Caledonia Mining completes indigenisation of Blanket mine

“Record production results released earlier this week [from Blanket] should ensure growing cash balance from the US$18.3m at the end of June 2012. These funds and future cash flows will be instrumental in preparing Caledonia for the next phase of growth," the broker said

Caledonia Mining (TSE: CAL, LON:CMCL) has completed the indigenisation of the Blanket Mine after final approval was granted by the Reserve Bank of Zimbabwe.

In February, Caledonia agreed with the Zimbabwe Minister of Youth, Development and Empowerment that indigenous Zimbabweans would acquire 51% ownership of Blanket for US$30.09 million.

Completion of the agreement was subject to the approval by the Reserve Bank of Zimbabwe, which included the repatriation of funds and interest to Caledonia in terms of the share sale transactions.

Stefan Hayden, Caledonia's president and chief executive, said: "I am very pleased that the implementation of indigenisation at Blanket has now been completed.

“We welcome our new Indigenous Zimbabwean partners, with whom we look forward to developing a mutually beneficial relationship.

“The newly indigenised Blanket is in a unique position amongst Zimbabwean gold miners as Blanket has significant growth potential which can be funded from internal cash flows.  Blanket can now finalise and implement its growth and development strategy to grow its operations for the benefit of all stakeholders."

Broker Canaccord said that with the indigenisation process complete, Caledonia is entering a new phase of development where it is well positioned to progress with the existing project portfolio, including Nama (base metals project in Zambia) and satellite projects to the Blanket mine.

“Record production results released earlier this week [from Blanket] should ensure growing cash balance from the US$18.3m at the end of June 2012. These funds and future cash flows will be instrumental in preparing Caledonia for the next phase of growth," the broker said.

Canaccord has a 16p share price target price for Caledonia, which is based on a NPV-based valuation for the Blanket mine that accounts for the 51% indigenous stake requirement.

Shares rose in London 2% to 6.39p (C$0.10).