JERSEY miner, Caledonia Mining Corporation (Caledonia) is expected to contribute 2,5 tonnes to 2025’s national gold deliveries of over 40 tonnes, with output set to rise to 7,5 tonnes once its Bilboes Mine comes online over the next three years.
The projected higher national gold deliveries come as small-scale miners buoyed by government incentives, 100% forex retention, and record global prices have increased production.
According to the Zimbabwe Miners Federation, through September, gold deliveries have already hit 33 tonnes.
With its main producing asset, Blanket Mine, having a remaining life of about 10 years, Caledonia is gradually shifting focus to its larger Bilboes project, which will become their new flagship mine.
Preliminary estimates suggest that once production begins, Bilboes Mine could yield between 250 000 and 300 000 ounces of gold annually.
Speaking during a media briefing held in Harare this week, Caledonia chief financial officer Ross Jerrard said Bilboes’ expected returns will play a significant role in the firm generating its own internal resources.
“So, at the moment, we’re producing 2,5 tonnes of the 43 tonnes national production, and if Bilboes comes online, we will increase our 2,5 tonnes to 7,5 tonnes,” he said.
Data shows Zimbabwe’s gold deliveries totalled about 36,4 tonnes last year, with various industry projections anticipating between 40 tonnes to as high as 52 tonnes for 2025.
“Acquiring Bilboes and Motapa assets was all about creating a funnel of assets that we can develop organically within the portfolio. The key thing for us is Bilboes, which is a very low-cost mine,” Jerard said.
“When we start producing at Bilboes, it will be US$1 000 an ounce in terms of cost.
“Whereas an old mine like Blanket, which has a lot of sustaining capital, is operating more at US$1 800.
“So, by bringing Bilboes online, it reduces our cost profile as a group and, importantly, produces more ounces and obviously free cash flow.”
Caledonia has been progressing work on a feasibility study for the Bilboes project, initially due for publication in the first half of 2025.
While ongoing work confirms the project has attractive economics, several new developments have prompted the company to undertake further work to allow for the evaluation of key and certain new factors that Caledonia expects could positively impact project economics.
Unlike Blanket Mine, in which Caledonia has a 64% stake, for Bilboes, it owns it 100%, ensuring that shareholders are geared to earn more from the latter.
Jerard said the strategy was to have Bilboes and Motapa produce at a lower cost to create a much bigger margin should the record gold prices stand.
Hence, capex at Bilboes and Motapa will depend on the strategic prioritisation of the uses of cash and the outcome of further work on feasibility studies and exploration.
“International gold prices have been amazing. It’s gone up basically four-fold compared to 18 months ago, and the projections are that it will continue to increase,” Jerard said.
“You look at the big international banks like Bank of America … they’re predicting US$4 600, US$4 700 an ounce by the end of next year.”
The Bank of America has become the first major lender to project gold prices reaching US$5 000 per ounce by 2026, amid the precious mineral surpassing the US$4 000 mark last week and now trading around US$4 073,69.
Rising gold prices are expected to be supported by the international markets moving to hedge their assets against the mineral in light of market volatility caused by increasing geopolitical tensions. – (Newsday)
