Caledonia Mining (TSX: CAL; NYSE: CMCL) has agreed to redeem Fremiro Investments' 15% stake in North American gold mines in transactions worth $ 16.6 million. After completing the deal, Caledonia will get 64% of the blankets.
Under the terms of the deal, both companies will cancel Fremiro's outstanding Caledonia loan for $ 11.46 million. Subsequently, Caledonia will issue Fremiro 727,266 shares worth US $ 7.15 per share, the share price quoted by Caledonia New York Stock Exchange August 17, 2018. Fremiro will then receive 6.42% of Caledonia's diluted own funds.
Caledonia produced nearly 14,000 oz. Gold at Blanket in the third quarter of 2018
Caledonia produced nearly 14,000 oz. gold at Blanket in the third quarter of 2018, 3% in the same quarter of the previous year, but 10% higher than in the second quarter of 2018. The company produced 39,559 oz. gold in the first three quarters of 2018, slightly lower than in the first three quarters of 2017.
As a result, the company has downgraded its 2018 production guidelines from 55,000 to 59,000 oz. gold 54,000 to 56,000 oz. gold However, it says it is still on its way to reach its 2021 production target of 80,000 oz. gold
The company says lower-than-expected guidelines along with a low gold price led it to reduce its adjusted profit margin from $ 1.65 to $ 1.90 per share, from $ 1.40 to $ 1.50 per share. The revised earnings guidelines are 3% to 12% higher than the company's profit in 2017.
Caledonia acquired a ski mine from Kinross Gold in April 2006 (TSX: K, NYSE: KGC). Its interest dropped to 49% after indigenization in 2012, which led it to sell 51% of its interests to the people of Zimbabwe, including Fremiro. Fremiro could not afford an interest, so Caledonia lent money.
Caledonian mining stocks are currently trading at $ 7.19 with a 52-week range from $ 6.80 to $ 12.50. The company has a market capitalization of $ 72 million.