Caledonia raises us$13 million for gold projects
Gold miner Caledonia Mining Corporation is raising about $ 13 million, or about £10.5-million, to strengthen its balance sheet and provide it with working capital flexibility to accelerate planned work at its three new gold projects – Bilboes, Motapa and Maligreen – in Zimbabwe.
Caledonia, which operates the Blanket mine, in Zimbabwe, set out to raise about $ 10 million, or about £ 8.1 million, through an accelerated book-building process being conducted in the UK and South Africa. At close, the book build raised $ 10.6 million, or about £ 8.7 million.
Further, IH Securities is undertaking a placing of Zimbabwe depositary receipts, in Zimbabwe, on behalf of Caledonia, to raise about $ 3 million, or about £ 2.4 million.
Caledonia acquired the Bilboes project for about $ 65.7 million in January. The project has National Instrument (NI) 43-101-compliant proven and probable mineral reserves of 1.96-million ounces of gold in 26.64-million tonnes at a grade of 2.29 g/t, measured and indicated mineral resources of 2.56-million ounces of gold in 35.18-million tonnes at a grade of 2.26 g/t and inferred mineral resources of 577 000 oz of gold in 9.48-million tonnes at a grade of 1.89 g/t.
Bilboes has produced about 288 000 oz of gold since 1989. The first gold from Bilboes under Caledonia’s ownership is due to be produced at the end of March.
Caledonia expects to use about $2-million of the net proceeds of its fundraise to fund a new feasibility study to investigate commercialisation of Bilboes, possibly through a phased development approach.
If successful, this would reduce the initial capital investment and also reduce the need for third-party funding, the gold miner says.
A further $2-million of the funds raised is expected to be used for the procurement of a management facility at Bulawayo, which will be used to provide shared services for the Blanket mine, as well as the Bilboes and Motapa projects.
Caledonia acquired the Motapa gold exploration project in Southern Zimbabwe in November 2022 for $8.25-million in cash and loan notes.
Motapa is a large exploration property, which is contiguous to the Bilboes gold project and about 75 km north of Bulawayo. The company believes the proximity to Bilboes will allow prospects of synergies in the evaluation of the geological potential for Motapa and, in due course, gold processing operations in the mining areas.
The mining lease for Motapa covers about 2 200 ha. About $6-million of the funds raised will be used for further exploration at Motapa.
Lastly, Caledonia acquired the Maligreen project for $4-million in November 2021.
The property contains NI 43-101-compliant measured and indicated mineral resources of 442 000 oz of gold in 8.03-million tonnes at 1.71 g/t and inferred mineral resources of 420 000 oz of gold in 6.17-million tonnes at 2.12 g/t.
Caledonia plans to use about $2-million of the funds raised for drilling and exploration at Maligreen.
RESULTS AND 2023 OUTLOOK
Meanwhile, Caledonia has posted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $50.4-million for the financial year ended December 31, 2022, compared with an Ebitda of $46.4-million in the 2021 financial year.
Gross revenue increased to $142-million for the 2022 financial year, compared with $121-million in the prior year.
Adjusted earnings a share, however, decreased to $2.20, from $2.26 in the prior year.
On-mine costs decreased to $735/oz, compared with $742/oz in 2021, while all-in sustaining costs increased to $878/oz, compared with $856/oz in 2021.
Caledonia paid a dividend of $0.56 a share for 2022, compared with the dividend of $0.50 a share the year before.
The Blanket mine produced 80 775 oz of gold in the year under review, compared with the 67 476 oz produced in 2021.
“Operationally, the last 12 months have marked a turning point for the business, and I am delighted that we hit our long-term target of just over 80 000 oz.
“The last couple of years has seen a tremendous amount of change in the company as we pivot the direction of the business towards becoming a multi-asset gold producer in Zimbabwe. We have always seen huge geological potential in the country and are very excited about the portfolio of attractive new assets that we have acquired,” comments CEO Mark Learmonth.
Another highlight at Blanket has been the installation of a 12.2 MW solar plant.
“In November 2022, the company’s . . . solar plant was connected to the Blanket grid and the mine has since been receiving 27% of its energy from solar. The solar power will displace power from the grid and from the diesel generators and is expected to reduce Caledonia’s consolidated cost per ounce of gold produced by about $37.
“This completion happily coincides with an improvement in the supply of power from the Zimbabwe grid which has substantially reduced the amount of diesel consumed. We are confident that we will continue to see an ongoing meaningful reduction to our diesel use month on month, fully justifying our investment in solar power and delivering on our environmental social governance strategy,” says Learmonth.
Looking ahead, Caledonia expects the Blanket mine to produce 75 000 oz to 80 000 oz of gold this year.
The Bilboes oxide operation is expected to deliver a further 12 500 oz to 17 000 oz of gold this year.
Mining Weekly