Caledonia is committed to evaluating investment opportunities in Zimbabwe with a vision to become a multi asset gold producer in one of the last gold frontiers in Africa.
In December 2020 the Company announced that it had entered into an option agreement which gives the Company the exclusive right to explore and subsequently, if exploration is successful and at its sole discretion, acquire the mining claims over the area known as Glen Hume a property situated in the Gweru mining district in the Zimbabwe Midlands that has historically produced significant quantities of gold.
Caledonia believes that Glen Hume offers significant exploration potential. The agreement covers an area of approximately 350 hectares with substantial evidence of gold mineralisation including historical mining activity. Caledonia has conducted airborne geophysics which indicates attractive exploration targets and has also conducted preliminary metallurgical work indicating favourable grade and recovery. A preliminary contract has been signed with the existing drilling contractor and a drill programme has been put in place.
Caledonia has acquired the right to explore the area for a period of up to 15 months and subsequently, if exploration is successful and at its sole discretion, acquire the mining claims over the area. The total consideration is an initial payment of $2.5 million in cash, followed by a further payment of $2.5 million (payable in cash or shares at the discretion of the vendor) which would be payable should Caledonia decide to exercise its right to acquire the mining claims.
Caledonia has agreed to the payment of a one per cent net smelter royalty (“NSR”) to the vendor on gold it produces from the area. The NSR can subsequently be bought out at Caledonia’s discretion for a lump sum payment of $15 million within the first five years following the acquisition by Caledonia of the claims, or $10 million until the tenth anniversary of operation or $5 million thereafter.
In December 2020, shortly after the announcement of Glen Hume, the Company announced a further option agreement which gives the Company the exclusive right to explore and subsequently, if exploration is successful and at its sole discretion, acquire the mining claims over an area known as Connemara North, a property which, like Glen Hume, is situated in the Gweru mining district in the Zimbabwe Midlands that has historically produced significant quantities of gold.
Connemara North is the northern section of the currently closed Connemara mine which was previously owned by First Quantum Minerals; it was placed on care and maintenance in 2001 and subsequently disposed of in 2003. It has not been commercially mined since this time but before being placed on care and maintenance the Connemara mine produced approximately 20,000 ounces of gold per annum from an open pit heap leach operation. Previous public disclosures made by First Quantum in 2001 indicated that they had plans to expand the existing open pit operations at Connemara mine, when gold prices were approximately $300/oz. At this stage it is not possible for Caledonia to verify any of the work performed by previous owners or to ascertain what proportion of any purported resource lay within the boundaries of the Connemara North property over which Caledonia has secured the option. The property is approximately 30km from Glen Hume with good road access between them offering the potential of operating synergies should Caledonia decide to develop both areas.