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Caledonia Mining (TSX: CAL, NYSE: CMCL) has agreed to acquire 15% of Fremiro Investments' stake in the Blanket gold mine in Zimbabwe in a $ 16.6m deal. Upon completion of the deal, Caledonia will own 64% of Blanket.
Under the terms of the agreement, the two companies will cancel Caledonia's debt of $ 11.46 million. Caledonia will then issue Freemro 727,266 shares worth US $ 7.15 per share, the closing price of Caledonia's share in New York Stock Exchange on 17 August 2018. Fremiro will then own 6.42% of the diluted capital of Caledonia. Caledonia produced almost 14,000 ounces. gold in Blanket in the third quarter of 2018
Caledonia produced almost 14,000 ounces. gold in Blanket in the third quarter of 2018, 3% in the same quarter of the previous year, but 10% higher than the second quarter of 2018. The company produced 39,559 ounces. gold in the first three quarters of 2018, slightly smaller than the first three quarters of 2017.
As a result, the company has reduced its production orientation from 2018 from 55,000 to 59,000 ounces. gold to 54,000 to 56,000 ounces. gold. He says, however, that he is still on track to achieve the 2021 production target of 80,000 ounces. gold.
The company says lower than expected guidance coupled with the weak gold price forced it to reduce its adjusted earnings from $ 1.65 to $ 1.90 per share to US $ 1.40 to $ 1, US $ 50 per share. Revised earnings guidance is 3% to 12% higher than the company's earnings in 2017.
Caledonia acquired Blinket mine from Kinross Gold in April 2006. Its interest declined to 49% after indigenization was exported in 2012 that forced it to sell 51% of its interest to Zimbabwean residents, including Freemro. Fremiro could not stand the interest, so Caledonia borrowed the money.
Caledonia Mining shares are currently trading at $ 7.19 with 52 weeks from $ 6.80 to $ 12.50. The company has a market value of $ 72 million.
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