North American investors just poured US$150 million into Caledonia Mining Corporation to jumpstart the Bilboes gold project through a massive bond sale.
American investors go wild for Zimbabwean gold
American investors go wild for Zimbabwean gold
- Demand for these bonds actually hit US$600 million because institutional investors in the United States really wanted in.
- Mark Learmonth originally hunted for US$100 million, but the company had to bump that number up twice to keep everyone happy.
- Underwriters eventually pushed the total to US$150 million after they used up every single option to buy extra notes.
- Financial experts at Cantor Fitzgerald led the deal, which uses convertible notes that pay out a 5.875% interest rate.
- Cash is staying in the pocket because Caledonia used capped call transactions to make sure current shareholders do not get diluted.
- Net proceeds should land right around US$130 million once all the fees and hedging costs get cleared away from the pile.
- Bilboes needs a ton of cash, so this bond issue is just the first step in a much bigger four-part plan.
- Protection against a market crash is already in place thanks to gold price hedging that locks in US$3,500 per ounce.
- Regional banks in Zimbabwe and South Africa are currently talking to the firm about an extra US$150 million loan.
- Formal project financing should kick off this quarter as lenders start their deep dives into the feasibility studies for the mine.
