Judith Phiri. Business Reporter
LISTED gold mining entity, Caledonia Mining Corporation Plc has signed a conditional sale agreement to sell its 12.2 megawatt solar power plant for $22.35 million to CrossBoundary Energy Holdings (CBE).
The solar plant supplies power to Blanket Mine in Gwanda, Matabeleland South. In 2020, Caledonia announced that the US$14 million 12,2 MWac solar power was part of efforts to address electricity constraints that have over the years affected the mining industry.
The project, connected to the Blanket grid in November 2022 is in line with the Government’s strategy to boost power production.
In a statement, the firm said the power generation of the solar plant will continue to be sold to Blanket Mine by way of a power purchase agreement.
“Caledonia Mining Corporation Plc is pleased to announce that it has signed a conditional sale agreement for the entire issued share capital of its Zimbabwe subsidiary, Caledonia Mining Services (Private) Limited (CMS), which owns and operates the 12.2MWac solar plant that supplies power to Blanket Mine.
“CMS is to be sold to CrossBoundary Energy Holdings (CBE) for $22.35 million, payable in cash, and the power generation of the solar plant will continue to be sold to Blanket Mine by way of a power purchase agreement,” it said.
It said upon completion of the sale, Caledonia will realise a profit on the $14.3 million construction cost by selling the plant for $22.35 million.
Caledonia Mining said completion of the sale will return capital to Caledonia at a key moment in the company’s growth trajectory.
“Caledonia will retain the exclusive energy off-take, ensuring approximately a fifth of Blanket Mine’s daily electricity requirement continues to be met by renewable power. CBE has been invited to tender for an expansion of the solar plant to deliver further renewable energy to Blanket Mine,” read part of the statement.
It said the construction of the solar plant was initially financed by a registered offering of Caledonia’s shares in the US in 2020 and this raised $13 million through the issue of 597,963 shares.
Related Stories:
Caledonia Mining said since commissioning in February 2023, the solar plant has generated over 47,350Mwh of power, and profits attributable to the solar plant for the year ended December 31, 2023 were $728,023.
“The power generated from the solar plant has significantly reduced the use of diesel generators and grid power at Blanket Mine, ensuring approximately a fifth of the mine’s daily electricity needs are met by solar power. The plant will continue to supply Blanket Mine under an exclusive power purchase agreement.”
It said the sales consideration will be reinvested in Caledonia’s other projects that are expected to yield a higher return to their shareholders and will have the added benefit of focusing management’s attention on their core business of gold mining and exploration.
Commenting on the announcement, the firm’s chief executive officer (CEO), Mr Mark Learmonth said: “We are pleased to have signed this agreement to sell the solar plant which, upon completion, will enable us to redeploy capital to our core business of mining.”
He said the sale will generate an immediate profit for the company, while more importantly, they have identified an experienced partner in CBE which brings vast expertise in delivering and running renewable energy projects.
Mr Learmonth said they look forward to developing a strong relationship with CBE and were already working with them to deliver a meaningful extension to the plant, as they will be considering renewable energy solutions at their other development projects in due course.
Managing Partner at CrossBoundary Energy, Mr Matthew Tilleard said: “CrossBoundary Energy’s mission is to provide affordable, clean power solutions to underserved markets, and we achieve this by deploying capital into energy projects that enable businesses to focus on their core operations. Our partnership with Caledonia demonstrates the efficacy of this model for the mining sector, benefiting the mine’s operations and ultimately enabling sustainable mining. We look forward to pursuing these acquisitions with miners across the continent.”
CrossBoundary Energy is a leading developer, owner and operator of distributed renewable energy solutions for businesses across Africa, providing cheaper and cleaner energy through power purchase and lease agreements.
CBE provides tailored, fully financed renewable energy solutions to its corporate customers allowing them to avoid upfront capital expenditure and technical risks, whilst still benefitting from cheaper, cleaner, and more reliable power.
