The African Development Bank (AFDB) has shown great interest in funding Caledonia Mining Corporation’s planned $250 million gold mine in Zimbabwe.
The information was relayed by Mark Learmonth the company’s CEO.
According to Reuters, Caledonia which already owns a blanket gold mine in Zimbabwe is conducting a feasibility study with the aim of constructing a new mine at Bilboes with a capacity to produce 170,000 ounces of gold annually, making it potentially the country’s biggest gold mine.
The company is in preliminary talks with the “most likely lenders”, Learmonth said during a conference call.
- “They are going to be African development banks who have indicated a high degree of interest in this project,” he said.
The CEO explained that debt would form bulk of the funding for the project.
- “We will not be approaching the market for any non-debt funding until we’ve got a better idea of what the debt capacity is because, frankly, nothing is going to be as cheap as debt funding,” Learmonth said.
The CEO further explained that as soon as funding is in place which might take a year, construction of the mine should be done in two years.
Before the promise of this new funding, Caledonia’s operating profit plunged 62% to $15.18 million in 2023, from $40.28 million a year earlier, mainly due to higher administrative and production costs.
Caledonia backed by global financial powerhouse Blackrock and Cape Town-based fund manager Allan Gray is one of the few foreign investors in Zimbabwe braving its tough economy market plagued by foreign exchange shortages and hyperinflation.
What to Know
- Zimbabwe as a country has significant mineral resources including platinum group metals, gold and lithium. Despite its resource, the country has struggled to attract foreign investors due to economic instability and fears over property rights.
- Zimbabwe boasts of the second largest platinum deposit and high-grade chromium ores in the world. It has a proven 2.8 billion tonnes of platinum group metals and 10 billion tonnes of chromium ore
- The Mining sector accounts for about 12 percent of the country’s Gross Domestic Product (GDP) and 80% of national exports.