Caledonia splurges US$4m on Zimbabwe gold mine

DUAL-LISTED resources giant, Caledonia Mining Corporation is set to buy Pan African Mining's Maligreen goldfields near Gweru to develop its second bullion assets in two decades.

The asset is worth US$4 million, according to a statement released by the firm.

Caledonia already operates Blank Mine, one of Zimbabwe's biggest gold operations near Gwanda, but has been looking out for fresh opportunities to give impetus to its multi-asset strategy in the southern African country.

The claims are estimated to be holding up to 940 000 ounces of gold, which are likely to be cheaply

exploited using an open cast mining operation because they are closer to the surface, according to a statement released by Caledonia.

"The property has significant potential and has benefitted from many years of exploration activity," Caledonia chief executive officer, Steve Curtis said in the statement.

"Initial evaluation of the inferred mineral resource by our own team and by independent consultants indicates the potential for a significant mining operation with a NI 43-101 compliant inferred mineral resource of almost one million ounces at a grade of 1,88g/t, an acceptable open pit grade," said the firm, which recently commissioned Central Shaft, one of Zimbabwe's deepest gold pits, at a cost of US$67 million.

"This transaction is an important next step as Caledonia pursues its strategy to become a multi-asset gold producer in Zimbabwe, one of the last gold frontiers in Africa," Curtis said.

The investment gave Blanket capacity to push output to 80 000 ounces per annum beginning next year, from 55 000 ounces currently.

In May last year, Caledonia financial director, Mark Learmonth indicated that the firm was positioning to pounce on small-sized brownfield investments that could be brought to production at low cost.

Caledonia in May placed on ice exploration at Glen Hume, the Midlands-based goldfields, after results failed to live up to the resources giant's expectations.

Curtis said the size, grade and width of Glen Hume fell short of what Caledonia had expected when it ventured into the exploration of the claim that lies at the heart of sprawling mineral claims in one of the country's richest regions.

In December last year, Caledonia announced that it had entered option agreements on Glen Hume and Connemara.

These deals gave the company the right to explore each property for periods of between 15 and 18 months.

In a statement accompanying the group's financial results for the quarter ended June 30, 2021,

Curtis said the excursion into Glen Hume had produced "disappointing exploration results".

"Higher production, lower costs and a higher gold price resulted in a significant increase in the underlying profitability of our business with gross profit increasing by 51% compared to the comparable quarter in 2020," Curtis said in a commentary to the financial statements.

"Net profit was adversely affected by the impairment of the Glen Hume exploration asset following the board's decision not to proceed further with this project because the property does not meet Caledonia's strategic requirements in terms of size, grade and width," the Caledonia CEO said.