Caledonia said to eye one of Zimbabwe’s largest mines

Work at the Blanket mine. (Image courtesy of Caledonia Mining)

Caledonia Mining Corp. is interested in buying one of Zimbabwe’s largest gold operations as it embarks on an aggressive plan to acquire more assets in the country, according to a person familiar with the details.

The Jersey-based gold producer is weighing an acquisition of Bilboes Gold Ltd.’s Isabella-McCays-Bubi mines, in northwest Zimbabwe, said the person, who asked not to be identified as the details aren’t public.

A Caledonia spokeswoman declined to comment.

The gold miner is ramping up production at its Blanket mine in the southwest of the country, and needs larger assets to expand

Bilboes Chief Executive Officer Victor Gapare said the company is looking for investors but is not holding talks with Caledonia. “Every gold mine in Zimbabwe, without exception, is looking for money and it’s not a secret,” Gapare said. “Yes, we were on the market, but there is absolutely nothing in us talking to Caledonia.”

The mines can potentially produce more than 200,000 ounces of gold, making the project the largest by output in the country, said the person. Most of the Isabella-McCays-Bubi operations are currently mothballed as the owners search for investors, the person said.

Growth plans

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 person. 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 person said.

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.

The gold assets Caledonia has been assessing would require investment of between $200 million to $300 million to develop, Curtis said in an interview on Oct. 13, without specifying any names.

“We have been looking aggressively at assets in the private sector,” Curtis said. “Hopefully we can get our hands on something that enables Caledonia to grow from a single asset business. Zimbabwe is as good as any other prospect in Africa, Mali, Australia or elsewhere.”

(By Felix Njini and Godfrey Marawanyika)

744 0

Comments

Your email address will not be published. Required fields are marked *

More Africa News