Blanket mine shaft
Gold miner Caledonia Mining Corporation has confirmed that it will develop the Bilboes sulphide gold project, in Zimbabwe, in a single phase instead of multiple phases as initially planned, and with a revised approach to the tailings storage facility (TSF).
In a preliminary economic assessment (PEA) published on May 30, Caledonia and consultancy DRA Projects finds that the TSF will be built on a modular basis to reduce initial capital expenditure and improve economic returns; however, this revised approach constitutes a significant change to the project.
Caledonia advises that a new technical and economic study related to the TSF will be undertaken and that, owing to the significance of the TSF to the overall project, the company will upgrade the confidence level of the study in respect of the TSF so that the entire body of work on the project may be classified as a feasibility study.
Although the prior owners of the project published a feasibility study on the project in 2015, Caledonia’s PEA is a culmination of optimised studies having been done on the project since January last year, when Caledonia acquired Bilboes.
The PEA supersedes the former feasibility study until another feasibility study is published. Caledonia expects to publish a feasibility study during the first half of 2025.
Meanwhile, the PEA confirms that single-phase development of Bilboes will provide improved cash generation and lower cost of capital, as well as enhanced debt financing, compared with phased development alternatives.
The project is poised to yield 1.5-million ounces of gold over an initial ten-year mine life, according to measured and indicated mineral resources.
Caledonia and DRA have determined a payback period of 1.9 years and an internal rate of return of 34% for the project at a gold price of $1 884/oz, and an all-in sustaining cost of $968/oz.
The capital cost is currently expected to be $403-million.
“The board's decision to proceed with the single-phase development option for Bilboes represents a key strategic milestone in our journey to becoming a multi-asset, midtier gold producer.
“Notwithstanding the general inflationary increase in operating costs and capital costs over recent years, the PEA reconfirms that Bilboes is a high-quality mid-scale asset that can generate attractive economic returns,” says Caledonia CEO Mark Learmonth.
He adds that the PEA also confirms the project’s attractive production profile with the potential to almost triple Caledonia’s production capacity to more than 200 000 oz/y in combination with production from Blanket mine.
“The peak funding requirement for the project is expected to be about $309-million, with a sizable proportion funded through debt.
“The company and, in the past, Bilboes’ previous owners, have had highly positive engagements with prospective debt providers and we now propose to re-engage with these providers in parallel with the process of preparing the new feasibility study,” Learmonth concludes.