Harare (New Ziana) – Caledonia, which operates Blanket mine in Gwanda, Matabeleland South province, has lined up a $250 million investment to develop its new acquisition, Bilboes mine, as it pursues an aggressive growth strategy in Zimbabwe.
After acquiring Maligreen gold fields in Gweru last year, Caledonia last week added Bilboes Mine to its growing portfolio after agreeing a US$53.3 million takeover of the mine, which is located 75 kilometres north of Bulawayo.
The US$250 million investment, to be spread over three years, will be made using a mixture of funding options including loans.
Caledonia chief executive officer Mark Learmoth said the investment would build a 170 000 ounce a year mine.
He said there was further exploration potential at Bilboes
“We are engaged with international debt providers to provide as much debt as possible. The balance of that will come from equity. If none of those add up to US$250 million, we will then fall back on a two-phased project, which would see a first initial phase of 60,000 ounces, then move on to the second phase.
“Even if equity markets are not amenable, we will still continue to do the project using our own internal cashflows,” he told a media briefing at a local hotel.
Learmoth said Zimbabwe presented exciting investment options for the company.
“There are other assets that we continue to look at in Zimbabwe. We have got a very aggressive growth strategy in Zimbabwe. At this stage we are not looking at anything else outside Zimbabwe, the reason is we believe Zimbabwe is highly prospective for gold, is massively under explored and we are here and we know how to operate here so why on earth would we take our money somewhere else where we do not know how to operate?
“The critical thing, apart from being highly prospective for gold, that sets Zimbabwe apart is the quality and ability of the workforce, we have got 2 000 people at Blanket mine all of them Zimbabweans. Zimbabwe has a lot going for it and that is why we are perfectly willing to spend our money and to try and raise more money to invest in our growth in Zimbabwe. For us it is a no brainer.”
Meanwhile, Learmoth said the solar plant at Blanket mine would provide approximately 27 percent of the mine’s total daily electricity demand.
He said the plant was expected to be operational by next month.
Early this month, Caledonia announced a quarterly production record at Blanket mine, which delivered 20 091 ounces of gold during the second quarter ended June 2022, pushing total output for the first half of the year 29 percent above the same period last year.
The record breaking second quarter performance was a 20 per cent increase on the 16 710 ounces produced over the same period in 2021.
The planned expansion by Caledonia is one of several projects that are expected to spur the attainment of a US$12 billion local mining industry by 2023.
Under the road-map, gold production of 100 tons and earnings of US$4 billion per annum are expected to anchor the attainment of the US$12 billion milestone.
The milestone is expected to be achieved through sustained production growth across high value minerals such as gold, platinum, diamonds, lithium and chrome.
At least US$3 billion in annual export earnings is expected from platinum at a production rate of 2.4 million ounces a year, while chrome, iron ore and steel are expected to contribute US$1 billion, the same as diamonds at a production rate of over 11 million carats per annum.
Coal and hydro-carbons are expected to contribute US$1 billion, lithium US$0.5 billion while other minerals would add US$1.5 billion.