Caledonia Mining completes acquisition of Bilboes Gold
Friday, January 6th, 2023
Bilboes is a large, high-grade gold deposit located approximately 75 kilometres north of Bulawayo
Caledonia Mining Corporation PLC said it has completed the acquisition of Bilboes Gold Limited, the parent company which owns, through a subsidiary, the Bilboes gold project in Zimbabwe.
Commenting on the news in a statement, Mark Learmonth, the company’s chief executive officer, said: “Completion of the transaction is the cornerstone in Caledonia’s strategy to create a mid-tier, multi-asset gold producer focussed on Zimbabwe.
“Bilboes is a large, high-grade sulphide deposit which is amenable to low-cost, open-pit operations. A feasibility study on the Bilboes project which has been prepared by the Bilboes vendors envisages production of approximately 168,000 ounces of gold per annum over a 10-year life.
“Now that the transaction has completed, Caledonia will commission its own feasibility study to identify the most appropriate way to commercialise this asset having regard to the availability of funding with the objective of maximising Caledonia’s net present value per share. I anticipate the feasibility study will take 12 to 14 months to complete.”
He added: “In the short term, I expect ore production from the Bilboes oxides will commence in early February and we anticipate beginning to recover gold from the heap leach from March.
“The acquisition of Bilboes should be seen in the context of the successful implementation of the Central Shaft project at Blanket Mine, which is now producing at its target production rate of 80,000 ounces per annum, and the acquisitions of the exploration projects at Maligeen and Motapa. We recently announced an upgrade to the existing mineral resource base at Maligreen. Motapa is at a much earlier stage but, given its large size, its attractive geological prospectivity and its contiguity with Bilboes we believe it is a highly attractive addition to our portfolio.”
The total consideration payable for the Bilboes acquisition is, subject to adjustment, 5,123,044 shares representing approximately 28.5% of Caledonia’s fully diluted share capital and a 1% net smelter royalty (NSR) on the project’s revenues. Based on the last trading day’s closing price for Caledonia shares on the NYSE American exchange of US$12.82 per share, the value of the maximum number of new shares that could be issued as consideration if there is no adjustment is currently US$65,677,424.
Bilboes is a large, high-grade gold deposit located approximately 75 kilometres north of Bulawayo, and, historically, it has been subject to a limited amount of open-pit mining.
The project has NI43-101-compliant proven and probable mineral reserves of 1.96 million ounces of gold in 26.64 million tonnes at a grade of 2.29 grams per ton (g/t) and 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 ounces of gold in 9.48 million tonnes at a grade of 1.89 g/t. The project has produced approximately 288,000 ounces of gold since 1989.
A feasibility study prepared by the vendors indicates 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 will conduct its own feasibility study to identify the most judicious way to commercialise the project to optimize shareholder returns. One approach that will be considered is a phased development which would minimise the initial capital investment and reduce the need for third-party funding.
Under the terms of the transaction, Victor Gapare, who is affiliated with Toziyana, has been appointed as an executive director of Caledonia with effect from today. Gapare was previously the operations director for the gold and pyrites business of Anglo American Corporation Zimbabwe Limited when Bilboes was part of its portfolio and is a former president of the Chamber of Mines Zimbabwe. He has been the CEO of Bilboes Holdings since the management buyout of Bilboes from Anglo American Corporation Zimbabwe Limited in 2003.
Caledonia’s chairman, Leigh Wilson, commented: “I am very pleased the acquisition of Bilboes has been completed. I extend my appreciation to the Bilboes vendors and their advisors for their active assistance in closing what has been a complex deal, and in particular to Victor Gapare who has been closely involved with Caledonia management in satisfying a number of key conditions to the transaction.
“It is my pleasure to welcome Victor to the Caledonia board. His extensive knowledge of both the project itself and, more broadly, of mining in Zimbabwe is an invaluable addition to the board.”