Caledonia buys Bilboes for US$53,3m

Caledonia Mining Corporation

VICTORIA Falls Stock Exchange-listed Caledonia Mining Corporation has signed an agreement to buy Bilboes Gold for about US$53,3 million.

Tabled for consideration to stich the deal are about 5,1 million Caledonia shares, representing about 28,5% of Caledonia’s fully diluted equity, and a 1% net smelter royalty on the project’s revenues.

Based on the July 20 closing share price on the New York Stock Exchange of US$10,40 apiece, the proposed value of the new shares to be issued is currently pegged at about US$53,3 million. Completion of the transaction is subject to several other conditions, including that Bilboes Holdings receives confirmation from the Zimbabwean authorities that it would, for the life of the mine, be able to export gold directly and to retain 100% of the sale proceeds in US dollars with no requirement to convert US dollar gold revenues into domestic currency. Conditions also include an arrangement with or confirmation from the authorities and or an independent power producer regarding the future availability of a sufficiently reliable and affordable electricity supply to the project.

Formerly owned by Anglo American Corporation, Bilboes is a large, high-grade gold deposit located about 75km north of Bulawayo. Bilboes Gold is owned by Toziyana Resources which controls 50% shareholding, Baker Steel Resources Trust (24%) and Infinite Treasure with 26% stake. Upon successful completion of the transaction, Victor Gapare, a prominent Zimbabwean mining entrepreneur, who controls Toziyana Resources, will be appointed as an executive director of Caledonia. Caledonia chief executive officer Mark Learmonth described Bilboes as one of the best projects in Africa.

“This is a transformational asset for Caledonia as we embark on the next step in our journey to become a multi-asset, mid-tier gold producer. Once in full production (which will be subject to financing of the capex) Caledonia’s management believes that Bilboes could produce three times our current 64% attributable share of gold production from Blanket, resulting in production from the enlarged Caledonia group being potentially four times its current size,” he said.

Caledonia owns Blanket Mine in Gwanda. Learmonth said the acquisition of Bilboes will build on the recent acquisition of the Maligreen claims.

He said they have followed the progress of Bilboes for several years and the announcement marked the culmination of many years of hard work on the part of both 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,” he said.

Caledonia chairman Leigh Wilson said Bilboes was a transformational asset for their business.

“I would like to extend a welcome to Bilboes’ existing shareholders as they become significant shareholders in Caledonia on completion and I look forward to their long-term support as we continue to grow the business. I would also like to extend a warm welcome to all the employees of Bilboes as we look forward to them becoming our colleagues,” he said.

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