Caledonia Mining to go ahead with Bilboes project
By Josh White
Date: Tuesday 25 Nov 2025
(Sharecast News) - Caledonia Mining has approved the development of the Bilboes gold project in Zimbabwe, it announced on Tuesday, after a feasibility study confirmed strong economics under multiple price scenarios and projected annual output of about 200,000 ounces in its first full year of production.
The AIM-traded company said the study supported a single-phase development as the most efficient approach, with life-of-mine production of 1.55 million ounces over 10.8 years and all-in sustaining costs of $1,061 an ounce.
First production was expected in late 2028, with steady-state operations in 2029.
The project's proven and probable reserves totalled 1.75 million ounces at 2.26 grams per tonne, with measured and indicated resources of 532,000 ounces and inferred resources of 984,000 ounces.
It said the ore is refractory, adding that it had selected Metso's BIOX processing technology following extensive evaluation.
Plant throughput was expected to average 240,000 tonnes per month for the first six years, falling to 180,000 tonnes thereafter, with recoveries ranging between 83.6% and 88.9%.
At a long-term gold price of $2,548 an ounce, the feasibility study estimated a post-tax net present value of $582m at an 8% discount rate and an internal rate of return of 32.5%, with a payback period of 1.7 years.
Using the September spot price of $3,648 an ounce, post-tax NPV rose to $1.23bn and the IRR exceeded 50%.
Even at the three-year trailing average gold price of $2,350 an ounce, the project would generate an NPV of $454m and a 27.4% IRR.
Peak funding requirements remained $484m across all price scenarios.
Caledonia said the funding plan was designed to minimise equity dilution and maximise per-share value uplift.
The company said it expected to fund the project primarily with non-recourse senior debt, supplemented by internal equity from Blanket Mine and instruments such as royalties, streams, mezzanine funding or convertible bonds.
Management also anticipated an additional $150m would be needed across interest, working capital and cost-overrun facilities.
A phased fundraising approach would provide early liquidity for the procurement of long lead-time items, with a full financing package targeted for late 2026 or early 2027.
To underpin cash flows during the peak investment period, Caledonia recently hedged 3,000 ounces of monthly production from Blanket Mine for three years at a strike price of $3,500 an ounce.
The hedging, costing $13.5m, was intended to support $200m of cash receipts between 2026 and 2028.
Chief executive Mark Learmonth described the decision to proceed as "a defining moment for Caledonia in our journey to become a mid-tier gold producer."
"This feasibility study confirms that the project has robust economics, delivering 1.55 Moz over 10.8 years with first production expected in late 2028," he said.
"This project has been decades in the making and represents the culmination of an extraordinary amount of work by our team and our partners and by the previous owners of the project."
He added that the company believed Bilboes would "transform" Caledonia and "significantly change" its production profile.
"The project should also deliver substantial benefits to Zimbabwe in terms of foreign exchange earnings and tax receipts," noting that community and social participation structures similar to those at Blanket Mine are planned.
Bilboes, located 80 kilometres north of Bulawayo, was acquired in 2023 for $65m in Caledonia shares plus a 1% royalty.
The project is fully permitted and covers 2,732 hectares, with further exploration potential both on site and at the nearby Motapa property.
FEED work would begin immediately, with construction expected to take about two years once funding was secured.
At 1032 GMT, shares in Caledonia Mining Corporation were up 3.59% at 2,165p.
Reporting by Josh White for Sharecast.com.
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