CALEDONIA Mining plans to raise up to $150m through the issue of convertible shares with the proceeds earmarked for Bilboes, the miner’s recently unveiled gold project in Zimbabwe.
The initial notes offering is for $125m (increased from an earlier amount of $100m) but subscribing investors have the option to purchase an additional $25m (upsized from $20m) of shares. The convertibles will be issued at an interest payable of 5.875%.
The company said as far back as June 2024 that it could issue equity finance up to $100m of its $484m Bilboes project which is forecast to produce 200,000 ounces a year.
A portion of the funds raised will also be put towards the purchase by Caledonia of capped call options. In essence these enable Caledonia to limit the financial risk in the event the firm’s share price rises significantly prior to the convertible notes maturing. The capped calls also limit potential upfront share price weakness as a result.
The convertible shares will have an initial conversion price of about $40.51 per share, which represents a conversion premium of about 25% to the last reported sale price of Caledonia shares in New York where it is principally listed.
Shares in Caledonia have gained 205% over the past 12 months owing to the improvement in the gold price, up 7% year to date after bursting through fresh records. The metal is currently trading at $4,604/oz.
Speaking in November shortly after announcing it would proceed with Bilboes, Mark Learmonth, Caledonia CEO, said the project would help reclaim Zimbabwe’s place as a gold mining destination. “Bilboes should deliver substantial benefits to Zimbabwe: a project of this scale should help Zimbabwe to reclaim its position as a major gold destination in the eyes of the international investment community,” he said.
Then, as part of Zimbabwe’s National Budget on November 27, the country proposed doubling in the royalty rate for gold companies in terms of which they would pay a 10% royalty when prices exceed $2,501 per ounce. This was part of broader revenue measures designed to boost state income and support domestic industry, said Reuters of the National Budget announcement.
Following an outcry from its mining sector, the Zimbabwe government reversed its plans, saying in a new 2026 budget bill in December that a royalty rate of 5% would continue to apply for gold prices between $1,200 and $5,000 per ounce.
