Caledonia said to be eyeing one of Zimbabwe’s largest gold mines
Caledonia Mining 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’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.
Bilboes CEO 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 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, 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.
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