BLANKET gold mine’s Canada-based holding company, Caledonia Mining Corporation says it is taking legal advice after Empowerment Minister Saviour Kasukuwere recommended the cancellation of its operating licence.
In a statement issued on Friday, Caledonia said it had received a copy of a letter Kasukuwere wrote to his mining counterpart, Obert Mpofu requesting that the firm be barred from operating in the country.
“Caledonia has received a copy of a letter sent from the Minister for Indigenisation to the Minister of Mines, in which he requests that the Minister of Mines cancels Blanket's operating licence on the grounds that Caledonia's (indigenization) proposal does not meet the legislated indigenisation requirements,” the statement read.
Gwanda-based Blanket Mine is Caledonia’s sole operating subsidiary although the company has some platinum and copper exploration projects in South Africa and Zambia.
Foreign companies are required under law to transfer ownership of at least 51 percent of their shareholding to locals as part of government measures aimed at empowering the previously disadvantaged black majority.
However, Kasukuwere recently announced that some 175 companies had submitted proposals that did not meet the minimum 51 percent threshold.
Mining companies were said to be offering at least 26 percent equity with the balance met through so-called empowerment credits in an arrangement rejected by the government.
The companies have been given 14 days to revise their proposals or risk having their licences cancelled and their operations in the country seized.
Caledonia claims it is yet to receive official communication from Kasukuwere regarding its proposal.
“Caledonia submitted a comprehensive indigenisation proposal (the "proposal") to the Minister for Indigenisation on May 9, 2011,” the statement read.
“Since then neither Blanket nor Caledonia have received any formal notification that the proposal is deficient or that it should be revised within any specified timescale.”
The company however warned that Kasukuwere would be exceeding his “legal powers” if he were to order the cancellation of its Blanket Mine licence.
“Caledonia believes the Minister for Indigenisation has exceeded his legal powers both in terms of his assessment of Caledonia's proposal and his request to the Minister of Mines,” the company said.
“Caledonia is seeking urgent clarification from the relevant ministers, and is also consulting with its legal advisers regarding appropriate legal action.”
Blanket Mine recently posted impressive results with second quarter gross profits reaching $6.2 million, up 300 percent on the comparable period in 2010.
Output over the same period was also topped 8,226 ounces up 141 percent on the same period last year.
Management said production costs per ounce of gold had also significantly eased to US$585 from US$816 in the second quarter of 2010.
The company said it was looking to increase output to 10 000 ounces per quarter to take advantage of the current gallop in world market price of gold on the back of increasing economic concerns in the US and Europe.