Caledonia Mining has approved construction of the Bilboes Mine, after a feasibility study projected strong returns for what would be Zimbabwe’s biggest gold mine. The company has now started raising part of the US$484 million needed for a project that it says will help restore Zimbabwe’s reputation as “a major gold mining destination”. Caledonia bought Bilboes in 2023 for US$65 million in shares, part of a strategy to expand its portfolio beyond Blanket Mine.
Since then, it has been working out the most efficient way to develop the asset. It is going with a phased capital raise to minimise shareholder dilution. The company aims to secure full financing by late 2026 or early 2027, with first production in 2028.
Over its 10.8-year life, Bilboes will produce 1.55 million ounces. In its first full year, 2029, output is forecast at 200,000 ounces, more than twice Blanket Mine’s current production, and above other local miners. CEO Mark Leamonth says: “Bilboes should deliver substantial benefits to Zimbabwe: a project of this scale should help Zimbabwe reclaim its position as a major ‘gold destination’ in the eyes of the international investment community.” Using a gold price of US$2,548/oz, the project has a capital cost of US$584 million and peak funding needs of US$484 million.
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It is expected to deliver a strong 32.5% post-tax return, with investors getting their money back in just 1.7 years. Caledonia, advised by Cutfield Freeman & Co, plans to use non-recourse senior debt as the main source of capital. These are loans secured only against the project’s assets and cashflows, and not against the wider company.
This reassures lenders that the mine can repay itself. Other funding will come from equity contributions from Blanket Mine and instruments such as royalties, metal streams — where a financier pays upfront cash in return for buying a share of future gold — and mezzanine funding, such as bonds. To speed up development, Caledonia is already lining up the money to order long lead-time equipment in the second half of 2026.
The company has also launched a three-year hedging programme using put options with Auramet International and Standard Bank of South Africa. These act like insurance by guaranteeing a minimum gold price and making sure Caledonia has stable cashflows during construction. Caledonia has hedged 3,000 ounces per month at US$3,500/oz.
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