Caledonia Mining completes acquisition of Bilboes gold project

Highlights

• Bilboes is a large, high grade gold deposit located approximately 75 km north of Bulawayo, Zimbabwe. Historically, it has been subject to a limited amount of open cast mining.
• The project has NI43-101 compliant proven and probable mineral reserves of 1.96 million oz of gold in 26.64 million t at a grade of 2.29 g/t and measured and indicated mineral resources of 2.56 million oz of gold in 35.18 million t at a grade of 2.26 g/t and inferred mineral resources of 577 000 oz of gold in 9.48 million t at a grade of 1.89 g/t. The project has produced approximately 288 000 oz of gold since 1989.
• A feasibility study prepared by the vendors (the DRA feasibility study) indicates the potential for an open-cast gold mine producing an average of 168 000 oz/yr over a 10-year life of mine.
• Caledonia will conduct its own feasibility study to identify the most judicious way to commercialise the project to optimise 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.
• Caledonia entered into a tribute arrangement with Bilboes Holdings when it entered into the share purchase agreement so that oxide operations could re-start. The tribute agreement is now unnecessary due to completion of the transaction and oxide operations are anticipated to start from February 2023, with the expectation that Bilboes Holdings will return to profitable operations shortly thereafter. This also has the benefit of an element of pre-stripping for the main development of the project.

Commenting on the announcement, Mark Learmonth, 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 sulfide deposit which is amenable to low-cost, open-cast operations. A feasibility study on the Bilboes project which has been prepared by the Bilboes vendors envisages production of approximately 168 000 oz/yr of gold 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 – 14 months to complete.

"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 oz/yr, 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.

"I look forward to working with Victor and in particular developing Bilboes and other investments in Zimbabwe with him and the rest of the management team on behalf of Caledonia."

Caledonia's Chairman, Leigh Wilson, also commented on the announcement, saying:

"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."

Read the article online at: https://www.globalminingreview.com/mining/06012023/caledonia-mining-completes-acquisition-of-bilboes-gold-project/