- Caledonia Mining plans to raise up to US$120 million via convertible senior notes to fund the capital-intensive Bilboes gold project and support working capital
- The company posted a record financial performance in 2025, producing 2.16 tonnes of gold and generating projected revenue of US$260 million
- Bilboes development costs have risen from an initial US$309 million to peak funding of circa US$484 million
Harare - Caledonia Mining Corporation, Zimbabwe’s third-largest gold producer, has moved to secure up to US$120 million through a proposed issuance of convertible senior notes due 2033, a financing decision reflecting mounting capital requirements at its flagship development asset, the Bilboes gold project, and the limits of internally generated funding in a high-risk operating environment.
According to the latest press release, the company plans to raise an initial US$100 million via a private placement to qualified institutional buyers under Rule 144A of the US Securities Act, with an option to upsize the transaction by a further US$20 million.
‘’ Today announced its intention to offer $100 million aggregate principal amount of Convertible Senior Notes due 2033 (the “Notes”) in a private placement (the “Convertible Notes Offering”) to persons reasonably believed to be qualified institutional buyers pursuant,’’ reads the statement.
This comes after the company posted a record-breaking financial performance. For the 12 months ended December 2025, Caledonia produced 2.16 tonnes of gold, slightly up from the prior year, with topline revenue projected at US$260 million, surpassing the US$200 million mark due to a 30% price increase in the second half.
Despite the gold price rally, production remained largely stable, with fourth-quarter output of 17,367 ounces, 12.6% below the same quarter in 2024, as lower tonnages from high-grade ore zones and electricity supply interruptions affected output.
The Bilboes gold project is a capital-intensive project, initially envisaged at around US$309 million in a June 2024 Preliminary Economic Assessment, but the definitive Feasibility Study, published in November 2025, now estimates total capital costs at US$584 million, with a peak funding requirement of US$484 million. A total of US$132 million is earmarked for the project's development in 2026 to fund the next phase of development.
The decision to issue long-dated, unsecured convertible debt suggests that Blanket Mine cash flows alone are no longer sufficient to carry Bilboes forward without materially weakening liquidity or dividend capacity.
Convertible instruments, sitting between equity and straight debt, allow the company to preserve optionality in a challenging Zimbabwean operating environment marked by sovereign risk, currency constraints, and regulatory uncertainty.
The notes will accrue interest payable semi-annually and may be converted into cash, Caledonia shares, or a combination of both, with final pricing determining whether the transaction behaves more like delayed equity issuance or genuine leverage. Alongside the issuance, Caledonia plans capped call transactions to offset potential dilution.
Unlike Blanket, which generates steady cash flow from a mature underground operation, Bilboes is a large-scale open-pit development requiring significant upfront capital and long lead times, with production expected to triple current levels to over 250,000 ounces per year from 2029, positioning Caledonia among Zimbabwe’s largest gold producers.
Through allocating proceeds toward Bilboes development and general working capital, rather than full construction financing, Caledonia is preserving flexibility to navigate macroeconomic, gold price, or jurisdictional risks while advancing technical work and permitting.
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