Caledonia Mining Targets 200,000+ Gold Ounces Annually as Bilboes Development Advances

Key Points

• Caledonia Mining targets annual gold production above 200,000 ounces from 2029, driven by the Blanket Mine expansion and development of the Bilboes project in Zimbabwe.
• Blanket’s seven-day operating schedule and new oxide resource could raise production from roughly 70,000–75,000 ounces to nearly 90,000 ounces annually.
• Bilboes is expected to produce about 200,000 ounces per year, with projected capital requirements near $600 million; funding includes a $150 million convertible-note offering, an interim bank facility and planned project financing.

Caledonia Mining NYSEAMERICAN: CMCL outlined plans to increase gold production to more than 200,000 ounces annually from 2029 onward, supported by expansion at its Blanket Mine and development of the wholly owned Bilboes gold project in Zimbabwe.

During a company presentation, Mark said Caledonia has evolved from a single-asset operator into a portfolio of producing, development and exploration assets. The company currently has four assets: the producing Blanket Mine, the Bilboes development project, the adjacent Motapa exploration property and Maligreen.

“From 2025 onwards, we’re now going to transition into being a multi-asset, mid-tier producer, targeting production of over 200,000 ounces a year,” Mark said.

Blanket Mine expansion

Caledonia owns 64% of Blanket Mine, which it acquired from Kinross in 2006 for $4 million. The remaining ownership is held by employees, the local community and the Zimbabwean government, according to the presentation. Mark said the operation currently produces approximately 70,000 to 75,000 ounces annually and has 2.2 million ounces of measured and indicated resources following a recent resource upgrade.

The company is working to convert the expanded resource base into an updated life-of-mine plan, which Mark said it expected to publish toward the end of the month. He said the plan should support a “significant increase” in Blanket’s annual production run rate.

Caledonia recently moved Blanket to a seven-day work schedule from six days. While the change was primarily intended to address worker fatigue, Mark said it should add roughly 100,000 tonnes of annual run-of-mine production at grades above 3 grams per tonne, translating into an estimated 8,000 to 9,000 additional gold ounces.

The company also announced an open-pittable oxide resource on the Blanket property. Commercialization is expected to begin before year-end and could contribute an additional 4,000 to 5,000 ounces per year, Mark said. Together, the initiatives provide a path to production of close to 90,000 ounces annually, he added.

Blanket generates cash to fund corporate overhead, dividends and a modest contribution toward development of Bilboes, according to the presentation.

Bilboes development and projected economics

Caledonia acquired the Bilboes asset in 2023 for approximately $65 million plus a 1% net smelter return royalty. The project contains about 2.5 million ounces of measured and indicated resources at an average grade of 2.3 grams per tonne, Mark said.

Work on the fully owned, open-pit project has started, with personnel now on site. Mark described varying timing for initial output during the presentation, citing first gold in the fourth quarter of 2029 while also referring to production beginning toward the back end of 2028 and 2029 as the first full year of production.

At a gold price near $4,000 per ounce, Mark said Bilboes has an estimated net present value of more than $1.5 billion, an ungeared post-tax internal rate of return of nearly 60% and a mine life of nearly 11 years. He said the project’s all-in sustaining cost at current gold prices, including government royalties, would be about $1,145 per ounce.

Mark said Bilboes is expected to produce about 200,000 ounces annually, with production deliberately front-loaded to improve economics. Caledonia expects the neighboring Motapa property could eventually help smooth Bilboes’ production profile.

Funding strategy and liquidity

Caledonia outlined a four-part funding strategy for Bilboes. The company has established a $3,500-per-ounce floor price hedge on Blanket cash flows through out-of-the-money put options, at an upfront cost of approximately $13 million. The hedge allows the company to retain gold-price upside, Mark said.

In January, Caledonia completed a $150 million U.S. convertible-note offering after initially seeking $100 million. Mark said the transaction was more than four times oversubscribed and included a $20 million capped-call product that increased the conversion premium to 50% from the standard 25% premium.

The company is also nearing completion of an approximately $150 million interim funding facility with Zimbabwean banks. Mark said Caledonia expected the facility to close by the end of October, subject to final documentation. A longer-term traditional project financing package of about $300 million to $350 million is expected within six to nine months, with a portion intended to repay the interim facility.

Total project requirements include about $485 million in capital costs, approximately $80 million in capitalized interest during construction and $25 million in working capital, for a total near $600 million, according to the presentation. At the end of the second quarter, Caledonia had $172 million in cash and $13 million in bullion, for total available liquidity of about $200 million.

Zimbabwe operations and Motapa exploration

Mark said Caledonia has distributed more than $250 million to Zimbabwean stakeholders over the past decade through taxes, royalties and local ownership interests. He also cited a total shareholder return of about 1,200% over 10 years, including reinvested dividends.

Addressing Zimbabwe’s investment environment, Mark said conditions have “improved substantially” since Caledonia entered the country in 2006. He pointed to currency stability and changes intended to make the country easier to do business in, while noting that the oversubscribed convertible-note financing reflected growing international investor interest.

At Motapa, which Caledonia acquired in 2022 for approximately $8 million, the company recently reported a maiden measured, indicated and inferred resource of more than 500,000 ounces. Mark said the resource was discovered at a cost of about $15 per ounce and could provide future feed for the adjacent Bilboes operation.

About Caledonia Mining (NYSEAMERICAN:CMCL)

Caledonia Mining Corporation Plc is a gold exploration, development and mining company focused primarily on Zimbabwe. Its principal operating asset is the Blanket Gold Mine, an underground operation near Gwanda in the southwest of the country. Blanket produces gold doré, which is refined for sale through established precious-metals markets.

Caledonia also holds the Bilboes gold project and the Motapa exploration property in Zimbabwe. Bilboes is a large-scale gold project acquired by Caledonia in 2023, while Motapa provides additional exploration and development opportunities in the country.

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