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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (37661)	4/5/2007 9:06:53 AM
From: LoneClone	Read Replies (1) \| Respond to of 78421

Canadian Company to Sell Two Gold Mines in South Africa By Charlotte Mathews and Viwe Tlaleane 04 Apr 2007 at 08:54 AM GMT-04:00 resourceinvestor.com JOHANNESBURG (Business Day) -- Toronto-listed gold miner Caledonia Mining [TSX:CAL] has put its two South African gold mines, Barbrook and Eersteling, together with exploration properties at Eersteling and Roodepoort, up for sale. Caledonia had attracted "more than a handful" of interested bidders, president and CEO Stefan Hayden said yesterday. Hayden would not be drawn on the exact number of bidders but he said they included both South African and non-South African companies. The two mines together own about 2 million ounces of inferred gold resources. They are both on care and maintenance status - which means they are not producing gold any longer - after disappointing operational results at Barbrook and an illegal strike last year resulted in damage to mine property. Barbrook, which has been mining gold for more than 100 years, is near Barberton in Mpumalanga and Eersteling is 36 km south of Polokwane in Limpopo. Hayden said the decision to sell the two mines was entirely based on the assets themselves rather than any intention to disinvest from South Africa. The two mines were absorbing too much management time, which would be better spent on Caledonia's recently acquired Blanket gold mine in Zimbabwe and on making progress on the group's Nama cobalt-copper project in Zambia. Caledonia has other exploration assets in South Africa: the Rooipoort platinum group metals project near Polokwane and the Goedgevonden diamond property near Klerksdorp, where it plans to seek joint venture partners or dispose of the property. Caledonia management said in the outlook for the company that while initial lack of clarity about the status of prospecting under South Africa's mining charter had caused confusion among companies and delays in processing licence applications, there had recently been an apparent relaxation of the attitude of the South African authorities and many companies, including Caledonia, had received new-order prospecting rights in recent months. In the year to December Caledonia lifted total revenue to C$16.6 million (US$14.3 million) from C$2.6 million (US$2.25 million) in 2005 and reduced its net loss to C$0.013 (US$ 1 cent) a share from C$0.031(US$ 3 cents), mainly because of the contribution from Blanket mine. Blanket Mine, which Caledonia bought from Kinross Gold last June, is 150 km south of Bulawayo. At the end of December the mine's total proven and probable ore reserves were 449,500 ounces of gold. It produced 12,437 ounces in the six months to December and Caledonia is busy with an expansion project at the mine and mill, likely to be completed by the fourth quarter of this year, which will lift production to 40,000 ounces a year from 25,000 ounces at present. Mobile Investors One of the interesting features about Caledonia Mining's two South African mines, Barbrook and Eersteling, is that they are 100% owned by the Toronto-listed company. This is fairly rare in the South African mining industry after the introduction of the mining charter and the Minerals and Petroleum Resources Development Act in 2004, which requires a certain minimum empowerment shareholding. A minimum black equity participation of 15% has to be achieved only by April 2009 to convert "old order" mining rights to "new order" mining rights, but most local mining companies pre-empted the requirements of the charter by introducing black shareholders, whether in the South African operating assets or the holding company, several years ago. Not Caledonia. It did say in 2005 it had signed a memorandum of understanding with a black empowerment consortium, but no more has been heard since. The fact that potential bidders for Barbrook and Eersteling are only dealing with one seller may simplify the process, but it may be a deterrent for those who do not have black partners already as they will have to find them and probably finance their participation. Both the mines, naturally, having no empowerment partners in place, still hold "old order" mining rights, although Caledonia's prospecting operations at Rooipoort and Goedgevonden, which it is keeping, have secured "new order" prospecting licenses. Speculation may be that issues around trying to secure black shareholders also played a role in Caledonia Mining's decision to sell its two gold mines, although the official reason is that Barbrook was not profitable and had a damaging labour dispute last year. It is once again worth reminding the South African authorities that if they make it too complex for foreign-owned companies to operate in South Africa, those companies may be attracted to one of many other countries with plentiful natural resources begging for foreign investment.