The African Development Bank (AFDB) has expressed keen interest in financing Caledonia Mining Corporation’s proposed $250 million gold mine project in Zimbabwe, as revealed by Mark Learmonth, the company’s CEO.
According to reports from Reuters, Caledonia, which already operates a blanket gold mine in Zimbabwe, is undertaking a feasibility study to develop a new mine at Bilboes. This new mine is projected to have a production capacity of 170,000 ounces of gold annually, potentially making it the largest gold mine in the country.
During a conference call, Learmonth stated that the company is engaged in initial discussions with the “most likely lenders,” with African development banks displaying a notable interest in the project. He emphasized that debt financing would constitute the primary source of funding for the project, highlighting the cost-effectiveness of debt funding compared to other sources.
“We will not be seeking non-debt funding until we have a clearer picture of the debt capacity because nothing will be as cost-effective as debt financing,” Learmonth remarked.
He further outlined that once funding is secured, which could take approximately a year, the mine construction is expected to be completed within two years.
Before the potential funding announcement, Caledonia reported a 62% decline in operating profit to $15.18 million in 2023, compared to $40.28 million in the previous year, primarily attributed to increased administrative and production costs.
Caledonia, supported by global financial giant Blackrock and Cape Town-based fund manager Allan Gray, stands out as one of the few foreign investors in Zimbabwe, navigating the challenges posed by the country’s tough economic environment characterized by foreign exchange shortages and hyperinflation.
Key Points to Note:
- Zimbabwe possesses substantial mineral resources, including platinum group metals, gold, and lithium. Despite this, attracting foreign investors has been challenging due to economic instability and concerns over property rights.
- The country boasts the world’s second-largest platinum deposit and high-grade chromium ores, with proven reserves of 2.8 billion tonnes of platinum group metals and 10 billion tonnes of chromium ore.
- The mining sector contributes approximately 12% to Zimbabwe’s Gross Domestic Product (GDP) and accounts for 80% of national exports.
