‘Zimbabwe is probably the most prospective gold country in the whole of Africa’

Zimbabwe has been ravaged by political and economic uncertainty, but it is now starting to gain recognition as a place where foreign businesses may invest. The country in southern Africa has some intriguing gold reserves, but there has not been much research there recently. Investor interest in the country has grown as a result of the current administration’s pro-foreign investment stance, which is consistent with the country’s “open for business” credo.

The new government’s determination to further liberalize the country for international investment has been underlined by recent changes to the nation’s mining legislation. The contentious indigenization policy that had worried foreign mining companies was changed. Mark Learmonth (ML), chief executive officer of Caledonia Mining Corporation, recently sat down with our reporter Almot Maqolo (AM) to share a bit about the company and some of the secrets behind the company’s success. Below are excerpts of the interview.

AM: Let’s begin by reviewing the history of Caledonia Mining Corporation. There is already a long and honorable history.
ML: A long time ago, Caledonia Mining Corporation used to have a whole range of assets. We were looking for cobalt in Zambia, we were looking for PGMs in South Africa, and we were looking for diamonds in Zambia and Canada. We had this little gold mine that we bought from Kinross in 2006 called Blanket Mine. We bought it for about US$4 million, which is always a whole thing. Everything else kind of didn’t work. So we got rid of the cobalt and PGMs and we focused exclusively on Blanket Mine from 2008 onwards. We increased production from roughly 20 000 ounces to 80 000 ounces. We have invested US$70 million in the central shaft, and over the last 12 years we must have invested over US$100 million in our business. Obviously, by increasing production fourfold, it’s got great potential and it’s a low-cost asset. It’s a real cornerstone for our investment plans in Zimbabwe. It’s a good asset.

AM: How would you sum up your business dealings in Zimbabwe?
ML: It’s complicated but not impossible. There are a lot of rules and regulations you have to comply with, and if you are not careful, you can tie yourself up in knots. But we are very experienced, we have got good people, we know how to navigate the rules and we would not be investing in Zimbabwe if it was a place where we could not work effectively. So you have got to know what you are doing, but we are very comfortable here.

AM: Let’s discuss your ongoing projects in Zimbabwe and what is currently capturing your interest.
ML: Currently, we are obviously focused on keeping Blanket Mine running smoothly because it generates a lot of money. That is the money that pays me and pays Victor Gapare. (An agreement to purchase the Bilboes gold property, located 75 kilometers north of Bulawayo, was recently reached by Caledonia Mining Corporation, which also controls the Blanket Mine close to Gwanda. As part of the agreement, Victor Gapare, the CEO of Bilboes, would become a director at Caledonia and receive a salary of US$470,000 before incentives). That generated most of the cash to build Bilboes. So that’s always going to be the core of the cash generation. But actually now, in terms of growth, Bilboes is now our growth focus, basically our main focus.

AM: What is the secret behind the company’s success?
ML: An absolutely standard performer, undervalued and listed on the Victoria Falls Exchange. We pay a dividend. We have great growth prospects and are genuinely excited about the prospects for our business. So you need to score your line. It’s not for small investors. You need to be able to mobilize very large amounts of capital. They are pockets of capital available in Zimbabwe. We raise money on the Victoria Falls Stock Exchange. You have to come with experience, otherwise people will not lend you the money. So you must come with a proven track record, such as Victor Gapare’s ability to operate in mining in this country. So you cannot just walk through the door. You need a lot of experience. It is capital-intensive and very skills-intensive. You cannot just walk into mining and expect to make a fortune. You cannot just do it. I have been in the mining sector for 25 years and Victor Gapare probably worked more than that. The people who run our mines have got a lot of experience. You need a huge amount of experience because if you do not have experience, the risk is you will mess it up and you will lose money, and the worst is you will kill people. That’s not going to be easy, so you need to be very careful.

AM: What suggestions would you offer to someone thinking about making an investment in Zimbabwe, particularly in the mining industry?
ML: We think Zimbabwe is a very prospective place for gold. Probably the most prospective gold country in the whole of Africa. So that is important and actually, when you get through the day-to-day difficulties of working here, it is a great environment and we are very comfortable working here. Electricity is the main problem, but the good thing about Zimbabwe is the quality of the workforce, which is absolutely outstanding. We have got 2000 workers. Every single worker at the mine is Zimbabwean, and they are really high quality. We would not be able to achieve what we achieved at Blanket Mine without such high quality workers.

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