In a statement last week announcing the transaction,
Caledonia Mining Corporation said:
“The Company is pleased to announce that it has signed an
agreement to purchase Bilboes Gold Limited, the parent company which owns,
through its Zimbabwe subsidiary, Bilboes Holdings (Private) Limited, the
Bilboes gold project in Zimbabwe for a total consideration of 5,123,044
Caledonia shares representing approximately 28.5 per cent of Caledonia’s fully
diluted equity, and a 1 per cent net smelter royalty (“NSR”) on the Project’s
revenues (the “Transaction”).”
The company said based on Wednesday closing share price on
New York Stock Exchange American of US$10.40 per share, the value of the new
shares that will be issued as consideration is currently US$53,279,658.
Caledonia Mining said completion of the transaction will be
subject to several conditions set out such as part of the deal, Bilboes chief
executive officer (CEO) Mr Victor Gapare will join Caledonia as a director on a
US$470 000 annual salary (before incentives).
Bilboes is a high-grade gold deposit previously owned by
Anglo American and Caledonia has set conditions before the deal is finalised
that the Government must allow the company to export gold directly and to
retain 100 percent of sale proceeds in US$ and no requirement to convert
revenues into ZW$.
The company said also an arrangement with or confirmation
from the Zimbabwe authorities and/or an independent power producer regarding
the future availability of a sufficiently reliable and affordable electricity
supply to the project.
Part of the statement read: “Caledonia 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.”
The company said prior to completion of the transaction,
Caledonia will enter a tribute arrangement with Bilboes Holdings so that oxide
operations can be re-started with the expectation that Bilboes Holdings will
return to profitable operations within 6 months.
Caledonia said this also has the benefit of an element of
pre-stripping for the main development of the project.
Commenting on the announcement, Caledonia Mining CEO, Mr
Mark Learmonth said: “We are delighted
to have signed an agreement for the purchase of Bilboes, the premier gold
development project in Zimbabwe, and indeed one of the best gold development
projects in Africa.”
He said this was a transformational asset for Caledonia, as
they embark on the next step in our journey to become a multi-asset, mid-tier
gold producer.
Mr Learmonth said once in full production (which will be
subject to financing of the capex) Caledonia’s management believes that Bilboes
could produce three times their current 64 per cent attributable share of gold
production from Blanket, resulting in production from the enlarged Caledonia
group being potentially four times its current size.
“The acquisition of Bilboes will build on the recent
acquisition of the Maligreen claims which host NI43-101 compliant inferred
mineral resources of 940,000 ounces of gold in 15.6 million tonnes at a grade
of 1.88g/t1.
We continue our work at Maligreen which is focused on
increasing the confidence level of the resource base,” he said.
Mr Learmonth said they have followed the progress of
Bilboes for several years and their announcement marks the culmination of many
years of hard work on the part of both the Caledonia and Bilboes management
teams.
“The proposed acquisition of Bilboes is well timed
following the completion of the Central Shaft project at Blanket in 2021 as we
look to reinvest some of our surplus cash flow in this exciting new growth
opportunity.
“I look forward to updating shareholders as we review the
investment plan for Bilboes and as we continue work at Maligreen.” Sunday News
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