LONDON Stock Exchange-listed mining junior Caledonia has invested in excess of US$78 million in its subsidiary, Blanket Mine, in the last four years, but says investments in the country’s mining sector are far likely to be forthcoming in the near future until miners can retain 100% proceeds of their investments.
Policies around currency repatriation in the country have seen a number of offshore investors failing to repatriate their proceeds although government has relaxed laws around mine ownerships, except for platinum and diamond mines.
This comes as the company is engaging its local investors in order to increase its shareholding in Blanket to 64% from the current 49%.
Caledonia CE Steve Curtis told an Imara Investment Conference last week this was regardless of the fact that government had made genuine attempts to stimulate investments.
“Proposed repeal of the Public Order and Security Act (Posa) and Access to Information and Protection of Privacy Act (Aippa), which are the major obstacles to a normalisation of relations with the USA. Two factors are of critical importance to create a conducive investment and operating environment: A market-related RTGS-FCA exchange rate which allows local inflation to be absorbed and continued access to adequate FCA to make payments out of Zimbabwe. Investment in the Zimbabwean mining sector is far more likely to be forthcoming when investors are able to keep 100% of the proceeds of their investment,” he said.
Curtis said Caledonia continued to evaluate further investment opportunities in Zimbabwe, both at Blanket and its satellite properties and in new areas.
Last year, Caledonia signed a Memorandum of Understanding with Fremiro Investments with the intent to acquire Fremiro’s 15% equity stake in Blanket Mine.
Curtis said the mine was expected to be self-sufficient by 2022 with US$51 million having been invested in the mine’s central shaft aimed at increasing underground flexibility and rapid access to Blanket zone below 750 metres. Beyond 2022, production is seen coming from a combination of measures, indicated inferred resources with the Blanket plant expected to be functioning at full capacity, while continued exploration focus is expected to delineate additional resources to be included in the mine plant internal sources. Strong free cash-flows are expected from 2020 onward skewed towards declining capex and increasing cash generation.
“Building a solid track record built on production growth, good cost control and capital investment, Caledonia Mining has built a solid track record with rising production and declining unit operating costs, this has delivered solid and growing operating cash flow, which has supported significant capital investment in the Blanket mine, which will deliver the company’s growth ambition of 80 000 ounces by 2022,” he said. Staff writer.