Victoria Falls Stock Exchange-listed gold-focused miner, Caledonia Mining Corporation, will soon file a preliminary economic assessment (PEA) showing that Bilboes can triple Caledonia’s production to over two hundred thousand ounces.
According to Caledonia’s CEO, Mark Learmonth, despite inflationary pressures, the PEA confirms Bilboes as a high-quality asset with the potential to nearly triple Caledonia’s production to over 200,000 ounces annually, alongside Blanket Mine.
He said the $309 million project will be partly debt-funded, and Caledonia plans to re-engage with debt providers to support the new feasibility study.
“The Board’s decision to proceed with the single-phase development option for Bilboes represents a key strategic milestone in our journey to becoming a multi-asset, mid-tier gold producer.
“Notwithstanding the general inflationary increase in operating costs and capital costs over recent years, the PEA re-confirms that Bilboes is a high-quality mid-scale asset that can generate attractive economic returns. The PEA also confirms that Bilboes has an attractive production profile with the potential to almost triple Caledonia’s production capacity to over 200,000 ounces per annum in combination with production from Blanket Mine.
“The peak funding requirement for the project is expected to be approximately $309 million, with a sizable proportion funded through debt. The company and, in the past, Bilboes’ previous owners, have had highly positive engagements with prospective debt providers, and we now propose to re-engage with these providers in parallel with the process of preparing the new feasibility study. To date, 2024 production at Blanket has been robust, and the company remains well-positioned to deliver returns to shareholders while expanding our asset portfolio and growing our production profile.
“I am very excited by the opportunity we have to evolve our business, which we believe will generate significant long-term shareholder value,” Learmonth said.
The publication of the PEA follows the company’s decision to advance the project to the execution stage in a single-phase development instead of multiple phases.
This decision was made after evaluating different development options, revealing that the single-phase approach is expected to yield superior returns. Single-phase development is expected to provide improved cash generation, allowing for a lower cost of capital due to enhanced debt financing capacity compared to phased development alternatives.
The project is expected to yield approximately 1.5 million ounces of gold (based on measured and indicated mineral resources) over an initial 10-year life of mine at an all-in-sustaining cost of $968 per ounce. The payback period is expected to be 1.9 years at a gold price of $1,884 per ounce.
A new single-phase feasibility study (the “New Feasibility Study”) is expected to be delivered during the first half of 2025. Funding solutions are being progressed in tandem with work on the New Feasibility Study.
According to Learmonth, the company incorporated several material revisions to the original single-phase development plan (as set out in the Former Feasibility Study), which include:
– Revised designs for the TSF to incorporate a modular construction approach and reduce upfront capital.
– Revised pit designs to reduce upfront capital.
– A review of the cost of the process plant and infrastructure, particularly sourcing major equipment and steelwork from alternative suppliers to reduce costs.
– Reassessing the phasing of the mine village establishment.
– A review of the operating expenses and general and administrative expenses with the availability of shared resources now that the project is part of the Caledonia group.