Caledonia earmarks US$5m for gold project
The mining group, which owns Blanket Mine in Gwanda, last week indicated it was set to acquire Bilboes Gold Limited for US$53,3 million.
CALEDONIA Mining Corporation says it will this year inject US$5 million required to restart the oxide project at Bilboes Gold Limited in Bubi district, Matabeleland North Province. The mining group, which owns Blanket Mine in Gwanda, last week indicated it was set to acquire Bilboes Gold Limited for US$53,3 million.
Bilboes is a large and high grade gold deposit situated 75 kilometres north of Bulawayo for US$53,3 million.
Speaking during a media briefing in Harare on Tuesday evening, Caledonia Mining Corporation chief executive officer Mark Learmonth said the US$5 million will be injected this year before the acquisition deal is concluded.
“Also this year before this transaction is complete, Caledonia will enter into a tribute arrangement with Bilboes whereby Caledonia will provide the funding about US$5 million that’s needed to restart the oxide project which was currently stalled because it needs to go deeper,” he said.
Bilboes will be acquired for a total consideration of 5 123 044 Caledonia’s shares, representing an estimated 28,5 percent of Caledonia’s fully diluted equity, and a 1 percent net smelter royalty on the project’s revenue.
“We announced last week that we were buying Bilboes…we agreed to buy Bilboes for a consideration of 5,12 million of Caledonia shares which has a total value of about US$53,3 million.
Bilboes has a large resource base and measured mineral resources and indicated mineral
resources of 2,6 million ounces with a good grade of 2,2 or 2,3 grammes per tonne.
“We expect that to support in the first instance a mine producing about 170 000oz of gold
a year over a 10 year life, so it’s a very substantial project,” said Mr Learmonth.
He said as soon as the transaction is complete Caledonia will do its own feasibility study on
the project expected to generate about 2 000 oz of gold per month over the next two years
while they get busy dealing with the deepening of the shafts of the mine.
Meanwhile, Mr Learmonth said Caledonia has installed a 12MW solar power plant at
Blanket and the solar plant is expected to start running later next month supplying the
gold operation with an estimated 27 percent of its total daily electricity demand.
The photovoltaic solar power project whose construction began last year will see Blanket
Mine reducing its dependence on the national grid electricity and improve the quality and
security of the company’s power supply.
Caledonia, which owns 64 percent stake in Blanket, raised US$12 million for the solar
project from offshore last year.
“We are putting in a new solar plant, we raised US$12 million in New York in 2021 to fund
that and that plant is pretty much ready to go.
“We expect that project to be commissioned sometime next month, which will provide
about 27 percent of Blanket’s average daily requirements,” he said.
Mr Learmonth said they were now beginning to look into the second phase of the solar
project to increase its electricity contribution at the mine.
The operation is one of Zimbabwe’s major yellow metal producers. Since 2015, Caledonia
invested US$75 million into the Central Shaft project that was commissioned at Blanket
Mine in March last year.
The Central Shaft project was embarked on as one of the firm’s efforts to increase gold
production at the Gwanda-based mine.
As a result of the impact of the Central Shaft project, Blanket Mine’s has continued to
increase its production reaching a quarterly record high of 20 091oz of gold in the second
quarter ended June 30, 2022.
The latest output was 20 percent higher than the 16 710oz produced in the corresponding
period last year. Production in the first half of this year excludes an estimated 1 500oz of
recoverable gold on a stockpile.
Blanket is on track to hit its annual production target of between 73 000oz and 80 000oz
this year having achieved record production of 67 476oz in 2021 exceeding its revised
increased production guidance.-The Herald
