Caledonia approves US$584m gold project in Zimbabwe after positive feasibility study

BULAWAYO – New York Stock Exchange listed Zimbabwean gold mining giant, Caledonia Mining Corporation Plc has formally approved the development of the Bilboes Gold Project in Matabeleland North following the completion of a feasibility study that confirms strong economic prospects for the operation.

The company, which acquired Bilboes in January 2023 for approximately US$65 million in Caledonia shares and a 1% net smelter royalty, announced that the project will require a capital investment of US$584 million.

The peak funding requirement is set at US$484 million, while management anticipates an additional US$100 million will be needed for interest and working capital, and a further US$50 million for the cost overrun facilities typically demanded by senior lenders.

The feasibility study indicates that Bilboes is financially robust across all evaluated gold price scenarios.

Using an average gold price assumption of US$2,548 per ounce, the project is projected to generate a post-tax net present value (NPV) of US$582 million, a post-tax internal rate of return (IRR) of 32.5%, and a payback period of just 1.7 years from first production.

At the higher London Bullion Market Association (LBMA) spot price recorded in September 2025 of US$3,648 per ounce, the post-tax NPV increased significantly to US$1.234 billion, with an IRR exceeding 50%.

Even under the more conservative three-year trailing average gold price of US$2,350 per ounce, the project still delivers a post-tax NPV of US$454 million and an IRR of 27.4%, which Caledonia describes as attractive.

The company, which is also listed on the Victoria Falls Stock Exchange, expects Bilboes to produce approximately 1.55 million ounces of gold over a mine life of 10.8 years. Production is forecast to reach roughly 200,000 ounces in 2029, the first full year of operations.

The processing plant is designed to handle 240,000 tonnes per month for the initial six years, after which throughput will decrease to 180,000 tonnes per month. Metallurgical recoveries are expected to range between 83.6% and 88.9%, depending on ore type.

Proven and probable mineral reserves stand at 1.749 million ounces of gold at an average grade of 2.26 g/t. The project also hosts 532,000 ounces of measured and indicated mineral resources and 984,000 ounces of inferred resources, excluding reserves.

To finance the development, Caledonia intends to rely primarily on non-recourse senior debt, supported by internal equity contributions from Blanket Mine and other flexible instruments such as royalties, streams, mezzanine funding, or convertible bonds.

The company emphasised that minimising equity issuance is central to its strategy in order to protect shareholder value.

Caledonia is targeting late 2026 or early 2027 for the finalisation of a comprehensive funding package.

In preparation, the company has entered into a US$13.5 million hedging arrangement covering 3,000 ounces of gold per month for the next three years at a strike price of US$3,500 per ounce.

Caledonia expects the hedge to underpin approximately US$200 million in cash receipts from Blanket Mine between 2026 and 2028, which coincides with the peak capital expenditure period for Bilboes.

Development work will begin immediately as the company initiates the Front-End Engineering Design phase. Caledonia plans to procure long lead-time equipment in the second half of 2026, allowing it to accelerate construction, which is expected to take two years.

First gold production is anticipated in late 2028, with steady-state output expected in 2029.

The project is fully permitted under Zimbabwean regulations, and Caledonia says it will replicate the employee empowerment and community ownership structures currently in place at Blanket Mine.

Chief Executive Officer Mark Learmonth described the Bilboes project as a defining moment for the company, saying it is expected not only to transform Caledonia’s production profile but also to deliver substantial economic benefits to Zimbabwe, including foreign exchange earnings, tax contributions, and strengthened investor confidence in the country’s gold sector.

“We believe Bilboes will transform Caledonia and significantly change our production profile,” Learmonth stated.

“Bilboes should deliver substantial benefits to Zimbabwe: a project of this scale should help Zimbabwe to reclaim its position as a major “gold destination” in the eyes of the international investment community.

The Project should also deliver substantial benefits to Zimbabwe in terms of foreign exchange earnings and tax receipts.

“Caledonia intends to replicate some of the social and community structures it has successfully implemented at Blanket Mine.

These have delivered significant benefits to the local community in terms of the ownership in Blanket by the Gwanda Community Share Ownership Trust, and Blanket’s community and social investment programmes.

“I look forward to providing future updates on development.”