News / Regional
Gwanda Community Acquire Stake in Blanket Mine
11 May 2012 at 01:59hrs | Views
Blanket Mine in Matabeleland South, Gwanda district has disposed of a 15 percent stake to a consortium of local investors, Flemiro Investments, for US$11 million as part of its indigenisation compliance implementation plan. The Indigenisation and Economic Empowerment (General)
Regulations of 2010 require that foreign companies indigenise 51 percent of their equity.
The Flemiro transaction is the first of a four-pronged approach that will result in Blanket Mine fulfilling its agreement to dispose of an effective 51 percent equity to locals.
Blanket Mine, wholly owned by Canadian firm Caledonia Mining Corporation, signed a Memorandum of Understanding in February with the National Indigenisation and Economic Empowerment Board.
The MoU outlined the implementation of its compliance plan.
Caledonia chief executive officer Mr Stefan Hayden yesterday said they had begun the first of four transactions.
"The first transaction for the sale of 15 percent of Blanket to Flemiro Investments, a Zimbabwean-registered investment company, which has been incorporated to represent a diverse group of indigenous Zimbabweans, for a consideration of US$11 million, has been signed," he said. In terms of Caledonia's agreement with Flemiro Investments, the former will facilitate the vendor funding of this transaction which will be repaid by way of future dividends from Blanket Mine.
"Outstanding balances on the facilitation loans in terms of the agreement will attract interest at a rate of 10 percent over the 12-month Libor," said Mr Hayden.
"The timing for the repayment of the facilitation loans will depend on the future financial performance of Blanket Mine." But the gold producer said completion of the agreement is subject to "certain approvals from the Reserve Bank of Zimbabwe".
The company expects to complete the full implementation of its plan this year.
With regards to the remaining phases, 10 percent of the mine's shares will be sold to the Blanket Mine Employee Trust, 16 percent to the National Indigenisation and Economic Empowerment Fund and 10 percent donated to the Gwanda Community Share Ownership Trust. Caledonia is also expected to make a donation of US$1 million to the Trust as soon as it has been established.
Full implementation of the envisaged plan will result in a paid transactional value of US$30 million for the 51 percent Blanket Mine stake.
Mr Hayden also said his company had made headway in respect of the other transactions.
"Documentation for the formation of the Blanket Mine Employee Trust and the subsequent sale of a 10 percent interest in Blanket Mine to the Trust has been finalised and this transaction is expected to be concluded shortly.
"Caledonia has submitted agreements to the parties concerned regarding the remaining two transactions pursuant to the MoU. This being the sale of a 16 percent interest to the National Indigenisation and Economic Empowerment Fund and the donation of a 10 percent interest to a Gwanda Community Share Ownership Trust and their responses are awaited," said the company.
Caledonia has since indicated that it expects to re-deploy the sale consideration in its projects.
The Blanket Mine's audited revenues and profit after-tax for 2011 were US$56,6 million and US$19,2 million, respectively.
Regulations of 2010 require that foreign companies indigenise 51 percent of their equity.
The Flemiro transaction is the first of a four-pronged approach that will result in Blanket Mine fulfilling its agreement to dispose of an effective 51 percent equity to locals.
Blanket Mine, wholly owned by Canadian firm Caledonia Mining Corporation, signed a Memorandum of Understanding in February with the National Indigenisation and Economic Empowerment Board.
The MoU outlined the implementation of its compliance plan.
Caledonia chief executive officer Mr Stefan Hayden yesterday said they had begun the first of four transactions.
"The first transaction for the sale of 15 percent of Blanket to Flemiro Investments, a Zimbabwean-registered investment company, which has been incorporated to represent a diverse group of indigenous Zimbabweans, for a consideration of US$11 million, has been signed," he said. In terms of Caledonia's agreement with Flemiro Investments, the former will facilitate the vendor funding of this transaction which will be repaid by way of future dividends from Blanket Mine.
"Outstanding balances on the facilitation loans in terms of the agreement will attract interest at a rate of 10 percent over the 12-month Libor," said Mr Hayden.
"The timing for the repayment of the facilitation loans will depend on the future financial performance of Blanket Mine." But the gold producer said completion of the agreement is subject to "certain approvals from the Reserve Bank of Zimbabwe".
The company expects to complete the full implementation of its plan this year.
With regards to the remaining phases, 10 percent of the mine's shares will be sold to the Blanket Mine Employee Trust, 16 percent to the National Indigenisation and Economic Empowerment Fund and 10 percent donated to the Gwanda Community Share Ownership Trust. Caledonia is also expected to make a donation of US$1 million to the Trust as soon as it has been established.
Full implementation of the envisaged plan will result in a paid transactional value of US$30 million for the 51 percent Blanket Mine stake.
Mr Hayden also said his company had made headway in respect of the other transactions.
"Documentation for the formation of the Blanket Mine Employee Trust and the subsequent sale of a 10 percent interest in Blanket Mine to the Trust has been finalised and this transaction is expected to be concluded shortly.
"Caledonia has submitted agreements to the parties concerned regarding the remaining two transactions pursuant to the MoU. This being the sale of a 16 percent interest to the National Indigenisation and Economic Empowerment Fund and the donation of a 10 percent interest to a Gwanda Community Share Ownership Trust and their responses are awaited," said the company.
Caledonia has since indicated that it expects to re-deploy the sale consideration in its projects.
The Blanket Mine's audited revenues and profit after-tax for 2011 were US$56,6 million and US$19,2 million, respectively.
Source - Byo24News
