Caledonia bets big on Bilboes as Zimbabwe’s next major gold mine

Caledonia Mining (LSE, NYSE-A: CMCL) has approved full development of its Bilboes gold project in Zimbabwe after a feasibility study projected strong returns for what is expected to become the country’s largest gold mine.

The company, which acquired Bilboes in 2023, estimates peak funding at $484 million and total capital costs at $584 million. The study identified a single-stage development plan as the most economic path forward. Caledonia plans to finance construction mainly through debt and equity generated from its Blanket gold mine in the province of Matabeleland South.

The construction decision marks a milestone for a project “decades in the making,” CEO Mark Learmonth said in a release on Tuesday. Bilboes could help Zimbabwe reclaim its position as a leading gold producer, he added. 

The project covers 27.3 sq. km in Matabeleland North, about 80 km north of Bulawayo. The feasibility study reports proven and probable reserves of 24.1 million tonnes grading 2.26 grams gold per tonne for 1.75 million oz. contained metal. The study also outlines 18.9 million inferred tonnes at 1.62 grams for 984,000 oz. of gold.

Shares in Caledonia Mining gained 0.4% on Tuesday to close at C$28.93 apiece in Toronto, valuing the company at C$558 million. 

Due late 2028 

Bilboes will use Metso’s BIOX technology to process refractory ore by oxidizing sulphide minerals and improving gold recovery. The feasibility study outlines plant throughput of 240,000 tonnes per month during the first six years, tapering to 180,000 tonnes per month for the remainder of the nearly 11-year mine life. Metallurgical recovery is forecast to range from 83.6% to 88.9%.

Caledonia expects output to begin in late 2028, ramping up to roughly 200,000 oz. in 2029. Over the life of the mine, Bilboes is projected to produce 1.55 million oz. at an all-in sustaining cost of $1,061 per ounce.

Supported by investors including Allan Gray and BlackRock, Caledonia plans a staged financing strategy designed to accelerate development while limiting equity issuance to protect the project’s net present value per share.