Sundaymail Editor
Senior Business Reporter
CALEDONIA MINING CORPORATION’S recent sale of its 12,2-megawatt (MW) solar power plant has not only generated a US$14,3 million profit but has also set the stage for accelerated expansion in Zimbabwe’s gold sector.
Analysts believe the transaction highlights a broader trend among capital-intensive industries towards optimising asset portfolios while maintaining operational efficiency.
The solar plant — built for US$14,3 million and sold to CrossBoundary Energy (CBE) for US$22,35 million on April 11 — has delivered a timely liquidity boost.
The move allows Caledonia to reinvest earnings without incurring debt or resorting to shareholder-diluting equity raises.
Caledonia was one of the first mining companies in Zimbabwe to invest in solar energy for its operations, a decision that not only enhanced sustainability but also eased pressure on the national grid.
The success of this initiative has become a model for other miners, especially as the country continues to grapple with unreliable power supplies.
The sale to CBE, a leading developer and operator of distributed renewable energy systems across Africa, includes an exclusive power purchase agreement that ensures Blanket Mine continues to receive renewable energy.
CBE is known for delivering affordable, clean power through purchase and lease agreements across the continent.
Caledonia’s chief executive officer Mr Mark Learmonth has reaffirmed the company’s long-term commitment to clean energy.
“Importantly, we retain the exclusive energy off-take agreement, ensuring that approximately 20 percent of Blanket Mine’s daily electricity needs continue to be met by renewable energy,” he said.
Economist Mr Nicholas Dube, who specialises in mining sector trends, described the move as a textbook case of efficient capital reallocation.
“With US$34,9 million earmarked for Blanket Mine’s continued expansion and modernisation, and US$5,8 million allocated to advance the Bilboes and Motapa projects, the profit serves as a crucial injection that can cover nearly a third of the year’s planned capital investment,” he said.
“The sale reflects a shift in strategy, prioritising core gold mining operations while still retaining the benefits of renewable energy through the exclusive off-take agreement.
“This signals disciplined capital allocation. Caledonia is concentrating its financial and operational resources where it can deliver the greatest shareholder value through higher gold output and the unlocking of new mining assets.”
By monetising a mature, non-core asset, he said, Caledonia is effectively transforming past infrastructure investment into future growth capital.
“The retained exclusive power purchase agreement with CrossBoundary Energy ensures Blanket Mine continues to benefit from clean and stable energy. This de-risks the mine’s power supply without the operational burden of running a utility asset,” he added.
“With power challenges remaining a constraint in Zimbabwe, securing consistent electricity through a reliable third-party provider is a strategic win.”
Notable performance
Caledonia is one of Zimbabwe’s most consistent gold producers.
In 2024, it produced 76 656 ounces of gold, up from 75 416 ounces in 2023.
The company forecasts 2025 production of up to 78 000 ounces, solidifying its position as a reliable contributor to national gold output and foreign currency earnings.
Already, the firm has set a new first-quarter gold production record, delivering 18 671 ounces of gold in the first three months of the year — a marked increase from the 17 050 ounces produced during the same period in 2024.
This marks the highest gold output for a first quarter in the company’s history, surpassing the previous first-quarter record of 18 515 ounces achieved in 2022.
In a production update released on Tuesday, the company said this performance is particularly significant as the first quarter is traditionally its weakest in terms of output.
“The significant increase in both tonnes milled and the surface stockpile provides a strong foundation for the remainder of the year.”
Record gold prices
Caledonia expects rising gold prices to boost the company’s outlook.
“This is an excellent start, and with a strong gold price, we are well positioned to generate healthy cash flows and to continue investing in our growth projects.”
According to the update, 201 755 tonnes were milled during the quarter, 13,4 percent above expectations.
Additionally, the surface stockpile rose significantly to around 15 000 tonnes, as run-of-mine production outpaced the plant’s milling capacity.
Caledonia reaffirmed that its Blanket Mine remains on track to meet its 2025 annual gold production guidance of between 74 000 and 78 000 ounces.
Ms Elizabeth Maphosa, a mining sector analyst, said energy continuity is now critical as Caledonia scales up production.
“With Blanket Mine scaling up production and new assets in the pipeline, continuity in energy supply is a critical enabler,” she said.
Ms Maphosa explained the broader strategic implications.
“By strategically redirecting solar plant profits to de-risk and develop these projects, Caledonia is laying the foundation for sustainable growth beyond Blanket Mine, further consolidating its role in Zimbabwe’s gold mining sector.
“Its flagship expansion projects, Bilboes and Motapa, are central to this transformation and the injection of US$14,3 million from a non-core asset could help accelerate timelines.”
Ms Maphosa said Caledonia demonstrates financial agility, project pipeline discipline and a commitment to value creation.
“These factors can strengthen investor confidence, especially important for a firm listed on both the Victoria Falls Stock Exchange and overseas markets. Moreover, by showcasing the ability to internally fund a significant portion of its expansion, Caledonia reinforces its image as a self-sustaining, growth-oriented miner, a vital message for attracting institutional capital,” she added.
“The US$14,3 million profit from the solar plant sale is not just a financial milestone. It is a highly strategic move that aligns with Caledonia Mining’s long-term growth, risk management and capital optimisation strategies.
“It reflects an adept use of infrastructure assets to fund future mining expansion, while still preserving operational efficiency through retained energy access. Ultimately, the deal strengthens Caledonia’s position as a forward-looking, multi-asset gold producer ready to scale.”
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