News

February 06, 2008

Caledonia Mining Shares Take Off After Chinese Off-take Agreement

By Rob Davies

A 30 per cent rise in a share price is pretty significant even in these volatile markets. When that happened to Caledonia Mining at the end of January it was a clear sign that most investors had up until then only associated this company with gold mines in Zimbabwe. They’d forgotten about the Nama cobalt deposit in northern Zambia. And indeed, when Minews spoke to Stefan Hayden, President and Chief Executive Officer of Caledonia, we commented that the last time we spoke to Mr Hayden he gave Nama a fairly low profile. His polite response was that he likes to do things properly and in the right sequence and at that time it was not appropriate to say a lot more. In other words, he didn’t want to launch a promote, ahead of the facts. That’s a point of view that is unfortunately not shared by enough people in the mining community.

The reason the market has suddenly got excited about Nama again is that Caledonia has just signed an off-take agreement with a large Chinese refiner and a world-wide marketing agreement - excluding China and Taiwan - with MRI Trading AG.  Under the terms of the agreement Caledonia will supply 21,000 tonnes of cobalt metal equivalent, in the form of cobalt hydroxide, over six years. The agreement includes a guaranteed take or pay minimum price of US$12 per lb. But as the current price is...