Caledonia Mining (CMCL, CMCL.L) has announced it has entered into an agreement to acquire the mining claims over the Maligreen gold project in Zimbabwe. Caledonia will be paying US$4M in cash to the vendor Pan African Mining, a private company.
The project is actually a relatively late stage exploration project as Maligreen already hosts an inferred resource estimate of about 940,000 ounces of gold (15.6 million tonnes at an average grade of 1.88 g/t gold). This is not just an internal projection as the Maligreen resource estimate meets the NI43-101 standards. According to Caledonia, just over three quarters of the gold is located within 220 meters from surface so it looks like the Maligreen project could be an open pit mine (although a lot more work obviously needs to get done).
There isn’t a whole lot of information available right now, but the press release did contain an interesting sensitivity analysis. If the cutoff grade would be increased to 1 g/t, the total resource would decrease by about 12% to 827,000 ounces of gold, but at a much higher grade of 2.79 g/t gold, so it will be interesting to see how Caledonia will put a mine plan together. The first step is obviously to design a drill program to obtain more data and Caledonia is anticipating an initial 4,800 meter drill program over the next 18-24 months to get a better understanding of the gold resource.
Meanwhile, the operations at its producing Blanket Mine are going well. The total gold production in Q3 was just under 19,000 ounces of gold and Caledonia now expects to reach the higher end of its 65-67,000 ounce full-year production guidance. This makes the 2022 production guidance of 80,000 ounces quite achievable.
Disclosure: The author has no position in Caledonia Mining. Please read our disclaimer.
