REG - Caledonia Mining Crp - Completion of acquisition of Bilboes

Caledonia MiningAnnouncement

06/01/2023 07:00

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RNS Number : 8702L  Caledonia Mining Corporation PLC  06 January 2023

Caledonia Mining Corporation Plc

 

Completion of the acquisition of the Bilboes gold project in Zimbabwe and
appointment of Executive Director

 

(NYSE AMERICAN: CMCL; AIM: CMCL; VFEX: CMCL)

 

St Helier, January 6, 2023 - Caledonia Mining Corporation Plc ("Caledonia" or
the "Company") is pleased to announce that, following the satisfaction of
conditions precedent, it has today completed the acquisition of Bilboes Gold
Limited, the parent company which owns, through its Zimbabwe subsidiary,
Bilboes Holdings (Private) Limited ("Bilboes Holdings"), the Bilboes gold
project in Zimbabwe ("Bilboes" or the "Project").  Please refer to
Caledonia's announcement on July, 21 2022 for further details of the Project
and the Transaction.

 

As a reminder, the total consideration payable is, subject to adjustment (see
below), 5,123,044 shares representing approximately 28.5 per cent of
Caledonia's fully diluted share capital and a 1 per cent net smelter royalty
("NSR") on the Project's revenues (the "Transaction").  Based on the last
trading day's closing share price on NYSE American of US$12.82 per share, the
value of the maximum number of new shares that could be issued as
consideration if there is no adjustment is currently US$65,677,424.

 

Highlights

·    Bilboes is a large, high grade gold deposit located approximately 75
km north of Bulawayo, Zimbabwe. Historically, it has been subject to a
limited amount of open pit mining.

·    The Project has NI43-101 compliant proven and probable mineral
reserves of 1.96 million ounces of gold in 26.64 million tonnes at a grade of
2.29 g/t and measured and indicated mineral resources of 2.56 million ounces
of gold in 35.18 million tonnes at a grade of 2.26 g/t and inferred mineral
resources of 577,000 ounces of gold in 9.48 million tonnes at a grade of 1.89
g/t 1  (#_ftn1) .  The Project has produced approximately 288,000 ounces of
gold since 1989.

·    A feasibility study prepared by the vendors (the "DRA Feasibility
Study") indicates the potential for an open-pit gold mine producing an average
of 168,000 ounces per year over a 10-year life of mine.

·    Caledonia will conduct its own feasibility study to identify the
most judicious way to commercialise the Project to optimize shareholder
returns.   One approach that will be considered is a phased development
which would minimise the initial capital investment and reduce the need for
third party funding.

·    Caledonia entered into a tribute arrangement with Bilboes
Holdings when it entered into the share purchase agreement so that oxide
operations could re-start. The tribute agreement is now unnecessary due to
completion of the Transaction and oxide operations are anticipated to start
from February 2023 with the expectation that Bilboes Holdings will return to
profitable operations shortly thereafter. This also has the benefit of an
element of pre-stripping for the main development of the Project.

 

Under the Transaction, 5% of the total consideration shares (256,152 shares
(the "Deferred Shares")) will be retained by Caledonia in order that any
customary adjustments to the purchase price can be calculated after completion
to account for any extraordinary liabilities incurred prior to completion.
This calculation is expected to be completed in the next few weeks.

 

Furthermore, 441,095 of the total consideration shares that would have been
issued to Toziyana (the "Escrow Shares") will be withheld by Caledonia to be
issued to Shining Capital in settlement of a separate commercial arrangement
between Toziyana's holding company and Shining Capital's subsidiary Infinite
Treasure Limited.  The issue of the Escrow Shares to Shining Capital is
subject to Reserve Bank of Zimbabwe approval for the commercial arrangement
between Toziyana's holding company and Infinite Treasure Limited.

 

Accordingly, following today's completion, 4,425,797 new shares in Caledonia
are being issued to the sellers of Bilboes (the "Completion Shares") and up to
697,247 additional shares comprised of Deferred Shares and Escrow Shares will
be issued in due course, at which time further announcements will be made.

 

The number of Completion Shares being issued to the sellers of Bilboes is
therefore as follows:

 

 Name                                                            Shares issued  Percentage of Caledonia's fully diluted share capital upon issue of the
                                                                                Completion Shares
 Toziyana Resources Limited ("Toziyana")                         2,279,074      13.21%
 Baker Steel Resources Trust Limited ("BSRT") 2  (#_ftn2)        760,000        4.40%
 Shining Capital Holdings II LP ("Shining Capital") 3  (#_ftn3)  1,386,723      8.03%
 TOTAL                                                           4,425,797      25.64%

 

Following the issue of Completion Shares, Caledonia will have a total number
of shares in issue of 17,258,923 common shares of no par value each. Caledonia
has no shares in treasury; therefore, this figure may be used by holders of
securities in the Company as the denominator for the calculations by which
they determine if they are required to notify their interest in, or a change
to their interest in, the Company.

 

Application has been made by Caledonia for the admission of depositary
interests representing the Completion Shares to trading on AIM and it is
anticipated that trading in such securities will commence on January 11, 2023.

 

Pursuant to the terms of the Transaction, Mr Victor Gapare, who is affiliated
with Toziyana, has been appointed as an Executive Director with effect from
today.  Victor obtained a Masters in Business Leadership degree (MBL) from
the University of South Africa in 1999 and a Bachelor of Business Studies
honours degree (BBS Hon) from the University of Zimbabwe in 1986.  Victor was
previously the Operations Director for the gold and pyrites business of Anglo
American Corporation Zimbabwe Limited when Bilboes was part of its portfolio
and is a former President of the Chamber of Mines Zimbabwe.  He has been the
CEO of Bilboes Holdings since the management buyout of Bilboes from Anglo
American Corporation Zimbabwe Limited in 2003.

 

Commenting on the announcement, Mark Learmonth, Chief Executive Officer, said:

 

"Completion of the Transaction is the cornerstone in Caledonia's strategy to
create a mid-tier, multi-asset gold producer focussed on Zimbabwe.

 

"Bilboes is a large, high-grade sulphide deposit which is amenable to
low-cost, open-pit operations.  A feasibility study on the Bilboes project
which has been prepared by the Bilboes vendors envisages production of
approximately 168,000 ounces of gold per annum over a 10-year life.  Now that
the Transaction has completed, Caledonia will commission its own feasibility
study to identify the most appropriate way to commercialise this asset having
regard to the availability of funding with the objective of maximising
Caledonia's net present value per share.  I anticipate the feasibility study
will take 12 to 14 months to complete.

 

"In the short term, I expect ore production from the Bilboes oxides will
commence in early February and we anticipate beginning to recover gold from
the heap leach from March.

 

"The acquisition of Bilboes should be seen in the context of the successful
implementation of the Central Shaft project at Blanket Mine, which is now
producing at its target production rate of 80,000 ounces per annum 4  (#_ftn4)
, and the acquisitions of the exploration projects at Maligeen and Motapa. We
recently announced an upgrade to the existing mineral resource base at
Maligreen 5  (#_ftn5) . Motapa is at a much earlier stage but, given its large
size, its attractive geological prospectivity and its contiguity with Bilboes
we believe it is a highly attractive addition to our portfolio.

 

"I look forward to working with Victor and in particular developing Bilboes
and other investments in Zimbabwe with him and the rest of the management team
on behalf of Caledonia."

 

Caledonia's Chairman, Leigh Wilson, also commented on the announcement,
saying:

 

"I am very pleased the acquisition of Bilboes has been completed. I extend my
appreciation to the Bilboes vendors and their advisors for their active
assistance in closing what has been a complex deal, and in particular to
Victor Gapare who has been closely involved with Caledonia management in
satisfying a number of key conditions to the Transaction.

 

"It is my pleasure to welcome Victor to the Caledonia Board.  His extensive
knowledge of both the Project itself and, more broadly, of mining in Zimbabwe
is an invaluable addition to the Board."

 

This news release has been approved by Mr Dana Roets (B Eng (Min.), MBA,
Pr.Eng., FSAIMM, AMMSA), Chief Operating Officer, the Company's qualified
person as defined by Canada's National Instrument 43-101 - Standards of
Disclosure for Mineral Projects ("NI 43-101").

 

 Caledonia Mining Corporation Plc

 Mark Learmonth                                             Tel: +44 1534 679 802

 Camilla Horsfall                                           Tel: +44 7817 841793
 Cenkos Securities plc (Nomad and Joint Broker)

 Adrian Hadden                                              Tel: +44 207 397 1965

 Neil McDonald                                              Tel: +44 131 220 9771

 Pearl Kellie                                               Tel: +44 131 220 9775
 Liberum Capital Limited (Joint Broker)

 Scott Mathieson/Kane Collings                              Tel: +44 20 3100 2000
 BlytheRay Financial PR

 Tim Blythe/Megan Ray                                       Tel: +44 207 138 3204
 3PPB

 Patrick Chidley                                            Tel: +1 917 991 7701

 Paul Durham                                                Tel: +1 203 940 2538
 Curate Public Relations (Zimbabwe)

 Debra Tatenda                                              Tel: +263 77802131

 Rothschild & Co (Financial Advisor to Caledonia)

 Giles Douglas

 Muhammad Jaffer                                            Tel: +27 11 428 3700

                                                            Tel: +44 20 7280 5000
 IH Securities (Private) Limited (VFEX Sponsor - Zimbabwe)

 Dzika Dhana

 Lloyd Mlotshwa                                             Tel: +263 (242) 745 119/33/39

 

Appendix 1 - Current and Previous Directorships of Mr Gapare and other
matters required to be notified in accordance with paragraph (g) of Schedule 2
to the AIM Rules

The names of all companies and partnerships of which Mr Gapare has been a
director or partner at any time in the previous five years are set out
below.

Current

African Century Limited

Bilboes Holding (Private) Limited

Clacton Investments (Private) Limited

Doctudey Investments (Private) Limited

Eastic Investments (Private) Limited

Gat Finance (Private) Limited

Gat Investments (Private) Limited

Intrachem (Private) Limited

Iron Duke Pyrites (Private) Limited

Iron Mask Aerotech (Private) Limited

Odzi Resources Zimbabwe (Private) Limited

Pokoteke (Pty) Limited

Powerspeed Electrical Limited

Rinemeck Investments (Private) Limited

Sepdom Investments (Private) Limited

Toziyana Resources Limited

 

Previous

Bembezi Gold Mines (Private) Limited

Bilboes Gold Limited

Maligreen Mining Company (Private) Limited

Max Mind Investments (Private) Limited

Pan African Mining (Private) Limited

R Davis (Private) Limited

Tayanna Mocambique Limited

 

Mr Gapare's full name is Victor Robinson Gapare.  He is 58 years old.

Mr Gapare is interested in the shares issued to Toziyana.  He holds no share
options in the Company.

There are no other matters which have been disclosed to the Company that are
required to be announced pursuant to paragraph (g) of Schedule 2 to the AIM
Rules.

 Note: The information contained within this announcement is deemed by the
Company to constitute inside information under the Market Abuse Regulation
(EU) No. 596/2014 ("MAR") as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 and is disclosed in accordance with the
Company's obligations under Article 17 of MAR.

Cautionary Note Concerning Forward-Looking Information

Information and statements contained in this news release that are not
historical facts are "forward-looking information" within the meaning of
applicable securities legislation that involve risks and uncertainties
relating, but not limited, to Caledonia's current expectations, intentions,
plans, and beliefs.  Forward-looking information can often be identified by
forward-looking words such as "anticipate", "believe", "expect", "goal",
"plan", "target", "intend", "estimate", "could", "should", "may" and "will" or
the negative of these terms or similar words suggesting future outcomes, or
other expectations, beliefs, plans, objectives, assumptions, intentions or
statements about future events or performance. Examples of forward-looking
information in this news release include: production guidance, estimates of
future/targeted production rates, our plans regarding a modified development
plan with a phased approach with lower initial production and a lower peak
funding requirement and our plans and timing regarding further exploration and
drilling and development.  The forward-looking information contained in this
news release is based, in part, on assumptions and factors that may change or
prove to be incorrect, thus causing actual results, performance or
achievements to be materially different from those expressed or implied by
forward-looking information.  Such factors and assumptions include, but are
not limited to: the establishment of estimated resources and reserves, the
grade and recovery of minerals which are mined varying from estimates, success
of future exploration and drilling programs, reliability of drilling, sampling
and assay data, the representativeness of mineralization being accurate,
success of planned metallurgical test-work, capital availability and accuracy
of estimated operating costs, obtaining required governmental, environmental
or other project approvals, inflation, changes in exchange rates, fluctuations
in commodity prices, delays in the development of projects, the assessment of
the existing capital intensity of the Bilboes gold project and Caledonia's
experience of project development in Zimbabwe and other factors.

Security holders, potential security holders and other prospective investors
should be aware that these statements are subject to known and unknown risks,
uncertainties and other factors that could cause actual results to differ
materially from those suggested by the forward-looking statements.  Such
factors include, but are not limited to: risks relating to the completion of
the acquisition, risks relating to estimates of mineral reserves and mineral
resources proving to be inaccurate, fluctuations in gold price, risks and
hazards associated with the business of mineral exploration, development and
mining, risks relating to the credit worthiness or financial condition of
suppliers, refiners and other parties with whom the Company does business;
inadequate insurance, or inability to obtain insurance, to cover these risks
and hazards, employee relations; relationships with and claims by local
communities and indigenous populations; political risk; risks related to
natural disasters, terrorism, civil unrest, public health concerns (including
health epidemics or outbreaks of communicable diseases such as the coronavirus
(COVID-19)); availability and increasing costs associated with mining inputs
and labour; the speculative nature of mineral exploration and development,
including the risks of obtaining or maintaining necessary licenses and
permits, diminishing quantities or grades of mineral reserves as mining
occurs; global financial condition, the actual results of current exploration
activities, changes to conclusions of economic evaluations, and changes in
project parameters to deal with unanticipated economic or other factors, risks
of increased capital and operating costs, environmental, safety or regulatory
risks, expropriation, the Company's title to properties including ownership
thereof, increased competition in the mining industry for properties,
equipment, qualified personnel and their costs, risks relating to the
uncertainty of timing of events including targeted production rate increase
and currency fluctuations.  Security holders, potential security holders and
other prospective investors are cautioned not to place undue reliance on
forward-looking information.  By its nature, forward-looking information
involves numerous assumptions, inherent risks and uncertainties, both general
and specific, that contribute to the possibility that the predictions,
forecasts, projections and various future events will not occur. Caledonia
undertakes no obligation to update publicly or otherwise revise any
forward-looking information whether as a result of new information, future
events or other such factors which affect this information, except as required
by law.

National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI
43-101") is a rule of the Canadian Securities Administrators which establishes
standards for all public disclosure an issuer makes of scientific and
technical information concerning mineral projects.  Unless otherwise
indicated, all reserves and resource estimates contained in this press release
have been prepared in accordance with NI 43-101 and the Canadian Institute of
Mining, Metallurgy and Petroleum Classification System.  These standards
differ from the requirements of the U.S. Securities and Exchange Commission
(the "SEC"), and reserve and resource information contained in this press
release may not be comparable to similar information disclosed by U.S.
companies.  The requirements of NI 43-101 for identification of reserves and
resources are also not the same as those of the SEC, and any reserves or
resources reported in compliance with NI 43-101 may not qualify as "reserves"
or "resources" under SEC standards.  Accordingly, the mineral reserve and
resource information set forth herein may not be comparable to information
made public by companies that report in accordance with United States
standards.

This news release is not an offer of the shares of Caledonia for sale in the
United States or elsewhere. This news release shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
the shares of Caledonia, in any province, state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such province, state or
jurisdiction.

 

 1  (#_ftnref1) Refer to the technical report entitled "BILBOES GOLD PROJECT
FEASIBILITY STUDY" with effective date December 15, 2021 prepared by DRA
Projects (Pty) Ltd and filed by the Company on SEDAR (www.sedar.com) on July
21, 2022 (the "DRA Feasibility Study").

 2  (#_ftnref2) BSRT also entered into the NSR on completion. As stated in the
July 21, 2022 announcement, the NSR is perpetual but has been capped. The
parties have agreed the cap at $90million (which would require the Project to
produce revenues of $9billion).

 

 3  (#_ftnref3) Parent company of Infinite Treasure Limited, the party to the
share purchase agreement in respect of the Transaction, agreed by Infinite
Treasure Limited to receive the shares.

 4  (#_ftnref4) Refer to the technical report entitled "Caledonia Mining
Corporation Plc NI 43-101 Technical Report on the Blanket Gold Mine, Zimbabwe"
dated May 17, 2021 prepared by Minxcon (Pty) Ltd and filed by the Company on
SEDAR on May 26, 2021.

 5  (#_ftnref5) Refer to technical report entitled "Caledonia Mining
Corporation Plc Updated NI 43-101 Mineral Resource Report on the Maligreen
Gold Project, Zimbabwe dated November 3, 2022 prepared by Minxcon (Pty)
Ltd and filed on SEDAR on November 7, 2022.

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