Blanket expansion off track

A MULTIMILLION-dolla r shaft expansion project at Caledonia Mining Plc’s Gwanda-based Blanket Mine has been thrown off track by Covid-19-induced lockdown, businessdigest heard this week.

Caledonia chief executive officer Steve Curtis said in an interview this week that apart from delaying the US$70 million shaft expansion by three months, the New York listed gold giant had pushed forward the final phase of its share purchase programme.

The transaction has been on the cards for a while.

“Covid-19 has really put a stop on a lot of things,” he said.

“We started in 2015, and by the time it’s (the expansion) finished we will have spent US$70 million,” Curtis told businessdigest.

“|We are only three months late from the initial five-year programme, which under the circumstances is an amazing effort. It is money that we are investing into the future,” Curtis said.

The delay will mean Zimbabwe’s major gold producer will have to wait a little longer to achieve its ambition to strike an annual target of 80 000 ounces of gold by 2022, from 50 000 ounces currently.

He said the shaft expansion project remained top priority for Caledonia as it would open up access to fresh reserves.

Along with the expansion, Caledonia had geared itself to buyout minorities before Covid-19 tore through the world, shutting down economies.

“We are currently on 64%,” Curtis said on being asked about Caledonia’s current shareholding in the Gwanda based gold operation.

He spoke to businessdigest after signing a Memorandum of Understanding with government at State House on Monday, where he undertook to help Zimbabwe increase mineral output.

During Caledonia’s share acquisition offensive, it will spare stakes held by workers and communities around its operation, he said.

“We will always keep the staff and the community and our target is to do 80%. At this stage we are at 64% and that works for us, but if the government is interested then we can always have talks and negotiations about the way forward,” he added.

The Caledonia CEO was reluctant to disclose how much the firm would spend for the remaining shareholding in order to reach 80 percent.

In January, Caledonia spent US$16,7 million to take over 15% shareholding previously held by Fremiro Investments, an empowerment outfit which acquired its shareholding in Blanket to comply with the empowerment Act.

The deal followed a 2018 government policy shift, which gave foreign investors the right to control more than 51% shareholding in Zimbabwean mines.

Before President Emmerson Mnangagwa’s shift in 2017 to amend the Indigenisation and Economic Empowerment Act, foreign investors were restricted to a maximum of 49% shareholding in Zimbabwean firms.

After the January transaction, Caledonia said it was considering mopping up all minority shares under various structures except for the 10% donated to the Gwanda Community Share Ownership Trust.

This could take its shareholding in Blanket Mine to about 90%.

Curtis told businessdigest that he has been talking to government around the transaction “but not actively at the moment”.

Curtis said Caledonia was evaluating opportunities for new reserves.

Previously, Caledonia said it was in the market for brownfield gold mines to increase reserves as part of an expansion initiative.

These have been delayed due to conflict around title of the land and valuation.

“Well we continue to evaluate opportunities. The evaluation is quite a long process so it’s not that we have stopped or we are not interested, a lot has to happen in the background when you are not making a lot of noise about it,” he said.

Caledonia recently said shaft sinking at central shaft was completed in July 2019 to the target depth of 1 204 metres.

Work has commenced on equipping the shaft with commissioning expected before the end of this year.

Blanket is expected to produce approximately 75 000 ounces and 80 000 ounces in 2021 and 2022, respectively.