Number Four Shaft
at Caledonia’s Blanket
gold mine in Zimbabwe
Toronto, Canada — MININGREVIEW.COM — 23 February 2012 – Caledonia Mining Corporation “’ an African focused mining company with an operating gold mine in Zimbabwe and three platinum-nickel and cobalt-copper exploration projects in South Africa and Zambia “’ has signed a memorandum of understanding with the Zimbabwean minister of youth, development, indigenisation and empowerment in terms of which Caledonia has agreed to sell 51% of the Blanket gold mine in Zimbabwe to indigenous Zimbabweans for a paid transactional value of US$30.09 million.

Making this announcement here, the Caledonia statement explained that the sale would proceed on the following basis:

  • 16% will be sold to the National Indigenisation and Economic Empowerment Fund;
  • 10% will be sold to a Management and Employee Trust for the benefit of the present and future managers and employees of Blanket;
  • 15% will be sold to identified Indigenous Zimbabweans; and
  • 10% will be donated to the Blanket Gwanda Community Trust. Caledonia will also make a non-refundable donation of US$1.0 million to the Trust as soon as it has been established.

Caledonia will facilitate the vendor funding of these transactions which will be repaid by way of future dividends from Blanket. Caledonia expects to redeploy the sale consideration in its projects.

Caledonia has undertaken to complete the implementation of all the components of the indigenisation transaction as soon as possible. The Government of Zimbabwe has agreed that implementation of the terms of the MoU will constitute full compliance by Blanket and Caledonia with the requirements of the Indigenisation Act.

Further details of the MoU are subject to a confidentiality agreement, and further announcements will be made when appropriate, the statement added.

Blanket’s unaudited revenues and profit after tax for the year to December 31, 2011 were US$56.6 million and US$19.2 million respectively.

Excellent progress has been made at Blanket mine in recent years: gold production has increased by over 300% from 3,148oz in the first quarter of 2010 to 10,533oz in the fourth quarter of 2011 and cash operating costs fell by 27% from $804/oz in the first quarter of 2010 to $583/oz in the third quarter of 2011.