22 Jul Caledonia Mining to become Zimbabwe’s biggest gold producer following Bilboes acquisition
Africa-focused gold producer Caledonia Mining has agreed a deal to acquire Bilboes Gold Limited, owner of the namesake gold project in Zimbabwe, in a US$53 million shares deal, plus a royalty on revenues.
The Bilboes Gold Project is one of the biggest of its kind in Zimbabwe and could more than double Caledonia’s annual production, potentially making it Zimbabwe’s top gold miner. The project would also transform AIM and NYSE-listed Caledonia into a multi-asset, mid-tier producer.
Caledonia’s other asset, the 64%-owned Blanket Gold Mine in Southwest Zimbabwe, is expected to produce 80,000 ounces of gold this year following the development of a new shaft.
“We are delighted to have signed an agreement for the purchase of Bilboes, the premier gold development project in Zimbabwe, and indeed one of the best gold development projects in Africa,” chief executive Mark Learmonth said in a statement yesterday.
According to a recent feasibility study, Bilboes offers potential for an open pit gold mine producing an average of 168,000 ounces per year over a 10-year life of mine. The 1.96 million ounces gold asset has produced a total of just 288,000 ounces since its establishment in 1989.
Caledonia plans to conduct its own feasibility study to determine the ‘most judicious way’ to commercialise the deposit. The company will consider a phased development to minimise initial capital investment and reduce the need for third party funding.
The transaction is subject to the current owners receiving confirmation from Zimbabwean authorities that the mine will be able to export gold directly and retain the sale proceeds in US dollars, rather than domestic currency.