Caledonia Mining Corporation is set to be the new owner of one Zimbabwe’s biggest gold mining projects after agreeing to acquire Bilboes Gold Limited, owner of the namesake gold project, in a $53 million shares deal, plus a royalty on revenues.
The transaction could more than double Caledonia’s annual production, potentially making it Zimbabwe’s top gold miner. It would also help the company become a multi-asset mid-tier producer.
“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 the statement.
According to the last feasibility study, the asset has the potential for an open-pit gold mine producing an average of 168,000 ounces per year over a 10-year life of mine.
Caledonia said it plans to conduct its own feasibility study to o determine the “most judicious way” to exploit the deposit. As part of it, the company will see if a phased development plan, which will reduce initial capital investment, could be followed.
The transaction is subject to the current owners of Bilboes 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.
Prior to closing the deal, Bilboes will restart oxide operations with the expectation of returning to profitable operations within six months.
Caledonia currently owns 64% of the Blanket gold mine, in the southwest of Zimbabwe, which is expected to produce 80,000 ounces this year thanks to a new shaft.