Caledonia Mining Proposes Initial Dividend, Stated Capital Reduction, and a Share Consolidation
19 November 2012 - 6:00PM
Marketwired
Caledonia Mining Corporation ("Caledonia" or the "Company")
(TSX:CAL)(OTCQX:CALVF)(AIM:CMCL), is pleased to announce that it
proposes to pay an initial dividend of 0.5 cents (i.e. $0.005) per
ordinary share.
Highlights
-- Caledonia proposes to pay an initial dividend of 0.5 of a cent per share
on a pre-consolidation basis (equivalent to $0.05 on a post-consolidated
common share basis).
-- Driven by the Company's sustainable business model and significant
free cash generation.
-- Caledonia believes the combination of a dividend combined with
Caledonia's continued growth is the appropriate way to optimize its
capital structure and enhance shareholder value.
-- Caledonia's strategy will be to continue to invest, principally in its
projects in Zimbabwe and Zambia.
-- The proposed dividend will only be declared after Caledonia shareholders
have approved the Stated Capital Reduction.
-- After the dividend declaration, it is further proposed to consolidate
the Company's common shares on the basis of 1 new Caledonia share for 10
existing Caledonia shares.
-- A Special Meeting of Caledonia's shareholders will be held in late
January 2013 at which shareholders will vote on resolutions to effect
the reduction in Stated Capital and share consolidation.
Mr Stefan Hayden, Caledonia's President and Chief Executive
Officer said: "I am delighted to announce Caledonia's maiden
dividend. Over the past 3 years Caledonia has become a profitable
and cash generative company with exciting growth and investment
opportunities. In light of our cash position and strong cash
generation, the Caledonia Board feels it appropriate to propose a
dividend of one-half cent per existing common share and is
confident that the proposed dividend will not reduce our ability to
continue to invest in our exciting portfolio of assets, expanding
gold production at Blanket, and continuing exploration on our Nama
Project."
Further Information
Dividend Policy
Caledonia continues to generate significant free cash flow and
believes that its business model is sustainable. Caledonia's first
priority will be to continue to invest in its current and new
projects. Caledonia's cash flow provides the financial capacity to
distribute cash to its shareholders without adversely affecting
liquidity or the ability to continue to invest for future growth.
The Board will annually review the Company's ability to pay a
dividend with regard to its cash resources, prospective cash
generation and investment opportunities at that time. The next
review will take place in May 2013 after the finalisation of the
annual financial statements for the calendar year 2012.
Caledonia believes that the combination of a dividend with
Caledonia's continued growth is the appropriate way to enhance
shareholder value at this time.
As noted below, Caledonia's ability to declare and pay the
dividend is conditional upon shareholders approving a reduction in
its Stated Capital which is detailed below. Accordingly, the
dividend will not be payable until the Stated Capital reduction is
implemented. The record date for determining shareholders entitled
to receive the dividend will then be determined and announced
thereafter.
Reduction in Stated Capital
The reduction is necessitated by the provisions of the Canada
Business Corporations Act, the Act under which the Company exists,
which states that a company cannot pay dividends if its Stated
Capital plus liabilities exceeds the realizable value of the
company's assets. The Company's Stated Capital, which as shown in
the Company's September 30, 2012 unaudited balance sheet is
$196,657,000, is a reflection of historical capital raising via
share issues. The proposed capital reduction will not affect the
Company's operations or the value of the Company or its issued
shares. Caledonia's Board considers that, notwithstanding the
on-going development of the Company's properties and its increased
earnings, it cannot at this stage be conclusively determined that
the Company's assets have a current realizable value in excess of
the current Stated Capital plus liabilities. Management, in
conjunction with its financial advisors, will, prior to the mailing
of the Notice calling the Special Meeting, finalise the
calculations necessary to determine the extent of the reduction in
the Stated Capital that will be required, and circulate the
requisite documentation to shareholders.
Share Consolidation
Caledonia has 507,899,280 shares outstanding, the closing price
of which on the Toronto Stock Exchange on November 15, 2012 was 11
cents per share. Caledonia's Management believes the large number
of issued shares and the low current share trading price
discourages new investors. Accordingly and only after payment of
the dividend, Caledonia proposes to consolidate its shares in issue
on the basis of one (1) new Caledonia share for every 10 existing
Caledonia shares. Caledonia expects that the reduced number of
shares in issue, in conjunction with its growth profile and new
dividend policy, will increase the attraction of Caledonia to
investors.
Caution regarding Forward-Looking Information and Statements
This news release contains certain forward-looking statements
regarding Caledonia and the proposed Special Meeting and dividend.
These statements are based upon assumptions regarding Caledonia's
current operating results and current intentions of Management of
Caledonia. Actual developments may differ as a result of risks
relating to market conditions, global political uncertainties,
investor reaction and the timing of the special Meeting. Caledonia
disclaims any obligation to update any forward-looking statement
contained in this news release except to the extent required by
law.
Notes to Editors:
Background on Caledonia
Caledonia is a mining company, whose major asset is the Blanket
gold mine in Zimbabwe ("Blanket"). Blanket produced 12,918 ounces
of gold at an average cash cost of $508 in the quarter ended
September 30, 2012 and has an attractive portfolio of exploration
and development projects. Caledonia also owns the Nama base metal
exploration project in Zambia ("Nama"). Exploration at Nama has
identified a new copper-bearing mineralised zone. Further work is
in progress at Nama with the objectives of identifying a possible
extension to the mineralised zone and improving the confidence
level of the resource data.
As at September 30, 2012 Caledonia had net cash and cash
equivalents of $24,615,000.
Contacts: Caledonia Mining Corporation Mark Learmonth +27 11 447
2499marklearmonth@caledoniamining.com Canaccord Genuity Limited
Andrew Chubb / Sebastian Jones +44 20 7523 8000 Newgate
Threadneedle Terry Garrett / Beth Harris / Graham Herring +44 20
7653 9850 CHF Investor Relations Jeremy Hill +1 416 868 1079 x
238jeremy@chfir.com