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ZESA Loses Top Paying Client

GWANDA-based gold producer, Blanket Mine, which had been a foreign currency cash cow for ZESA, settling its huge electricity in US Dollars in order to enjoy uninterrupted power supply has dumped ZESA To generate its own electricity.

The mine has secured a power generation license from the Zimbabwe Energy Regulatory Authority (ZERA) which will allow the mining company to install an 18MW solar power plant.

Last October Blanket Mine, through its parent firm, Caledonia Mining Corporation announced plans to install a solar power plant to further reduce dependence on the national grid as well as reduce operational costs.

Caledonia Mining Corporation on its Twitter handle said:

“Caledonia has received a generating license for the proposed 18MW solar project to supply Blanket Mine and we are evaluating tenders received to build the project.

“In the meantime, we can start work clearing the 38-hectare (approximately 94 acre) site for the project.”

Speaking by telephone from Harare yesterday, Zera acting chief executive officer Mr Eddington Mazambani confirmed the development.

“Yes, we have issued them with a license to generate power but for own consumption. They will put to the grid what they will not use but we expect that they will use most of the power that they are going to produce,” he said.

The mining group expects to fund the project but the tender process would invite proposals from potential funders who may be able to offer a more cost-effective funding structure.

In the future, Caledonia also projects that Blanket will have blended electricity supply from grid, solar and back-up diesel generators, which would deliver greater operational reliability, lower operating costs and improved environmental sustainability.

Between July and early August 2019, Blanket Mine experienced electricity supply disruptions and the mine had to rely heavily on its installed diesel generator back-up capacity.

Meanwhile, gold production during 2019 was approximately 55 182 ounces, ahead of revised production guidance of 53 000 ounces driven by improved power availability and grade control.

In the quarter ended December 31, 2019, a total of 16 876 ounces of gold were produced — 24 percent higher than the previous quarter — exceeding a prior production record of 16 425 ounces set in the final quarter of 2017.

This year, Caledonia anticipates gold production to be between 53 000 and 56 000 ounces.

The mining group recently increased its stake to 64 percent in Blanket Mine following the acquisition of an additional 15 percent shareholding from Fremiro Private Limited (Fremiro).

Fremiro will now hold approximately 6,3 percent of the miner’s enlarged issued share capital following a US$16,6 million gross consideration for the 15 percent stake.

The deal was settled through the cancellation of a loan — which stood at $11,5 million as at June 30, 2018 — between Fremiro and Caledonia and the issue of 727 266 new shares in Caledonia.

Last year, Caledonia announced it had entered into a legally binding agreement with Fremiro to purchase the 15 percent stake in Blanket.

Fremiro acquired its shareholding in Blanket when Caledonia implemented transactions in 2012 to comply with the Zimbabwean Indigenisation and Economic Empowerment Act.

As part of the transactions, Caledonia sold 41 percent of Blanket to indigenous Zimbabwean shareholders.

At least 15 percent was sold to Fremiro, 16 percent went to the National Indigenisation and Economic Empowerment Fund, while the Blanket Employee Trust Services (Private) Limited received 10 percent. The financing of these acquisitions was facilitated through an estimated US$30 million of facilitation loans to the above parties apportioned pro rata between the parties based on shareholding.

In addition, 10 percent of Blanket was donated to the local community in the form of the Gwanda Community Share Ownership Trust.

Following the amendment of the Indigenisation Act in 2018 to remove the 51 percent indigenization requirement for gold mining businesses, Caledonia and Fremiro agreed on a transaction whereby Caledonia would purchase Fremiro’s shareholding in Blanket.

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Runyararo Makunde

Media and Society Studies Student Journalist for zimtrending Blogger Copywriter

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