Zijin Mining to take 9.9% stake in Montage Gold
As part of the deal, the Lundin Family Trust also agreed increase its stake in the company from 17.7% to 19.9%.
Caledonia Mining ended Friday down 10.5% or 1c ahead of the release of it annual results.
The company’s flagship asset is Blanket, a producing gold mine Zimbabwe where it reported production doubled over 2010 with 35,836 ounces produced.
Turnover came to $55 million versus $22 million the year before. Net profit after income taxes for 2011 was $12 million.
The company also said its the cash costs were significantly reduced over the year to $581 an ounce, compared to $751 an ounce in 2010. In Q4 costs were ratcheted down further to $521 an ounce.
Caledonia announced in February it has signed a deal with the Zimbabwe government to divest 51% of its Blanket Mine to indigenous Zimbabweans for $30 million. The purchase costs would be paid to Caledonia out of Blanket’s future dividend streams.
Caledonia said it made payments in respect of direct and indirect taxes, royalties, licence fees, levies and other payments to the Government of Zimbabwe totalling $13,6 million during the year.
The company is worth $42 million on the TSX, and is trading flat for 2012.
At the beginning of March the counter spiked higher to 11.5c after a new mineralized zone was identified at its Zambia copper exploration project called Nama.
Apart from Blanket and the Nama project in Zambia the Toronto-based company holds platinum assets in South Africa, but Caledonia is writing down $3.8 million because “despite the timely application for the renewal of the prospecting rights, no rights have been issued.”
4 Comments
Akmehra
Dear Mr Els,
Pinetree Capital, which now owns slightly over 10% of Caledonia Mining after it’s latest stock purchase. is clearly signalling to it’s investors like me that despite the risks associated with operating in Zimbabwe it sees significant rewards in the future. With the indeginous agreement in place, Caledonia’s low production costs, strong cash flow, growing gold production, strong profitability,it’s plans for developing it’s other copper properties, and finally the fact that it’s trading at a LOW single digit P/E has convinced me to buy heavily into this stock currently trading at Cdn $0.085.
The more I read and learn about Caledonia, the more I am convinced that despite the Mugabe factor this could be a multi bagger !
I would like to get your take on it. Am I seeing this investment opportunity through rose coloured glasses and ignoring the political risks ?
Thanks.
30303003456
Frik, what is the situation about the mining rights in SA (see you last paragraph) regrading Caledonia??? Is there a problem again ?????
MINING.com Editors
Caledonia did not issue a statement beyond saying that the company is writing down $3.8 million because “despite the timely application for the renewal of the prospecting rights, no rights have been issued.”
D Marais2008
Frik, Boet, jy skryf belangrike woorde..
There is much to be read in the (not merely bureaucratic procrastination) delays in renewing of the rights license by the South African authorities. Watch this space.