MINING REFINING

Zimbabwe miner expects to triple gold output

Wed June 05 2024

Caledonia Mining plans to triple its gold output by developing Bilboes, the gold asset it acquired last year, using a single-phase development strategy. The company initially considered a phased approach for Bilboes, which it purchased for $65.7 million in an all-share deal in January 2023. However, it has now opted for a single-phase development, necessitating a new feasibility study to be completed early next year.

CEO Mark Learmonth stated, "The preliminary economic assessment confirms that Bilboes has an attractive production profile with the potential to nearly triple Caledonia's production capacity to over 200,000 ounces per annum, in combination with production from the Blanket Mine." Caledonia's current operation, the Blanket Mine in Gwanda, produced 75,416 ounces of gold in 2023 and is expected to produce 78,000 ounces this year.

Learmonth added, "The Board's decision to proceed with the single-phase development option for Bilboes marks a key strategic milestone in our journey to becoming a multi-asset, mid-tier gold producer."

To develop Bilboes, Caledonia will need to raise up to $309 million, with a significant portion expected to come from debt financing. The company has been in discussions with African development banks to secure funding and may also use equity to raise additional capital. According to London-based investment advisory Cavendish, Bilboes can support approximately $200 million in debt, while Caledonia will need to raise an additional $100 million through equity, either at the project or company level.

Caledonia projects that the new mine will deliver 1.5 million ounces of gold over an initial 10-year mine life at a cost of $968 per ounce, with a payback period of just 1.9 years at a gold price of $1,884 per ounce. Gold is currently trading at $2,331 per ounce, up 12.5% since the beginning of the year.

Source: https://bulawayo24.com