Caledonia Mining Corp is to divest 51% of its Blanket gold mine to Zimbabweans. The $30 million deal was announced on Monday. This agreement allows Caledonia to meet the new foreign ownership rules that came into effect in 2010 in Zimbabwe.
The laws were negotiated with the Ministry of Youth, Development, Indigenization and Empowerment. Under the new law the companies that are worth more than $500,000 and run by non black Zimbabwean had to sell 51% stake to indigenous Zimbabweans within 5 years.
Stefan Hayden, Caledonia Mining president and CEO, said the agreement, when fully implemented, would represent the conclusion of the indigenization requirements for Blanket. The terms of the agreement will see 16% stake in the company going to the National Indigenization and Economic Empowerment Fund.
Another 15% will be given to previously identified Zimbabweans. Another 10 % will go to a management and employee trust for the benefit of current and future managers and employees. And a final 10% will be donated to the Blanket Gwanda community trust.
Mr Hayden said that this was a significant achievement in the current environment and the transaction was neither an expropriation nor a partial nationalization. He added that the indigenization agreement, when fully implemented, will introduce new shareholders to Blanket and that he was confident that their participation would enhance Blanket's further growth and development.
Production at the Blanket mine has increased from 3,148 ounces in the first quarter of 2010 to 10,533 ounces in the fourth quarter of 2011. The cash operating costs at the mine have fallen from $804 per ounce in the first quarter of 2010 to $583 in the third quarter of 2011.