Source: Caledonia to raise US$125m from convertible debt security – herald
Sikhulekelani Moyo
Zimpapers Business Hub
CALEDONIA Mining Corporation has issued US$125 million worth of Convertible Senior Notes (debt instruments) with an annual interest of 5,875 percent in a private placement to institutional buyers, to raise capital and funding to support operations.
A senior Convertible Note is a priority debt security or instrument that offers investors the opportunity to convert their investment (initially debt) into equity shares of the issuing company.
Both startup and established companies use such debt instruments to raise funds because they provide a flexible path to capital while ensuring investor recourse.
Particularly attractive to investors seeking high rewards from company growth and an initial public offering (IPO), senior convertible notes offer a balance between debt advantages and potential equity gains.
In a statement, Caledonia said the size of the Convertible Notes Offering was increased from the previously announced US$100 million aggregate principal amount of Notes.
Caledonia said it had granted the initial purchasers of the notes an option to purchase, during 13 days beginning on and including the date on which the notes are first issued, an additional US$25 million aggregate principal amount of Notes.
“The Convertible Notes offering is expected to close on January 20, 2026, subject to the satisfaction of customary closing conditions,” reads the statement.
“The Notes will be general senior unsecured obligations of Caledonia and will accrue interest payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2026, at a rate of 5,875 percent per year.
“The Notes will mature on January 15, 2033, unless earlier converted, redeemed, or repurchased. Caledonia estimates that the net proceeds from the Convertible Notes Offering will be approximately US$120,2 million (or approximately US$144,4 million if the initial purchasers exercise their option to purchase additional Notes in full) after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by Caledonia.”
The gold production company said it also expected to use the net proceeds from the Convertible Notes offering to pay the approximately US$12 million cost of the capped call transactions and to provide Caledonia with additional financial flexibility and enhanced options with respect to several group operations.
The funding will be used to finance the development of the Bilboes gold project in Zimbabwe, as well as general corporate, operational and working capital requirements.
The Bilboes Gold Project is strategically important to Caledonia, forming the cornerstone of the company’s ambition to transition from a single asset producer into a multi-asset, mid-tier gold producer in Zimbabwe.
Gold is strategically important to Zimbabwe as a leading source of foreign currency and export earnings, a key pillar supporting monetary stability through the gold-backed ZiG currency, and a critical driver of employment and livelihoods.
Zimbabwe’s gold output rose by 17 percent to an all-time high of 46,7 tonnes in 2025, up from 36,48 tonnes in 2024, according to Fidelity Gold Refinery (FGR), the country’s sole gold buyer.
Caledonia said that if the initial purchasers exercised their option to purchase additional Notes, the company expected to use a portion of the net proceeds from the sale of the additional Notes to enter into additional capped call transactions with the option counterparties and the remaining net proceeds for the purposes described above.
“The Notes will be convertible at the option of the holders in certain circumstances. The Notes will be convertible into cash, common shares of Caledonia, or a combination of cash and Common Shares, at Caledonia’s election,” said the company.
“The initial conversion rate is 24 6837 Common Shares per US$1 000 principal amount of Notes (equivalent to an initial conversion price of approximately US$40,51 per Common Share, which represents a conversion premium of approximately 25 percent to the last reported sale price of the Common Shares on the NYSE American on January 14, 2026), and will be subject to customary anti-dilution adjustments.
“In addition, following certain corporate events that occur before the maturity date of the Notes or if Caledonia delivers a notice of redemption, Caledonia will, in certain circumstances, increase the conversion rate of the Notes for a holder who elects to convert its Notes in connection with such a corporate event or convert its Notes called (or deemed called) for redemption during the related redemption period, as the case may be.”
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