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AIM-listed mining group, Caledonia Mining says it is seeking ways to deepen its investment in Zimbabwe even though a currency crisis has dented its earnings and slowed the company’s buying of an increased stake.

The mining group presently controls 49 percent shareholding in the Matabeleland South-based gold operation, Blanket Mine and plans to increase its stake to 64 percent after the Government announced changes to ownership laws last year.

Caledonia Mining chief financial officer Mr Mark Learmonth told Reuters this week that after the violent protests at the start of the year and Zimbabwe’s introduction of a new currency last month, the country was gradually moving in the right direction.

“If you believe things will be better in five years’ time, you have to get in now,” he was quoted as saying.

Last year, Blanket Mine produced 54 511 ounces of gold, a nearly three percent fall year-on-year because of lower ore quality.

The mine has been producing for a century barring a temporary shut-down from October 2008 to April 2009 at the height of Zimbabwe’s economic crisis.

Caledonia is expanding production at the mine in southern Zimbabwe and says it is sufficiently confident Zimbabwe will recover from its problems to re-invest on a modest scale.

“We’re not talking about a big, producing mine. We’re talking about advanced exploration or brown field, but with good prospectivity. 

 “We plan to redeploy some of the surplus cash to be generated by the Blanket Mine,” said Mr Learmonth without specifying figures.

The plan is to stay focused on gold, rather than expanding into other minerals.

Like other miners, Caledonia Mining has been hit by the currency challenges, which slowed operations because the mining firm could not buy equipment and power shortages also disrupted production.

The Blanket Mine is now expected to reach a target of 80 000 oz per year in 2022 rather than in 2021, a deadline the company previously anticipated achievable.

Caledonia said Zimbabwe’s foreign currency shortage worsened after the Reserve Bank of Zimbabwe announced last October gold producers would receive 30 percent of their proceeds in United States dollars and the rest in local currency.

Following negotiations between the Government and Caledonia and other gold miners, the US dollar percentage was raised to 55 percent and a higher share can be negotiated for specific needs, such as dividend payments.

—Rueters/Business Chronicle.