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Caledonia sells Zimbabwean solar operator subsidiary for $22.35 million
London-listed Caledonia Mining on April 11 completed the sale of its Zimbabwean subsidiary Caledonia Mining Services (CMS) to CrossBoundary Energy Holdings (CBE) for a pre-tax consideration of $22.35-million, payable in cash.
CMS owns and operates the 12.2 MW solar plant that supplies power to Caledonia’s Blanket mine in the country.
Under the terms of the sale, the solar plant will continue to provide the mine with power under an exclusive power purchase agreement.
In September 2024, following a robust bidding process managed by Caledonia’s Zimbabwe financial advisers IH Advisory, Caledonia signed a conditional sale agreement with CBE to sell the solar plant, aligning with its strategy to focus on its core business of gold mining, the company points out.
This agreement allows the Blanket mine to maintain access to clean energy while enabling Caledonia to reallocate capital for growth, it adds.
The construction of the solar plant was initially financed by a registered offering of Caledonia’s shares in the US in 2020, which raised $13-million.
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Since its commissioning in February 2023, the solar plant has generated over 57 722 MWh of power, Caledonia says.
The company’s consolidated net debt as at April 9 was $3.8-million. Accounting for receipt of the cash consideration, Caledonia’s pro forma consolidated net cash balance was $18.6-million.
“We are pleased to have completed the sale of the solar plant, strengthening our cash position and enabling us to redeploy capital towards our core gold mining and expansion operations.
“By selling the plant for $22.35-million, Caledonia realises a profit on the $14.3-million construction cost. Importantly, we retain the exclusive energy offtake agreement, ensuring that approximately 20% of Blanket mine’s daily electricity needs continue to be met by renewable energy,” says Caledonia CEO Mark Learmonth.
“Energy provision is an expensive challenge for the mining sector in Africa. The acquisition of Blanket mine’s solar PV facility is part of CBE’s ongoing commitment to providing the best energy solutions for the sector.
“Through a power purchase agreement, Blanket mine will continue utilising the benefits of distributed renewable power, whilst freeing up capital for its value-generating mining activities,” says CBE managing partner Matthew Tilleard.