- In the near term, it positions Padenga as the potential largest listed- gold producer
- Padenga targets reaching 85,000 ounces, surpassing Caledonia’s 78 000 ounces
- In long-run, Bilboes revival will boost Caledonia's output to over 200,000 p/a
Harare- Caledonia Mining Corporation has announced that it will revive the Bilboes Mine operations in Zimbabwe through a single-phase development approach, a decision expected to provide improved cash generation and enhanced debt financing capacity compared to previous phased development plans.
The Victoria Falls Stock Exchange-listed mining group also owns Blanket Mine, its flagship whose annual output in 2023 was 75 416 ounces. Caledonia also owns the Maligreen goldfields and the Glen Hulme gold project in Gweru, Midlands province.
The peak funding requirement however, for the Bilboes revival project is expected to be approximately US$309 million, with a significant portion financed through debt.
The Bilboes Mine was placed under maintenance in 2023, but its revival is projected to yield approximately 1.5 million ounces of gold (based on measured and indicated mineral resources) over an initial 10-year life of mine. The all-in sustaining cost is estimated at US$968 per ounce, with a payback period of 1.9 years, assuming a gold price of US$1,884 per ounce.
Once revived, Bilboes is expected to almost triple Caledonia's production capacity, allowing the company to produce over 200,000 ounces of gold per annum in combination with the output from its Blanket Mine. However, this will be in the long term.
This will position Caledonia as the largest gold producer in Zimbabwe, surpassing Freda Rebecca, which typically produces between 80,000 and 100,000 ounces per year and Padenga which currently targest 85 000 ounces this year.
However, the revival means Caledonia will be producing lesser gold than its peers, 78 000 ounces vs Padenga’s 85 000 ounces.
This may provide a window of opportunity for Padenga to solidify its position as the leading gold producer in Zimbabwe, at least in the near term. However in the long term, Padenga is also targeting 100 000 ounces per annum that will make the race interesting.
Caledonia currently faces competition from Padenga, which is expected to produce a minimum of 80,000 ounces of gold this year, with a potential upper range of 85,000 ounces.
This is higher than Caledonia's anticipated production of 74,000 to 78,000 ounces in 2023. Furthermore, Padenga is projecting an increase in production to 100,000 ounces in the coming years, potentially overtaking both Caledonia and Freda Rebecca as the largest listed gold producer in Zimbabwe in the near term.
However, with the completion of the Bilboes revival, likely far beyond 2025, Caledonia will have the capacity to produce over 200,000 ounces of gold per annum, which could potentially shift the dynamics in the Zimbabwean gold mining industry.
In January 2023, Caledonia acquired the Project for 5.12 million consideration shares (28.5% of Caledonia's fully diluted equity, valued at approximately $65.7 million at the time) and a 1% net smelter royalty.
The main objective was to construct a large, open-pit operation to extract sulphide mineralization. The previous owners had prepared a Feasibility Study for the Project, which targeted mine and processing operations to produce an average of 168,000 ounces of gold per annum over a 10-year life of mine.
Caledonia commissioned an update of the Feasibility Study for the sulphide project, reflecting the prevailing economic environment for capital and operating costs and a revised gold price outlook. The goal was to identify the most judicious way to commercialize the Project and maximize future shareholder value.
This exploration examined the potential for the Project to be implemented in a single step or on a phased basis over an extended life of mine, and it is resulting in the publication of a Preliminary Economic Assessment (PEA), which is expected to be converted into a New Feasibility Study in due course.
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