Caledonia Mining agrees to buy Maligreen project claims

Caledonia Mining Corporation has entered into an agreement to purchase the mining claims over the Maligreen project in the Gweru mining district of the Zimbabwe Midlands, it announced on Thursday, from privately-owned local company Pan African Mining.

The AIM-traded firm said the acquisition carried a total cash consideration of $4m, with the property estimated to contain an NI 43-101-compliant inferred mineral resource of around 940,000 ounces of gold.

It described Maligreen as a “substantial” brownfield exploration opportunity with “significant” historical exploration and evaluation work having been conducted on the property over the last 30 years.

That work included an estimated 60,000 meters of diamond core and percussion drilling, 3.5 tonnes of bulk metallurgical test work, and aeromagnetic and ground geophysical surveys.

As at 31 August, Maligreen was estimated to host an inferred mineral resource of about 940,000 ounces of gold in 15.6 million tonnes, at a grade of 1.88 grams per tonne.

Caledonia said 76% of the inferred mineral resource, or 712,000 ounces, was shallower than 220 metres, indicating the potential for an open pit mining operation.

The inferred mineral resource was estimated using a cut-off grade of 0.4 grams per tonne for a potential open pit, and 1.5 grams per tonne for a potential underground mine.

Initial assessments of the inferred resource indicated a favourable grade tonnage curve, with the company explaining that by applying a higher cut-off grade of one gram per tonne, the total estimated resource reduced by 12% to around 827,000 ounces at a grade of 2.79 grams per tonne, or a 48% higher grade.

Those favourable grade tonnage dynamics offered a high level of flexibility in the evaluation of a future mining operation, the board claimed.

The total land area of Maligreen totalled around 550 hectares, comprising two historic open pit mining operations which produced about 20,000 ounces of gold mined from oxides between 2000 and 2002, after which the operation was closed.

Caledonia said it was expecting to drill an initial 4,800 meters at an estimated cost of $1.6m over 18 to 24 months to improve its understanding of the existing resource, and assess the potential for a mining operation.

Further exploration opportunities existed within the claims area, and a subsequent exploration programme was under consideration to explore for continuations of the existing inferred mineral resource at depth to the north-west and the strike extension in the northern part of the property.

“We are delighted to enter into this agreement to purchase the claims over Maligreen, one of the more significant exploration opportunities in Zimbabwe,” said chief executive officer Steve Curtis.

“The property has significant potential and has benefitted from many years of exploration activity.

“Initial evaluation of the inferred mineral resource by our own team and by independent consultants indicates the potential for a significant mining operation with a NI 43-101 compliant inferred mineral resource of almost one million ounces at a grade of 1.88g/t, an acceptable open pit grade.”

Moreover, Curtis said the company’s understanding of the grade tonnage curve indicated that the deposit was likely to offer a “high level of mining flexibility”, although much more work was needed in that area.

“We believe the property also offers significant upside exploration potential at the north-west extensions to the existing inferred mineral resource and at additional exploration targets in the northern part of the property.

“This transaction is an important next step as Caledonia pursues its strategy to become a multi-asset gold producer in Zimbabwe, one of the last gold frontiers in Africa.”

At 1202 BST, shares in Caledonia Mining Corporation were up 0.56% at 905p.