Gold miner Caledonia Mining has agreed to acquire Bilboes Gold, the owner of the Bilboes gold project in Zimbabwe, in an all-share deal worth $53.3m.
Under the agreed terms, Caledonia will issue 5.1 million of its shares, representing 28.5% of its fully diluted equity, and a 1% net smelter royalty (NSR) on the project’s revenues from the Bilboes project.
The transaction is subject to several conditions.
Bilboes Gold, through its Zimbabwe subsidiary Bilboes Holdings, owns the Bilboes high-grade gold deposit located 75km north of Bulawayo.
The Bilboes mine, which was earlier subject to a limited amount of open-pit mining, has produced 288,000oz of gold since 1989.
Caledonia CEO Mark Learmonth said: “Once in full production (which will be subject to the 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.”
The acquisition is also expected to help Caledonia become a multi-asset mid-tier gold-producing company.
According to a feasibility study prepared by the vendors, the open pit mine has the potential to produce an average of 168,000oz/y of gold over its operational life of ten years.
Caledonia plans to undertake its own feasibility study to determine the ‘most judicious way’ for the project’s commercialisation.
Learmonth added: “The acquisition of Bilboes will build on the recent acquisition of the Maligreen claims, which host NI 43-101-compliant inferred mineral resources of 940,000oz of gold in 15.6-million tonnes at a grade of 1.88g/t. We continue our work at Maligreen, which is focused on increasing the confidence level of the resource base.”