Caledonia Mining Corporation has sold its 12.2 MW solar plant in Zimbabwe to CrossBoundary Energy Holdings (CBE) for US$22.35 million. CBE will now oversee the solar plant’s operations, while Caledonia plans to reinvest the profit in its gold mining and exploration projects.
A Profitable Solar Investment
Caledonia Mining Corporation PLC has announced the sale of its 12.2 megawatt (MW) solar plant in Zimbabwe for US$22.35 million (£16.72 million). The buyer, CrossBoundary Energy Holdings (CBE), will assume control of Caledonia Mining Services Ltd—the subsidiary that operates the solar facility.
The transaction allows Caledonia to realize a profit on its investment. The company initially spent US$14.3 million to build the solar facility, which began operations in February 2023.
Profits from the sale will be reinvested into Caledonia’s core gold mining and exploration projects, a move expected to significantly boost the company’s growth.
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Partnership with CBE
A key aspect of the deal is an exclusive offtake agreement ensuring that CrossBoundary Energy will supply renewable energy to Caledonia’s Blanket Mine. Under this agreement, the solar plant will continue to meet 20% of the Blanket Mine’s electricity needs.
Mark Learmonth, Caledonia’s chief executive, emphasized the importance of the partnership with CBE. “Whilst the sale will generate an immediate profit for the company, more importantly, we have identified an experienced partner in CBE, which brings vast expertise in delivering and running renewable energy projects,” Learmonth said.
CrossBoundary Energy also plans to expand the solar facility to better meet the energy demands of the Blanket Mine. This expansion will not only support current operations but also help reduce the mine’s reliance on diesel generators.
Strategic Sale to Secure Power and Capital
The sale of the solar facility marks a strategic move for Caledonia as it seeks to optimize its assets and invest in more profitable ventures. With electricity shortages being a recurring issue in Zimbabwe, the solar plant has played a critical role in keeping the Blanket Mine operational.
By selling the plant to an experienced global operator like CBE, Caledonia secures a stable and reliable power supply while unlocking cash for reinvestment in its gold mining projects.
The solar plant currently provides around a quarter of the Blanket Mine’s electricity needs during the day. Through the take-or-pay agreement, the mine will continue to receive power from the plant, securing its future energy requirements.
In a recent statement, the company said, “The solar plant, which was commissioned in early 2023, continues to operate well. The solar plant is owned by Caledonia rather than Blanket, and therefore the economic benefit arising from the solar plant has been realized in the consolidated all-in sustaining cost rather than the on-mine cost.”
Blanket Mine Production and Financial Performance
In its Q3 report, Caledonia announced a strong performance for the nine months ending September 30, 2023. Revenues for the third quarter amounted to US$41.2 million, bringing the total for the first nine months to US$107.7 million. Despite a slight dip in profits, underlying earnings remained robust at US$15.5 million, down 2.9% from the same period last year.
Gold production at the Blanket Mine reached a new record of 21,120 ounces for the quarter, lifting total production for the first nine months of 2023 to 55,244 ounces. Caledonia remains on track to exceed its full-year production guidance of 75,000 to 80,000 ounces.
The company also anticipates a similar level of production at the Blanket Mine in 2024. Gross profit for the third quarter stood at US$14.1 million, while EBITDA was US$15.5 million, marking a 2.5% year-on-year decline.
Caledonia Mining Corporation’s sale of its solar plant to CBE is a strategic move designed to unlock value and support future growth. The deal ensures the Blanket Mine will continue to receive renewable energy, while also freeing up capital for reinvestment in mining and exploration projects.
