Caledonia Mining Corporation an Island of Jersey-based NYSE-listed gold producing company announced today an agreement that will see its purchase of another Zimbabwean gold project. Bilboes Holdings (Private) Limited is set to sell for an estimated US$53,279,658.

According to a feasibility study; the Bilboes project indicates the potential for an open-pit gold mine producing an average of 168,000 ounces (just under 5,000 kgs) per year over a 10-year life of the mine. The project which is 75 km kilometres from Bulawayo is said to have a probable total mineral reserve of varying gold grades to the tune of over 5 million ounces.

US$54,880

the value of 1 kg of Gold

According to their statement, the transaction which is dependent on the Zimbabwean Government granting the mine permission to export gold directly while retaining 100% of the sales proceeds. Caledonia further expects Bilboes Holdings to have no requirement to convert revenues into domestic currency for the life of the Mine.

Current Regulations

It was only last year when the Reserve Bank of Zimbabwe loosened the reins and allowed for large-scale gold mining companies to directly export a portion of their gold outputs on the condition that they outdid their monthly targets. Its wholly owned Fidelity Print & Refineries are still Zimbabwe’s sole gold buyer.

According to the Gold Trade Act, such special permissions can only be granted by the Minister of Mines. The Group CEO of Caledonia, Mark Learmonth said in a statement that this expansion would catalyse its growth exponentially exceeding its first Zimbabwean Gold Project, Blanket Mine. 

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 list of requirements also included assurance of reliable and cheap electricity as well as a feasibility study of their own to determine the full potential of the project.

It would seem Caledonia drives an untough bargain with high stakes. They do say, high risk, high reward.