Caledonia Mining Says It Plans To Invest US$250 million To Develop Bilboes Mine
Caledonia Mining says it plans to invest US$250 million over three years to develop Bilboes Mine, once it completes the takeover of one of Zimbabwe’s most prized mining assets.
Last week, Caledonia announced it had agreed on a deal to take over Bilboes for US$53.3 million in Caledonia stock plus a royalty on revenues. Estimates show Bilboes could produce an average of 168,000 ounces of gold per year over a 10-year life of mine.
newZWire quotes Caledonia CEO Mark Learmonth as saying:
The cost of building a 170,000 ounce a year mine will be about US$250 million, spread over three years, some very substantial investment opportunity.
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.
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So, even if equity markets aren’t amenable – and the environment is not great right now – we will still continue to do the project with just using our own internal cashflows.
Caledonia has so far used internally generated resources to expand Blanket Mine.
Bilboes shareholder Victor Gapare says his company had considered several options, including selling the asset or listing Bilboes directly. They settled on the Caledonia deal as it presents the best chance to develop the operation.
The transaction will only go through if Bilboes gets guarantees from the government that it will be able to sell its own gold and retain all its earnings.
