Caledonia Mining is set to announce the first acquisition of an expansion strategy in its Zimbabwe base by the end of 2020. The mining firm currently operates the 58,000 ounce a year Blanket mine. Whilst the company is expanding Blanket to about 80,000 oz a year by 2022, it has alluded in the past to production growth by acquisition.
According to media reports, this move has numerous risks. However, a spokesperson from the firm said that some of those risks are mispriced by the market. Furthermore, it has been seen that Zimbabwe offers good return for acceptable risk. Mines mothballed by the government and operating mines were on Caledonia’s radar.
Caledonia CEO, Steve Curtis, signed a memorandum of understanding with the Zimbabwe government on Monday to evaluate some of the gold assets of Mining Development Corporation, a state-owned company, pending possible purchases, said the newswire.
“We are excited to start our exercise in evaluating the potential that is inside that portfolio,” said Steve Curtis, MD of Caledonia at a ceremony in Harare attended by the country’s president Emmerson Mnangagwa.
Mason said mining investors are concerned by existing obligations to sell their gold to the nation’s central bank, and Caledonia would be interested in discussing alternative arrangements for any new investments.
“Zimbabwe is very attractive geologically and we are serious about growing our operations in the country,” Mason said. “The government is saying they are committed to helping us with the regulatory framework there, but looking specifically at state assets.”
The current Blanket mining area has eight ore shoots in the producing section of the mine. The majority of the mine production is sourced at present from the AR Main and AR South ore bodies with a lesser contribution from the Blanket, Eroica and Lima reefs. AR Main and AR South are massive ore bodies up to 30 m wide and are ideally suited to the long-hole open stope mining method, while the remainder of the Blanket ore bodies are tabular and better suited to underhand stoping methods.
