Caledonia Mining Corporation which recently signed a huge mining deal with the Zimbabwean government is reportedly interested in taking over one of Zimbabwe’s largest gold operations as it embarks on an aggressive plan to acquire more assets in the country.
According to highly placed sources who spoke to Bloomberg media, the Jersey-based gold producer is weighing an acquisition of Bilboes Gold Ltd.’s Isabella-McCays-Bubi Mines, in Inyathi District of Matabeleland North Province northwest of Zimbabwe though a Caledonia spokeswoman declined to comment.
Caledonia Mining Corporation, early this month signed a memorandum of understanding (MoU) with the Government of Zimbawe which allowed the Canadian company to identify and acquire any gold assets in the country which would boost investment and production in its gold mining and play a leading part in the drive to a US$12 billion mining sector economy by 2023.
In the MoU, which analysts equated to the 1892 Rudd Concession signed between Lobengula and The British South African Company which gave the British company gold mining rights throughout the country, Caledonia declares and affirms its intention to increase gold production in excess of 500 000 ounces, around 15,5 tonnes, by 2030.
Further, the parties acknowledge and agree that where Caledonia had specific interest in identified assets or projects towards the achievement of the target, there shall be need to enter into specific agreements governing those assets.
The Bubi mines can potentially produce more than 200,000 ounces of gold, making it the largest project by output in the country, said the person. Most of the Isabella-McCays-Bubi operations are currently mothballed as the owners search for investors.
Caledonia, which has Cape Town-based fund manager Allan Gray as its biggest shareholder, would be able to return the mines to full production within a short period, said the sources.
They could be operated for more than a decade and would align with the company’s plans to grow its Zimbabwean presence. Raising financing for the deal depends on the nature of the final agreement.
The gold miner is ramping up production at its Blanket mine in the southwest of the country, and needs larger assets to expand. It sees potential in some mines which were shut down in the 1980s due to a lack of capital, Maurice Mason, the company’s vice president for corporate development said earlier this month.
Caledonia could increase its output more than eightfold through deals, to half a million ounces a year as the company considers investing $400 million in Zimbabwe over the next decade, the person said. This month, Caledonia CEO Steve Curtis signed a memorandum of understanding with the government to evaluate some of the gold assets of state-owned Zimbabwe Mining Development Corp., pending possible purchases.