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*Caledonia Agrees To Buy Bilboes Gold Mine*

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Caledonia Mining has agreed to buy Bilboes gold mine for US$53 million worth of stock.

The company already owns Blanket Mine and has stated its ambitions to buy more mines to increase the number of its assets.

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The new deal involves Bilboes getting 5,123,044 Caledonia shares, or 28.5% of Caledonia’s fully diluted equity, plus a 1% net smelter royalty on the project’s revenues.

Based on Caledonia’s closing share price of US$10.40 per share on the New York Stock Exchange on Wednesday, the value of the stock is US$53,279,658, reported newZWire.

Caledonia CEO Mark Learmonth said the deal that could increase Caledonia’s gold output by four times. He said:

> 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% attributable share of gold production from Blanket, resulting in production from the enlarged Caledonia group being potentially four times its current size.

Bilboes has proven and probable mineral reserves of 1.96 million ounces of gold at a grade of 2.29 g/t and measured and indicated mineral resources of 2.56 million ounces of gold at a grade of 2.26 g/t.

It has inferred mineral resources of 577,000 ounces of gold at a grade of 1.89 g/t.

The Project has produced approximately 288,000 ounces of gold since 1989.

Meanwhile, Caledonia said it will only complete the transaction if Bilboes can get reassurance from the Zimbabwe government that it can export gold directly and retain 100% of the sale proceeds in US dollars.

Currently, mines must sell 40% of their export earnings to the Reserve Bank of Zimbabwe (RBZ) at the official rate.

More: newZWire

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