Caledonia Mining Corporation Plc (“Caledonia” or the “Company”)
(NYSE AMERICAN: CMCL; AIM: CMCL; VFEX: CMCL) is pleased to announce
that the Company will shortly be filing a preliminary economic
assessment in accordance with Canada’s National Instrument 43-101 -
Standards of Disclosure for Mineral Projects (“NI 43-101”) on
SEDAR+ (the “PEA”) for a single-phase development of the Bilboes
sulphide gold project (the "Project"). A copy of the PEA, which is
entitled “Bilboes Gold Project Preliminary Economic Assessment”
with effective date May 30, 2024 prepared by DRA Projects (Pty) Ltd
(“DRA”), and reflecting the summary information contained in this
announcement, will also be available on the Company’s website at
www.caledoniamining.com/investors/technical-reports/. All dollar
figures are in U.S. dollars unless otherwise noted.
The PEA reflects the work that has been done by
Caledonia and its consultants over the period since the Project was
acquired by Caledonia in January 2023. This work focussed on
updating the feasibility study in respect of the Project that was
prepared by DRA on behalf of the previous owners of the project and
which had an effective date of December 15, 2021 (the “Former
Feasibility Study”); the work also considered alternative
development options for the Project, which included multi-phase
development and changes to certain aspects of the Project. The main
change to the Project development plan that has been made relates
to the proposed construction of the Tailings Storage Facility
("TSF"), which will now be constructed on a modular basis to reduce
the initial capital expenditure and therefore improve the economic
returns. The revised approach to the TSF constitutes a “significant
change” to the Project and requires the preparation of an entirely
new technical and economic study. The work that has been carried
out to date in respect of the revised approach to the TSF is to the
level of a preliminary economic assessment and not to the level of
a feasibility study. Due to the significance of the TSF to the
overall Project, the entire body of work that has been completed to
date is therefore at the level of confidence of a preliminary
economic assessment. Over the course of the next 9 months, the
Company intends to upgrade the confidence level of the study in
respect of the TSF so that the entire body of work on the Project
may be classified as a feasibility study which will be published in
due course.
The PEA therefore supersedes the Former
Feasibility Study.
Highlights of the PEA
The publication of the PEA will follow the
Company’s decision to advance the Project to the execution stage in
a single-phase development instead of multiple phases. This
decision followed an evaluation of different development options,
revealing that the single-phase approach is expected to yield
superior returns.
- Publication of PEA for a
single-phase development of the Project.
- Single-phase development is
expected to provide improved cash generation allowing for a lower
cost of capital due to enhanced debt financing capacity than phased
development alternatives.
- Project to yield approximately 1.5
million ounces of gold (based on measured and indicated mineral
resources) over an initial 10-year life of mine at an all-in
sustaining cost of $968 per ounce. See below for mineral resource
table. (Note that mineral resources are not mineral reserves and
have no demonstrated economic viability.)
- Payback period of 1.9 years at a
gold price of $1,884 per ounce.
- New single-phase feasibility study
commissioned (the “New Feasibility Study”) that is expected to be
delivered during the first half of 2025.
- Funding solutions being progressed
in tandem with work on the New Feasibility Study.
Summary of the revisions made to the
single-phase development plan
The Company incorporated several material
revisions to the original single-phase development plan (as set out
in the Former Feasibility Study) which include:
- Revised designs for the TSF to
incorporate a modular construction approach and reduce upfront
capital.
- Revised pit designs to reduce
upfront capital.
- A review of the cost of the process
plant and infrastructure, in particular sourcing major equipment
and steelwork from alternative suppliers to reduce costs.
- Reassessing the phasing of the mine
village establishment.
- A review of the operating
expenses and general and administrative expenses with the
availability of shared resources now that the Project is part of
the Caledonia group.
The results of the evaluation confirmed that the
single-phase development option, that incorporates rephased capital
spending, revised costs and applies updated gold prices is expected
to offer more appealing returns than multi-phased development
options. This approach is also anticipated to generate cash returns
capable of accommodating a lower cost of capital due to an
increased debt capacity compared to the multi-phase development
options. The Company expects that the single-phase development
option will optimise capital allocation and maximise the NPV of the
Project compared to the multi-phase development options.
Further work is required on the selected
single-phase development option to elevate the confidence level of
the PEA towards the New Feasibility Study. DRA has indicated that
this work is expected to be completed in the first half of 2025.
The main focus of this work relates to the TSF, which is
effectively a new undertaking due to the modular construction
approach.
The Company believes that a significant
proportion of the funding requirement for the single-phase
development option may be provided by one or more lenders. The
Company will work with its appointed debt adviser to secure an
acceptable debt funding package in parallel with the process of
preparing the New Feasibility Study.
Summary of economic outcomes in the
PEA*:
Total production (m.oz) |
1.518 |
Life of mine (years) |
10 |
Total capital cost ($’m) |
403 |
Peak funding ($’m) |
309 |
NPV (10%) ($’m) |
309 |
IRR (%) |
34 |
AISC ($/oz) |
968 |
Payback (undiscounted) (years) |
1.9 |
Summary of mineral resource estimate in the
PEA*:
Base Case Mineral Resources (0.9 g/t Au) Reference Point: in Situ
(31 December 2023) |
|
Classification |
Tonnage (Mt) |
Au (g/t) |
Metal (kg) |
Ounces (koz) |
Totals |
Total Measured |
6.128 |
2.51 |
15,382 |
495 |
Total Indicated |
27.522 |
2.26 |
61,446 |
1,976 |
Total Measured and Indicated |
33.650 |
2.30 |
76,828 |
2,470 |
Total Inferred |
9.118 |
1.99 |
17,406 |
560 |
*based on a 0.9g/t Au Cut-Off Grade
- CIM definitions (May
10, 2014) observed for classification of mineral resources.
- Mineral resources
are in situ.
- Block bulk density
interpolated from specific gravity measurements taken from core
samples.
- Resources are
constrained by a Lerchs-Grossman (LG) optimized pit shell using
Whittle software.
-
Mineral resources are not mineral reserves and have no demonstrated
economic viability. The estimate of mineral resources may be
materially affected by mining, processing, metallurgical,
infrastructure, economic, marketing, legal, environmental, social,
and governmental factors (Modifying Factors).
-
The results of the PEA are preliminary in nature and include
inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves, and
there is no certainty that the PEA will be realized. For the risks
in realizing the PEA, please refer to those set out below at
“Cautionary Note Concerning Forward-Looking Information”.
- Numbers may not add
due to rounding.
- The mineral resource
estimate has been depleted to reflect mining up to 31 December
2023.
- Effective Date of
mineral resource estimate is 31 December 2023.
Inferred mineral resources have not been
included in any economic outcomes in the PEA.
No mineral reserves were declared in the
PEA.
Sensitivity analysis in the PEA (NPV (post tax;
$’m)):
|
Discount Rate |
15 |
% |
12.50 |
% |
10 |
% |
7.50 |
% |
5 |
% |
Gold Price |
$1,500 |
31 |
|
59 |
|
94 |
|
137 |
|
191 |
|
$1,700 |
116 |
|
157 |
|
206 |
|
267 |
|
342 |
|
$1,884 |
194 |
|
246 |
|
309 |
|
385 |
|
480 |
|
$2,000 |
243 |
|
302 |
|
373 |
|
460 |
|
567 |
|
$2,200 |
327 |
|
398 |
|
484 |
|
588 |
|
717 |
|
$2,400 |
411 |
|
494 |
|
594 |
|
717 |
|
867 |
|
$2,600 |
495 |
|
590 |
|
705 |
|
845 |
|
1,016 |
|
Mark Learmonth, Caledonia’s Chief Executive Officer,
commented:
“The Board's decision to proceed with the
single-phase development option for Bilboes represents a key
strategic milestone in our journey to becoming a multi-asset,
mid-tier gold producer. Notwithstanding the general inflationary
increase in operating costs and capital costs over recent years,
the PEA re-confirms that Bilboes is a high-quality mid-scale asset
that can generate attractive economic returns. The PEA also
confirms that Bilboes has an
attractive production profile with the potential to
almost triple Caledonia’s production capacity to over 200,000
ounces per annum in combination with production from Blanket
Mine.
“The peak funding requirement for the Project is
expected to be approximately $309 million, with a sizable
proportion funded through debt. The Company and, in the past,
Bilboes’ previous owners, have had highly positive engagements with
prospective debt providers and we now propose to re-engage with
these providers in parallel with the process of preparing the New
Feasibility Study.
“To date, 2024 production at Blanket has been
robust and the Company remains well positioned to deliver returns
to shareholders while expanding our asset portfolio and growing our
production profile. I am very excited by the opportunity we have to
evolve our business, which we believe will generate significant
long term shareholder value.”
Background
Caledonia acquired the Project in January 2023
for 5.12 million consideration shares (28.5% of Caledonia’s fully
diluted equity, valued at approximately $65.7 million at the time)
and a 1% net smelter royalty.
The main objective was to construct a large,
open-pit operation to extract sulphide mineralisation. The Former
Feasibility Study in respect of the Project was prepared by the
previous owners which targeted mine and processing operations to
produce an average of 168,000 ounces of gold per annum over a
10-year life of mine.
Caledonia commissioned an update of the Former
Feasibility Study for the sulphide project reflecting the
prevailing economic environment for capital and operating costs and
a revised gold price outlook. It aimed to identify the most
judicious way to commercialise the Project to maximise future
shareholder value; this explored the Project potentially being
implemented in a single step or on a phased basis over an extended
life of mine and is resulting in the publication of the PEA which
is expected to be converted into the New Feasibility Study in due
course.
Investor
webinar
Investors are invited
to a Zoom webinar for management to discuss the PEA and the
proposed development of Bilboes. The details are as follows:
When: June 6, 2024 02:00 PM London
Topic: Bilboes PEA Investor Call
Register in advance for this webinar:
https://caledoniamining.zoom.us/webinar/register/WN_VkTijABuRNurc_CYsNQWDg
After registering, you will receive a
confirmation email containing information about joining the
webinar.
Enquiries:
Caledonia Mining Corporation PlcMark
LearmonthCamilla Horsfall |
Tel: +44 1534 679 800Tel:
+44 7817 841 793 |
Cavendish Capital Markets
Limited (Nomad and Joint Broker)Adrian Hadden Pearl
Kellie |
Tel: +44 207 397 1965Tel:
+44 131 220 9775 |
Liberum Capital Limited
(Joint Broker)Scott Mathieson / Matt Hogg |
Tel: +44 20 3100 2000 |
Camarco, Financial PR/ IR
(UK)Gordon PooleJulia TilleyElfie Kent |
Tel: +44 20 3757 4980 |
3PPB (Financial PR, North
America)Patrick ChidleyPaul Durham |
Tel: +1 917 991 7701Tel: +1
203 940 2538 |
Curate Public Relations
(Zimbabwe)Debra Tatenda |
Tel: +263 77802131 |
IH Securities (Private)
Limited (VFEX Sponsor - Zimbabwe)Lloyd Mlotshwa |
Tel: +263 (242) 745
119/33/39 |
This announcement contains inside
information which is disclosed in accordance with the Market Abuse
Regulation (EU) No. 596/2014 (“MAR”) as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
and is disclosed in accordance with the Company's obligations under
Article 17 of MAR.
Cautionary Note Concerning
Forward-Looking Information
Information and statements contained in this
news release that are not historical facts are forward-looking
information or forward-looking statements (collectively,
“forward-looking information”) within the meaning of applicable
securities legislation that involve risks and uncertainties
relating, but not limited, to Caledonia’s current expectations,
intentions, plans, and beliefs. Forward-looking information
can often be identified by forward-looking words such as
“anticipate”, “believe”, “expect”, “goal”, “plan”, “target”,
“intend”, “estimate”, “could”, “should”, “may” and “will” or the
negative of these terms or similar words suggesting future
outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions or statements about future events or
performance. Examples of forward-looking information in this news
release include: the willingness of lenders and availability of
funding to construct the Bilboes project and the generation of a
new feasibility study for the project, the planned development of
the Bilboes project, including with respect to the cost of
development and production, project economics, gold price
assumptions, potential mineralization, projected ore grades,
expectations regarding the mine plan, sustaining capital and value
of operations and other statements, shareholder returns, expanding
our asset portfolio and information that is based on forecasts and
projections of future operational, geological or financial or
market results, estimates of amounts not yet determinable and
assumptions of management. This forward-looking information
is based, in part, on assumptions and factors that may change or
prove to be incorrect, thus causing actual results, performance or
achievements to be materially different from those expressed or
implied by forward-looking information. Such factors and
assumptions include, but are not limited to: failure to establish
estimated resources and reserves, the grade and recovery of ore
which is mined varying from estimates, success of future
exploration and drilling programs, reliability of drilling,
sampling and assay data, assumptions regarding the
representativeness of mineralization being inaccurate, success of
planned metallurgical test-work, capital and operating costs
varying significantly from estimates, delays in obtaining or
failures to obtain required governmental, environmental or other
project approvals, inflation, changes in exchange rates,
fluctuations in commodity prices, delays in the development of
projects and other factors.
Security holders, potential security holders and
other prospective investors should be aware that these statements
are subject to known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from
those suggested by the forward-looking statements. Such
factors include, but are not limited to: risks relating to
estimates of mineral reserves and mineral resources proving to be
inaccurate, fluctuations in gold price, risks and hazards
associated with the business of mineral exploration, development
and mining, risks relating to the credit worthiness or financial
condition of suppliers, refiners and other parties with whom the
Company does business; inadequate insurance, or inability to obtain
insurance, to cover these risks and hazards, employee relations;
relationships with and claims by local communities and indigenous
populations; political risk; risks related to natural disasters,
terrorism, civil unrest, public health concerns (including health
epidemics or outbreaks of communicable diseases such as the
coronavirus (COVID-19)); availability and increasing costs
associated with mining inputs and labour; the speculative nature of
mineral exploration and development, including the risks of
obtaining or maintaining necessary licenses and permits,
diminishing quantities or grades of mineral reserves as mining
occurs; global financial condition, the actual results of current
exploration activities, changes to conclusions of economic
evaluations, and changes in project parameters to deal with
unanticipated economic or other factors, risks of increased capital
and operating costs, environmental, safety or regulatory risks,
expropriation, the Company’s title to properties including
ownership thereof, increased competition in the mining industry for
properties, equipment, qualified personnel and their costs, risks
relating to the uncertainty of timing of events including targeted
production rate increase and currency fluctuations. For a
more detailed discussion of such risks and other factors that may
affect the Company’s ability to achieve the expectations set forth
in the forward-looking statements contained in this news release,
see the Company’s latest Form 20-F Annual Report and Management’s
Discussion and Analysis, each under the heading “Risk Factors”,
available on the SEDAR website at www.sedar.com or on EDGAR at
www.sec.gov. The foregoing should be reviewed in conjunction with
the information and risk factors and assumptions found in this news
release.
Security holders, potential security holders and
other prospective investors are cautioned not to place undue
reliance on forward-looking information. By its nature,
forward-looking information involves numerous assumptions, inherent
risks and uncertainties, both general and specific, that contribute
to the possibility that the predictions, forecasts, projections and
various future events will not occur. Caledonia undertakes no
obligation to update publicly or otherwise revise any
forward-looking information whether as a result of new information,
future events or other such factors which affect this information,
except as required by law.
National Instrument 43-101 - Standards of
Disclosure for Mineral Projects ("NI 43-101") is a rule of the
Canadian Securities Administrators which establishes standards for
all public disclosure an issuer makes of scientific and technical
information concerning mineral projects. Unless otherwise
indicated, all resource estimates referred to in the PEA have been
prepared in accordance with NI 43-101 and the Canadian Institute of
Mining, Metallurgy and Petroleum Classification System. These
standards differ from the requirements of the U.S. Securities and
Exchange Commission (the "SEC"), and resource information and
economic analysis contained in the PEA may not be comparable to
similar information disclosed by U.S. companies under SEC
standards.
This news release has
been approved by Mr Craig James Harvey, MGSSA, MAIG,
Caledonia Vice President, Technical Services, the Company's
qualified person as defined in NI 43-101. Mr Sivanesan Subramani
(BSc. Hons (Geology), Pri.Sci.Nat) of Caracle Creek International
Consulting MINRES (Pty) Ltd, and Mr David Alan Thompson (B-Tech, Pr
Cert EngSACMA) and Mr Aveshan Naidoo (BSc Chemical, MBA, PrEng)
each of DRA Projects (Pty) Ltd, the qualified persons responsible
for the PEA, have also reviewed and approved this news release and
the scientific and technical data presented herein. Each of the
qualified persons stated above has verified the data disclosed
herein, including sampling, analytical and test data by reviewing
the methodologies, results and all procedures undertaken in a
manner consistent with industry practice, and all matters were
consistent and accurate according to their professional judgement.
There were no limitations on the verification process.
GLOSSARY
$’m |
Millions of U.S. dollars |
$/oz |
U.S. dollars per ounce |
AISC |
All in sustaining cost |
Au |
Gold |
Caledonia or the Company |
Caledonia Mining Corporation Plc |
CIM |
Canadian Institute of Mining |
DRA |
DRA Projects (Pty) Ltd |
Former Feasibility
Study |
Bilboes Gold Project Feasibility Study prepared by DRA with
effective date of December 15, 2021 and filed by the Company on
SEDAR on July 21, 2022 |
g/t |
Grams per tonne |
IRR |
Internal rate of return |
Kg |
Kilogram |
koz |
Thousand ounces |
m.oz |
Million gold ounces |
MAR |
Market Abuse Regulation (EU) No. 596/2014 |
Mt |
Million tonnes |
New Feasibility
Study |
Feasibility study for the Project expected to be delivered during
the first half of 2025 |
NI 43-101 |
Canada’s National Instrument 43-101 - Standards of Disclosure for
Mineral Projects |
NPV |
Net present value |
PEA |
Bilboes Gold Project Preliminary Economic Assessment with effective
date May 30, 2024 prepared by DRA |
Project or
Bilboes |
Bilboes sulphide gold project |
SEDAR+ |
Canada’s System for Electronic Document Analysis and Retrieval |
TSF
|
Tailings storage facility |
U.S. dollars or
$ |
United States dollars, the currency of the United States of
America |
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