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Caledonia Mining Corp PLC on Friday said it completed the acquisition of Bilboes Gold Ltd for 5.1 million shares.
The St Helier, Jersey-based gold producer with operations in Zimbabwe acquired the company which, through Bilboes Gold’s subsidiary Bilboes Holdings (Private) Ltd, owns the Bilboes gold project in Zimbabwe.
Bilboes is a large, high grade gold deposit located around 75 kilometres north of Bulawayo, Zimbabwe. The acquisition was completed by specialist fund manager Baker Steel Resources Trust Ltd.
Caledonia Mining said the 5.1 million shares represent around 28.5% of Caledonia’s fully diluted share capital and a 1% net smelter royalty on the gold project’s revenue. It added that the maximum number of new shares that could be issued as consideration is currently $65.6 million.
Shares in Caledonia Mining were down 2.2% to 1,046.00 pence on Friday morning in London.
A feasibility study prepared by the vendors indicates the potential for an open-pit gold mine producing an average of 168,000 ounces per year over a 10-year life of the mine.
Caledonia will conduct its own feasibility study to identify the ‘most judicious way’ to commercialise the project to optimise shareholder returns.
Caledonia is planning to restart oxide operations at Bilboes from February, and it expects the start of gold recovery from the heap leach from March.
Once the full production rate is achieved, the net smelter royalty would generate around $2.6 million per annum for the company at current gold prices, Caledonia said.
Additionally, Bilboes Holdings Chief Executive Victor Gapare has been appointed as an executive director of Caledonia Mining from Friday this week.
‘[The] completion of the transaction is the cornerstone in Caledonia’s strategy to create a mid-tier, multi-asset gold producer focussed on Zimbabwe,’ Caledonia Chief Executive Mark Learmonth said.
By Jaskeet Briah, Alliance News reporter
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