mine by buying the government's 16% stake, Mason said.
The company is not alone in seeing new opportunities in Zimbabwe. A Cypriot investor signed a $4.2-billion deal in March to develop a platinum mine and refinery in Zimbabwe, which President Emmerson Mnangagwa said showed the country was "open for business".
Analysts, however, have cautioned against the perception that investors are ready to flood Zimbabwe with capital, citing the short time the new government has been in power as well as concerns over foreign exchange restrictions.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation