Oliver Kazunga, Senior Business Reporter
AIM-listed Caledonia Mining Corporation plans to increase its stake in Gwanda-based gold producer, Blanket Mine, following recent amendments to the Indigenisation and Economic Empowerment Act by Government.
The mining firm controls 49 percent shareholding in the gold mining unit after successfully implementing the Indigenisation and Economic Act, which stipulated that foreign investors should cede 51 percent of their shareholding to locals.
In compliance with the Indigenisation and Economic Empowerment Act, Caledonia in 2012 sold Blanket Mine’s 16 percent shares to the National Indigenisation and Economic Empowerment Board, 10 percent to Blanket’s mine management and employee trust, 15 percent to identified indigenous Zimbabweans and 10 percent was donated to the Gwanda Community Share Ownership Trust.
In a bid to attract more investment, the new political dispensation has amended the indigenisation and economic empowerment framework by removing the 51/49 percent requirement for all foreign-owned businesses.
The percentage threshold now applies to the diamond and platinum sectors only.
In a commentary accompanying Blanket Mine’s production update for the quarter ended March 31, 2018, Caledonia chief executive officer, Mr Steve Curtis, said they had been encouraged by the level of support that the new political leadership has shown for the mining sector and the Zimbabwean economy in general.
“We look forward to the opportunities that the improving macro-economic environment in Zimbabwe is likely to present. In March, the Government enacted legislation which completely removed the requirement for gold producers to implement indigenisation, which has created an opportunity for Caledonia to potentially increase its stake in Blanket Mine subject to agreement with our local partners,” he said.
Mr Curtis said Zimbabwe’s gold sector offers exciting opportunities but was in need of significant capital investment. In the first quarter of the year, the Gwanda-based gold mine produced 12 924 ounces up from 12 794oz during the same period in 2017. Last year, Blanket Mine produced 56 135oz. The gold producer this year targets production levels of between 56 000oz and 59 000oz and by 2021 output is expected to increase to 80 000oz.
Blanket is also targeting a $5,1 million additional income by the end of the year from an Export Credit Incentive, which the Reserve Bank of Zimbabwe (RBZ) has increased to 10 percent from 2,5 percent. The above projection is hinged on the assumption that the Export Credit Incentive remains in place this year and the international gold price of $1 260 per ounce does not change.
In the 2018 monetary policy statement, RBZ Governor Dr John Mangudya raised the Export Credit Incentive paid to all gold producers with a view to boosting the mineral’s output.