Caledonia, Fremiro in talks over Blanket

Caledonia Mining Corporation Plc has announced that it has entered into a Memorandum of Understanding (MOU) with Fremiro Investments (Private) Limited (Fremiro) with the intention to purchase Fremiro’s 15 percent shareholding in Blanket Mine (1983) (Private) Limited (Blanket).

Caledonia will acquire Fremiro’s shareholding in Blanket for a gross consideration of $16,667 million to be settled through a combination of: The cancellation of the loan between the two entities which stood at $11,467 million as at June 30, 2018; and the issue of 727 266 new shares in Caledonia at an issue price of $7,15 per share.

The transaction remains subject to approvals from various Zimbabwean regulatory authorities and the execution of a legally binding sale agreement.

Fremiro acquired its 15 percent shareholding in Blanket when Caledonia implemented transactions in 2012 in compliance with the Zimbabwean Indigenisation and Economic Empowerment Act (the “Act”).

Following amendments to the Act passed in March 2018 which removed the 51 percent indigenisation requirement for gold mining businesses, Caledonia and NIEEF have agreed to enter into a transaction whereby Caledonia purchases Fremiro’s 15 percent shareholding in Blanket.

On completion of the transaction, Caledonia will have an effective 64 percent shareholding in Blanket while Fremiro will hold 6,42 percent of Caledonia’s diluted equity.

Commenting on the transaction, Steve Curtis, Chief Executive Officer, said: “We are delighted to agree to a transaction with Fremiro for the purchase of their 15 percent 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 pleased to increase our shareholding in Blanket to a majority stake, moving from 49 percent to 64 percent 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.”

-The Herald