Caledonia Mining Corporation (LON:CMCL)

Caledonia Mining Corporation (LON:CMCL)

Share Price
455.00 p
10 (2.25 %)
Market Cap
£48.97 m
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Caledonia Mining Corporation

Caledonia is an exploration, development and mining company focused on Southern Africa. Caledonia's primary asset is a 49% interest in the Blanket Mine in Zimbabwe which produced 50,351 ounces of gold in 2016 at an All in Sustaining Cost of US$912/oz.

Market: AIM:CMCL
52-week High/Low: 694.00p / 331.00p
Sector: General Mining - Gold
Market Cap: £48.97 m
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Big Picture – A Deep Dive Examination of Caledonia Mining Corporation

Caledonia Mining Corporation Snapshot

The Blanket Mine re-started production in April 2009 after a temporary shut-down due to the economic difficulties in Zimbabwe. In late 2010, Blanket successfully completed an expansion project which increased production capacity from 24,000 ounces of gold per annum to 40,000 ounces of gold per annum.

As an indigenised entity, Blanket can implement its long term growth strategy. The Blanket board, which includes representatives of the Indigenous Zimbabwean shareholders, approved a capital investment programme for a 4 year growth strategy for 2014 to 2017. This investment programme, which was endorsed by the Caledonia board, is estimated at US$65 million, is being funded from Blanket's internally generated cash, and is expected to result in progressive increases in gold production.

Blanket is engaged in the exploration of the down-dip extensions of the known ore bodies and the first two satellite exploration projects which are within trucking distance of the Blanket metallurgical recovery plant.

Blanket's metallurgical plant has substantial surplus capacity. Increased production arising from increased mining throughput should therefore be processed with moderate capital investment and incurring only consumable costs to treat any increased throughput.

Caledonia has a strong, experienced management team and board of directors with diverse expertise in gold production, exploration, mine development, finance and marketing. The group’s management team is based in Johannesburg, South Africa, London, United Kingdom and Jersey, Channel Islands.

Caledonia paid its initial dividend in February 2012. On April 4, 2013 Caledonia announced an annual dividend in respect of the year to December 31, 2012. On November 25, 2013 Caledonia announced that in 2014 it intended to pay an annual aggregate dividend of 6 Canadian cents per common share, payable on a quarterly basis. The first quarterly dividend of 1.5 Canadian cents per common share was declared and paid in January 2014. Further quarterly dividends were paid thereafter. On December 16, 2015, Caledonia announced that henceforth it would report its financial results in United States Dollars. The dividend paid at the end of January 2016 was therefore denominated in United States Dollars. In Q3 of 2016 Caledonia increased its quarterly dividend from 1.125 US cents per share to 1.375 US cents per share, an increase of 22%, representing an annual dividend of 5.5 US cents. In conjunction with the overall 1 for 5 share consolidation which became effective on June 26, 2017, Caledonia announced on July 4, 2017 that it had made a commensurate adjustment to the dividend by increasing it fivefold.


Caledonia acquired the Blanket Mine from Kinross Gold Corporation with effect from April 2006. Following the implementation of indigenisation with effect from September 5, 2012, Caledonia now owns 49% of Blanket. 

Blanket Gold Mine is a well-established Zimbabwean gold mine, which operates at a depth of approximately 750 meters below surface and produced approximately 45,500 ounces of gold in 2013. Blanket also holds brownfield exploration and development projects both on the existing mine area and on its satellite properties which are within trucking distance of the Blanket metallurgical recovery plant.  In November 2014, Caledonia announced a revised investment plan for the Blanket Mine in terms of which production is expected to increase to approximately 80,000 ounces of gold by 2021 following the investment of approximately US$70m, all of which is expected to be funded from internal cash generation and existing cash resources. 

A View of the Blanket Gold Mine

The Blanket Mine is located in the south-west of Zimbabwe approximately 15 km west of Gwanda, the provincial capital of Matabeleland South. Gwanda is 150 km south east of Bulawayo the country's second largest city and 196 km northwest of the Beit Bridge Border post with South Africa, and 560 km from Harare, Zimbabwe's capital city. Access to the mine is by an all-weather tarred road from Gwanda, which is linked from Beit Bridge to Bulawayo and Harare by a national highway.

Zimbabwe - Background

Zimbabwe had an excellent infrastructure system comprising good roads, railways and electricity generation. Lack of investment over the last 10 to 15 years means that much of the general infrastructure in Zimbabwe has deteriorated and substantial investment will be required to rectify and remediate it.

Notwithstanding the general deterioration in Zimbabwe's infrastructure, Blanket has adequate access to the specific infrastructure it requires in order to operate efficiently:

    • Zimbabwe's national highway system remains serviceable and most of Blanket's consumable and equipment supplies are transported to the mine by road from Johannesburg, in South Africa. Blanket has funded the maintenance of the minor road that connects the mine to the national highway and heavy goods vehicle can easily access the mine without impediment throughout the year.
    • Zimbabwe produces approximately 50% of Zimbabwe's total electricity demand and in 2010 this resulted in considerable interruptions to power supplies at Blanket. To address this situation, Blanket installed four, 2.5 MW diesel generators which allow the mine and all of the metallurgical operations to run normally during any interruption to the main electricity supply. In addition, Blanket has entered into an un-interruptible power supply agreement with the state-owned electricity supplier. Although the power supplied in terms of this agreement is more expensive than previously, it is substantially cheaper than the electricity generated by the stand-by diesel generators. Following the conclusion of the un-interruptible power supply agreement, the frequency of power interruptions has diminished to an acceptable level.
    • Much of Zimbabwe's social infrastructure (e.g. water treatment and healthcare) has deteriorated and there have been outbreaks of illness such as cholera and typhoid amongst the general population. The majority of Blanket's employees live with their dependants on the Blanket Mine village where they are provided with potable water (treated at blanket's on-site treatment facility) and healthcare facilities.
    • Zimbabwe has historically had a strong and highly effective educational system. Notwithstanding a chronic shortage of funding in recent years, the general levels of education in the Zimbabwean workforce are very high and this is reflected in Blanket's well-educated and highly skilled workforce.
    • Caledonia in Johannesburg, South Africa provides procurement services to Blanket.  This means that Blanket has ready access to consumables and specialist technical services at highly competitve prices. 


Blanket Gold Mine MapZimbabwe has a long history of mining and there are known occurrences of over 40 minerals in Zimbabwe, mainly gold, nickel and copper but also including coal, diamonds, PGE's and chromite. The Zimbabwean mining industry has operated for over 100 years and prior to the collapse of the economy from 2005 onwards, there was a well-established base of mining skills, expertise and local suppliers.

Zimbabwe has been a gold producer for over 100 years. Gold production in Zimbabwe reached a peak of 29.7 tonnes in 1999, at which time it was ranked as the 16th largest gold producer in the world. Gold production fell to only 3.5 tonnes in 2008 and by the end of 2008 all the gold mines in Zimbabwe had been forced to close due to the failure of the Reserve Bank of Zimbabwe ("RBZ") to pay for gold which, under the prevailing regulations prior to February 2009, required all gold producers to sell gold to the RBZ. Most of the Zimbabwean gold mines re-opened in the course of 2009 following the liberalisation of the commercial environment for gold producers. Gold production in 2009 was approximately 5 tonnes and is estimated to have increased to approximately 10 tonnes in 2012 and 13 tonnes in 2013.

In the period from October 2008 until Blanket resumed operations in April 2009, Blanket continued to pay and provide food and basic necessities to all of its over 500 employees, thereby successfully retaining the majority of the skills embedded in its work force.

The Zimbabwean Government recognises that the mining industry and particularly the gold mining industry is crucial to the growth and re-construction of the Zimbabwean economy.  Accordingly in February 2009, the Zimbabwean Government relaxed on restrictions over foreign payments, which means that it is now relatively easy to make payments of less than $5million to foreign suppliers, lenders and investors without the requirement for Central Bank approvals. Caledonia receives remittances from Blanket in the form of payments for goods and services procured by Caledonia on behalf of Blanket; a management fee payable by Blanket to Caledonia; payments of dividends from Blanket to Caledonia and the repayment of facilitation loans which were extended by Caledonia to the Indigenous Zimbabweans who acquired shareholdings in Blanket.

  • On January 28, 2014 Caledonia announced that as a result of new regulations introduced by the Zimbabwe Ministry of Finance, all gold produced in Zimbabwe must now be sold to Fidelity Printers and Refiners Limited ("Fidelity"), a company which is controlled by the Zimbabwean authorities and which is now responsible for the final refining and marketing of all gold produced in Zimbabwe. Accordingly, all of Blanket’s production has subsequently been sold to Fidelity. Blanket receives 98.5% of the value of the gold within a maximum of 7 days of a sale to Fidelity. Blanket has received all payments due from Fidelity under these new arrangements in-full and on-time.

Safety Health and Environment

During October 2011 Blanket received two prestigious safety awards. Blanket's Occupational, Safety and Health ("OSH") policy and procedures have been audited by the National Social Security Authority (the "NSSA"). The NSSA is a public institution in Zimbabwe and was established as an initiative of the Government of Zimbabwe with the objective of introducing social protection to Zimbabwean workers and their families. The NSSA audit covered inter alia, Blanket's OSH policies, procedures, training and management systems. As a result of this audit, Blanket was awarded the gold medal in the Mining and Quarrying sector in Matabeleland and also the bronze medal across all industrial sectors in Zimbabwe.


The prevailing taxation regime for mining companies in Zimbabwe includes the following provisions:

  • Corporate Income tax at 25,75%
  • Exploration, development and capital costs can be expensed against profit in the year incurred or carried forward to be expensed against the first year of production
  • Royalty at 7% of turnover with effect from 1 January 2012 to September 30, 2014.  With effect from 1 January 2014, the royatly was no longe deductable for the purposes of calculating profit that is chargeable to Zimbabwean Income Tax.  Wwith effect from 1 October 2014, the royalty rate was reduced from 7% to 5%.
  • Exemptions on customs duty and import taxes on capital items during exploration and development phases
  • Withholding tax on dividend payments to non-Zimbabweans and on services provided by foreign suppliers at a rate of 5% to 15% depending on the location of the payee.


The Indigenisation and Economic Empowerment Act ("The Act"), which was enacted in 2007 requires that 51% of the equity of all commercial enterprises in Zimbabwe must be owned by Indigenous Zimbabweans.

On February 20, 2012 Caledonia announced it had signed a Memorandum of Understanding ("MoU") with the Minister of Youth, Development, Indigenisation and Empowerment of the Government of Zimbabwe pursuant to which 51% of Blanket would be sold for a paid transactional value of US$30.09 million. The various transactions were implemented with effect from September 5, 2012 on the following basis:

  • 16% was sold to the National Indigenisation and Economic Empowerment Fund;
  • 10% was sold to a Management and Employee Trust for the benefit of the present and future managers and employees of Blanket;
  • 15% was sold to identified Indigenous Zimbabweans; and
  • 10% was donated to the Gwanda Community Share Ownership Trust. Blanket also made a non-refundable donation of US$1.0 million to the Trust as soon as it was established and paid advance dividends of US$4million before the end of April 2013.  The Trust will receive no further dividends from Blanket until the advance dividends have been repaid by the offset offuture dividends arising on the Blanket shares that are owned by the Trust.

Caledonia facilitated the vendor funding of these transactions: i.e. Indigenous Zimbabweans who have purchased their interest in Blanket will repay their outstanding facilitation loan by sacrificing 80% of their future entitlement to Blanket dividends. Outstanding balances on the facilitation loans attracts interest at LIBOR plus 10% up to December 31, 2016, subject to moratoria on interest accrual during periods when Blanket did not pay dividends. From January 1, 2017, interest was reduced to the lower of a fixed rate of 7.25% per annum, payable quarterly, or 80% of the dividend that is attributable to Blanket’s indigenous shareholders paid in a quarter by Blanket. The reduction in the interest rate reflects the general lowering of interest rates in Zimbabwe.

Following the implementation of Indigenisation, Caledonia has received the Certificate of Compliance from the Government of Zimbabwe which confirms that Blanket is fully compliant with the Indigenisation and Economic Empowerment Act.

As an indigenised entity, Blanket can now develop and implement its long term growth strategy. The recently re-constituted Blanket board, which includes representatives of the Indigenous Zimbabwean shareholders, approved a capital investment programme for 2013 and a 4 year growth strategy for 2014 to 2017. This investment programme, which was endorsed by the Caledonia Board, is estimated at US$37m, will be funded from Blanket's internally generated cash, and is expected to result in progressive increases in gold production.


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Steve Curtis, C.A. (SA) - Chief Executive Officer (Caledonia Mining South Africa Proprietary Limited)

stevecMr Curtis is a Chartered Accountant with over 30 years’ experience and has held a number of senior financial positions in the manufacturing industry. Before joining Caledonia in March 2006, he was Director Finance and Supply Chain for Avery Dennison SA and prior to this Financial Director and then Managing Director of Jackstadt GmbH South African operation.

Mr Curtis is a member of the South African Institute of Chartered Accountants and graduated from the University of Cape Town. He was appointed to the Caledonia board in July 2008.  Steve was appointed Caledonia's Chief Executive Officer in November 2014, prior to which he was Caledonia's Chief Financial Officer


Dana Roets B.Sc. - Chief Operating Officer (Caledonia Mining South Africa Proprietary Limited)

danarDana Roets is a qualified Mining Engineer and holds a B.Sc. Mining Engineering degree from Pretoria University (1986) and an MBA from the University of Cape Town (1995). Mr Roets is a South African national with over 26 years of operational and managerial experience in the South African gold and platinum industry.

He started his career with Gold Fields at the St Helena Gold Mine as a graduate trainee and progressed via various operational roles from being an underground shift boss to become Vice President and Head of Operations at Kloof Gold Mine in January 1999 at which time Kloof produced over 1,000,000 ounces of gold per annum. More recently, Mr Roets was the COO at Great Basin Gold which had gold mining operations in the United States of America and South Africa.


Mark Learmonth - Chief Financial Officer  

marklMr Learmonth joined Caledonia in July 2008. Prior to this, he was a Division Director of Investment Banking at Macquarie First South in South Africa, and has over 17 years' experience in corporate finance and investment banking, predominantly in the resources sector in Africa.

Mr Learmonth graduated from Oxford University and is a chartered accountant. Mr Learmonth is a member of the Executive Committee of the Chamber of Mines, Zimbabwe.  Mr Learmonth was appointed Caledonia's Chief Financal Officer in November 2014.


Caxton Mangezi - General Manager and Director, Blanket Mine 

management3Mr Mangezi is a qualified miner and mine manager. He has worked at Blanket Gold Mine since 1969 in a range of roles including geological technician, overseer miner and underground manager.

Mr Mangezi has been General Manager of Blanket Mine since 1993, with full responsibility for day-to-day operations.


Maurice Mason - VP Corporate Development & Investor Relations 

Maurice Mason

Maurice is is an engineer with an MBA from Henley Reading University. Before Joining Caledonia,  Maurice was a securities analyst at Stifel, a US investment bank, where he focused on the mining sector.

Prior to working as a securities analyst Maurice worked for 6 years with Anglo American in their Platinum and Coal operations based in both the Johannesburg and London offices.

Maurice is based in London.


Adam Chester - General Counsel, Company Secretary and Head of Risk and Compliance


Mr Chester is a dual qualified lawyer (England and Jersey, Channel Islands) and previously worked as a solicitor of the Supreme Court of England and Wales at international law firms in the City of London and, more recently, as an advocate of the Royal Court of Jersey at an international offshore law firm in which he was a partner.  

He has extensive experience advising businesses and individuals on a variety of commercial and corporate legal issues.  Mr Chester was appointed General Counsel, Company Secretary and Head of Risk and Compliance in January 2017.


As at 31 December 2018, or as subsequently disclosed or ascertained, to the knowledge of Caledonia the significant shareholders of Caledonia are:


Shares / Depositary interests

% of share capital

Allan Gray Investment Management



Sales Promotion Services SA / Heinrich Auwärter 918,773 8.59

TD Ameritrade stockbrokers



UBS, New York



Charles Schwab, San Francisco



National Financial Services

402,040 3.79




Royal Bank of Canada



TD Waterhouse Canada



According to the above information, 22.88% of Caledonia's securities are held "not in public hands" in terms of the AIM Rules.

There are no restrictions on the transfer of Caledonia’s issued shares.

Head and Registered Office

Caledonia Mining Corporation Plc
3rd Floor
Weighbridge House
St Helier
Jersey JE2 3NF

+44 1534 679800
[email protected]


South Africa
Caledonia Mining South Africa Proprietary Limited

P.O. Box 4628
Weltevreden Park 1715
South Africa

+27 11 447 2499
Johannesburg, South Africa


Caledonia Holdings Zimbabwe (Private) Limited

P.O. Box CY1277
Harare, Zimbabwe

Tel: +2634 701 151/4

Corporate Offices
Jersey - Head and Registered Office
Caledonia Mining Corporation Plc

3rd Floor
Weighbridge House
St Helier
Jersey JE2 3NF

Tel: +44 1534 679800
Email:[email protected]


South Africa
Caledonia Mining South Africa Proprietary Limited

4th Floor, No. 1, Quadrum Office Park
Constantia Boulevard
Floracliffe, South Africa

Tel: +27 11 447 2499


Caledonia Holdings Zimbabwe (Private) Limited

P.O. Box CY1277
Harare, Zimbabwe

Tel: +2634 701 151/4

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