Caledonia Mining Corporation has engaged South African banks to anchor a US$150 million funding facility for its Bilboes gold project in Matabeleland North, as it deepens its footprint in Zimbabwe’s lucrative gold sector.
The Victoria Falls Stock Exchange-listed multinational, which also controls Blanket Mine near Gwanda, said the facility would form a critical part of its broader financing strategy to fast-track development of Bilboes.
Chief financial officer, Ross Jerrard, said negotiations were underway with a consortium of regional lenders.
“We are currently in negotiations with a consortium of both Zimbabwean and South African banks to raise a US$150 million facility,” Jerrard said during a presentation of the group’s financial results for the year ended December 31, 2025.
“You would have seen the announce ment in terms of appointing Standard's Stanbic and CBZ (banks) as the arrangers of that facility. We are targeting the middle of this year to have it in place. The cornerstone of that is again the Blanket Mine cash flows.”
Standard Bank Group is the parent company of Stanbic Bank Zimbabwe that together with CBZ Bank are the local arrangers for the proposed facility.
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Jerrard said Caledonia had engaged about six banks for an interim facility and had received strong interest.
“We have got two South African banks and then the Zimbabwean banks that are participating. So, about half a dozen banks that we are talking to,” he told businessdigest.
“We have been pleased with the appetite to participate. We have not had any negative feedback from those involved.”
Once operational, Bilboes is expected to produce about five tonnes of gold annually, potentially positioning Caledonia as Zimbabwe’s largest gold producer.
Feasibility studies indicate the project hosts approximately 1,74 million ounces of proven and probable gold reserves, valued at several billions of United States dollars. The company aims to establish Bilboes as its primary operation within three years.
The funding structure is anchored on projected cash flows under varying gold price scenarios.
At a gold price of US$3 500 per ounce, Caledonia projects future net cash flows of US$125 million, alongside US$319 million in senior debt and other facilities, US$130 million in net proceeds from convertible bonds, and US$16 million in cash reserves.
At US$5 000 per ounce, projected net cash flows rise to US$275 million, with senior debt and other facilities easing to US$169 million, alongside the same US$130 million in convertible bond proceeds and US$16 million in cash on hand.
To hedge downside risk, Caledonia has already secured put options covering 108 000 ounces at a strike price of US$3 500 per ounce for the period 2026 to 2028.
“These put options are expected to underpin cash flow at gold prices below US$3 500 per ounce,” the company said, adding that lenders may still require upfront cash rather than reliance on forecast flows.
Caledonia has structured a four-pronged funding plan to raise the estimated US$590 million required to develop Bilboes.
The first phase, completed in December, involved the purchase of put options. This was followed by the issuance of US$150 million in convertible senior notes earlier this year, generating net proceeds of US$130 million.
The final component is a project finance facility to be arranged through African banks.
“The fourth arm is really the project finance facility, and our (PF) facility is focused on African banks,” Jerrard said.
“We are expecting that to be delivered within the next 12 months, subject to the various due diligence processes.”
He added that progress made so far on the project finance structure had effectively underwritten the broader funding strategy.