Caledonia Mining Corporation’s newly acquired gold mining outfit, Bilboes Gold Project, will become Zimbabwe’s largest gold producer, more than twice the current gold produced by a single mine, it has been reviewed.
Rudairo Mapuranga
Last month, Caledonia signed an agreement to purchase Bilboes for a consideration of 5.12m Caledonia shares (approximately 28.5% of Caledonia’s fully diluted equity) and a 1% NSR on the Project.
According to the company, the Transaction is subject to several conditions including that Bilboes Holdings receives confirmation from the Zimbabwe authorities that it will, for the life of the mine, be able to export gold directly and retain 100 per cent of the sale proceeds in US dollars with no requirement to convert US dollar gold revenues into domestic currency.
The Bilboes gold project, according to Caledonia Chief Executive Officer Mark Learmonth, has the potential to become the country’s biggest gold-producing mine by producing nearly 5 tonnes per year. Currently, the country’s biggest gold producer is producing an average of 2 tonnes per annum.
He said a feasibility study prepared by the vendors (the “DRA Feasibility Study”) indicates the potential for an open-pit gold mine producing an average of 168,000 ounces per year over a 10-year life of mine.
“Bilboes has a NI43-101 compliant P&P Reserve of 1.79Moz @ 2.34 g/t and an M&I Resource of 2.56Moz @ 2.26 g/t and an additional Inferred mineral resource of 577Koz @ 1.89 g/t
“A Feasibility Study indicates the potential for an open-pit gold mine producing an average of 168Koz per year over a 10-year life of mine,” Learmonth said.
According to Learmonth, Caledonia will conduct its own feasibility study to identify the most judicious way to commercialise the Project. One approach that will be considered is a phased development which would minimise the initial capital investment and reduce the need for third-party funding.
He said, prior to completion of the transaction, Caledonia will enter into a tribute arrangement with Bilboes Holdings Limited to restart oxide mining operations which are currently in care and maintenance. This is expected to result in Bilboes returning to profitable operations within 6 months
Learmonth said Caledonia will acquire Bilboes Gold in an all-share deal worth US$53 million with Toziyana Resources.
“Toziyana Resources Limited, which is controlled by Mr Victor Gapare, will become Caledonia’s largest shareholder (13.5%). Following the successful completion of the Transaction, Mr Gapare will be appointed as an executive director of Caledonia.
“Based on the closing share price on 20 July 2022 of $10.40 per share, the value of the new shares that will be issued as consideration is approximately $53 million,” he said.
Victor Gapara will become Caledonia’s largest shareholder with 13. 5 per cent.