Caledonia’s Bilboes project comes on stream

CALEDONIA Mining Corporation’s new acquisition, Bilboes Gold Project, has commenced production — setting the thriving mining firm in a firm position to further boost its output in line with the company’s growth plans.

The Victoria Falls Stock Exchange (VFEX)-listed group announced the completion of the acquisition of Bilboes in January this year as a critical cornerstone in its aggressive drive to develop a mid-tier, multi-asset Zimbabwe-focused gold production business.

According to Caledonia, Bilboes is a large, high-grade sulphide deposit situated in Matabeleland North province, which is amenable to low-cost, open-pit operations.

In a latest production update issued yesterday, Caledonia Corporation said although gold production from its flagship Blanket Mine operations in Gwanda had slightly dropped to 16,036 ounces in the first quarter to March this year, 13 percent lower than the 18,515 ounces produced in the first quarter of 2022, the coming on-stream of Bilboes was a giant leap in business growth.

Production was lower than last year due to several individually insignificant mechanical breakdowns and logistical issues, which have since been resolved, said the company.

It noted that production in the early part of this month has been better than expected and reiterated its commitment to fulfilling production guidance for Blanket of between 75,000 and 80,000 ounces of gold this year.

“Bilboes commenced production of gold from oxides derived from pre-stripping works in the last few days of the quarter, producing 105 ounces of gold,” said Caledonia.

“The small-scale low-margin oxide operation at Bilboes is effectively a pre-stripping exercise for the larger sulphide project in respect of which we have commenced work on an updated feasibility study.”

Caledonia has said the commencement of oxide production at Bilboes has been slower than anticipated, having been adversely affected by inconsistent grades, mechanical breakdowns, and the poor availability of spare parts and alternative equipment.

“The oxide project was adversely affected by the breakdown of contractor-provided drill rigs, which are used for evaluation drilling and the limited availability in Zimbabwe of spare parts or alternative equipment,” chief executive, Mr Mark Learmonth, said.

As highlighted in the production guidance dated January 13, 2023, Caledonia said the on-mine cost/oz of Bilboes oxide production was anticipated to be US$1,200-1,320 and is hence a relatively low margin activity, which is primarily justified by the parallel benefit of pre-stripping in anticipation of the development of the Bilboes sulphide project.

The company has said it is reviewing its initial evidence of this activity given some of the initial challenges and relative to the larger sulfide project, for which a feasibility study is being updated.

Accordingly, going forward, the company said it will report actual production achieved each quarter at the oxides project as part of the pre-stripping activities, and has since withdrawn guidance on the low-margin oxide production.

Commenting, on Blanket Mine production, Mr Learmonth, said gold production at the mine is usually lower in the first quarter of each year and increases in the following quarters.

“This trend is in evidence this year, albeit production in the first quarter of 2023 was below our target due to a series of issues including equipment failures and logistical issues,” he said.

“These issues have been resolved and production to date in April has been higher than expected.

In light of the foregoing, we reiterate production guidance for 2023 of between 75,000 and 80,000 ounces of gold from Blanket.

“We expect to publish further operating information and the financial results for the quarter on or about May 15, 2023.”-chronicle