Caledonia Mining Corp PLC said Friday it intends to re-purchase its 15% shareholding in Blanket Mine Ltd following an amendment to Zimbabwean law.
Back in 2012, Caledonia sold the 15% stake to Fremiro in order to comply with the Zimbabwean Indigenisation and Economic Empowerment Act. The sale which was financed through a facilitation loan to Frimero.
Following an amendment to the act in March of this year, Caledonia has entered into a memorandum of understanding with Fremiro Investments Ltd for the 15% stake. Caledonia will then cancel its USD11.5 million facilitation loan to Fremio and issue 727,266 new Caledonia shares at USD7.15 per share. The transaction, including the loan and issue of new Caledonia shares, is worth USD16.7 million in total.
Once the transaction is complete, Caledonia's share in Blanket mine will reach 64%, while Fremiro will own 6.42% share in Caledonia.
Prior to its amendment, the Zimbabwean indigenisation act required that all gold mining business should have at least 51% ownership within Zimbabwe.
"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," said Caledonia Chief Executive Steve Curtis.
Shares in Caledonia Mining were flat at 550.00 pence each on Friday. – London South East