Caledonia Mining buys lease over Zimbabwe's Motapa

The AIM-traded firm said it made the purchase from Bulawayo Mining Company - a privately owned UK company - at an undisclosed purchase price, below the regulatory disclosure threshold.

It said it considered Motapa to be “highly prospective” and “strategically important” to its growth ambitions in Zimbabwe, in terms of both location and scale.

Motapa is a large exploration property, which is contiguous to the Bilboes gold project, over which Caledonia entered into a binding sale and purchase agreement in July.

The project was formerly owned and explored by Anglo American Zimbabwe, before that company’s exit from the Zimbabwean gold sector in the late 1990s.

Caledonia said the project is about 75 kilometres north of Bulawayo, with a mining lease covering around 2,200 hectares.

The Motapa asset had been mined throughout most of the second half of the 20th century, with the company saying it understood that during the period, the region produced as much as 300,000 ounces of gold.

While none of the mining infrastructure remained, the evidence of historical mining would provide guidance to the firm’s exploration team in best understanding the prospectivity of the region.

“Given its large scale, excellent geological prospectivity and its strategic location adjacent to Bilboes, Motapa was a high priority acquisition for Caledonia,” said chief executive officer Mark Learmonth.

“We look forward to developing an exploration program for Motapa as we target a large-scale gold belt surrounding the Bilboes project.

“With the central shaft at Blanket now fully operational and production targeting 80,000 ounces of gold per year, we anticipate that we will deploy the incremental cash flow arising from Blanket into our exciting exploration and project development portfolio in Zimbabwe.”

Learmonth said the acquisition of Motapa, following the signing of a sale-and-purchase agreement to acquire Bilboes and the acquisition of Maligreen, demonstrated that over the last year the company had established a pipeline of “high-quality” exploration and development projects.

“This is in addition to the potential for further growth at Blanket where we are optimistic about its exploration potential.”

At 1501 GMT, shares in Caledonia Mining Corporation were up 1.59% at 924.5p.

Reporting by Josh White for Sharecast.com.