CALEDONIA Mining Corporation seeks to raise US$125 million through a convertible notes offering, which it will use to accelerate development of its flagship gold mining projects in Zimbabwe, the businessdigest can report.
The Victoria Falls Stock Exchanged listed company announced the pricing of its 5,875% convertible senior notes due 2033 in a private placement to institutional investors.
“The size of the convertible notes offering was increased from the previously announced US$100 million aggregate principal amount of notes,” the company said.
The transaction represents a strategic move for Caledonia. Its primary asset is Blanket Mine in Zimbabwe, an underground operation in Matabeleland South in which it holds a 64% stake.
Over the past decade, the company has invested heavily in Blanket’s development. The new capital injection is poised to advance its broader portfolio, which includes Bilboes, Maligreen, and Motapa projects.
Caledonia said net proceeds would be used to “pay the cost of the capped call transactions” and to “provide Caledonia with additional financial flexibility and enhanced options”, specifically for “developing the Bilboes gold project in Zimbabwe” and for “general corporate needs, ongoing operational needs and working capital requirements”.
The notes function as a hybrid financial instrument. They are essentially a loan from investors that pays a fixed annual interest of 5,875% and must be repaid in cash by January 2033.
However, their key feature is that holders have the right, under certain conditions, to convert the debt into Caledonia’s common shares. The initial conversion price has been set at approximately US$40,51 per share, which is a 25% premium over the share price on January 14, 2026.
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This structure allows the company to raise money at a lower interest rate than a standard loan, while offering investors the potential upside of share price appreciation.
To protect existing shareholders from excessive dilution if the share price rises sharply and many notes are converted, Caledonia has entered into separate “capped call transactions” with financial institutions.
The company explained these transactions are “expected generally to compensate for potential economic dilution upon any conversion of the notes and/or offset any cash payments Caledonia is required to make in excess of the principal amount of converted notes”.
The company also noted that the financial institutions involved in these hedging arrangements are likely to trade Caledonia’s shares in the market, which “could increase (or reduce the size of any decrease in) the market price of common shares or the trading price of the notes at that time”.
