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Oliver Kazunga Senior Business Reporter

CALEDONIA Mining Corporation, which operates Gwanda based gold producer, Blanket Mine, is courting Zambian authorities over a power purchase agreement to import electricity directly for its planned gold asset acquisition.

Last week, Caledonia, one of the largest gold producers in Zimbabwe, announced that it was in the process to acquire Bilboes Gold Limited for US$53,3 million.

Speaking during a media briefing in Harare on Tuesday evening, Caledonia chief executive officer, Mark Learmonth, said the decision to import power through the national grid was part of the agreement they have made with the Government.

“We are also looking for a Power Purchase Agreement (PPA) outside Zimbabwe so that power can be fed into the Zimbabwe grid to the project and there we had a very constructive conversation with the Ministry of Energy  and Power Development today (Tuesday), so we are pleased we will get those conditions precedent.

“We have got someone going to Lusaka to engage the Zambian authorities,” he said.

Should the PPA deal with Zambian authorities sail through, Mr Learmonth, said this would be complemented by a small diesel generator and standby solar to support operations at Bilboes.

At present, Zimbabwe is grappling with acute power shortages forcing Zesa to resort to extensive hours of load shedding due to constant breakdowns at the country’s largest thermal power plant, Hwange as well as small thermal power stations.

Bilboes presently has a functional oxide mining and metallurgical plant in Bubi, which has historically produced up to 20 000oz of gold per annum and is on care and maintenance.

Caledonia will enter into a tribute agreement with Bilboes to mine the oxide and transitional ore.

It is believed that the tribute agreement will commence as soon as it is registered with relevant authorities and will continue until completion of the transaction.

The cumulative maximum funding cost to restart the oxides is expected to be in the range of US$3 million to US$5 million and the oxide mining operation is expected to take an estimated six months to restart and repay the initial funding costs.

Regarding Bilboes gold operation acquisition, Learmonth said: “We are delighted to have signed an agreement for the purchase of Bilboes, the premier gold development project in Zimbabwe, and indeed one of the best gold development projects in Africa.

“This is a transformational asset for Caledonia, as we embark on the next step in our journey to become a multi-asset, mid-tier gold producer.

“Once in full production (which will be subject to financing of the capex) Caledonia’s management believes that Bilboes could produce three times our current 64 percent attributable share of gold production from Blanket, resulting in production from the enlarged Caledonia group being potentially four times its current size.”

It is hoped that the acquisition of Bilboes will build on the recent acquisition of the Maligreen claims which host N1 43-101 compliant inferred mineral resources of 940 000oz of gold in 15,6 million tonnes at a grade of 1,88 grammes per tonne.

Towards the end of last year, the mining group announced that it had bought the Maligreen Goldfields in Gweru in the Midlands province for about US$4 million.

In December 2020, the mining concern announced that it had bought a US$2,5 million option over a gold exploration prospect, Glen Hulme also in Gweru.