CALEDONIA Mining said it was close to securing further funding for its Bilboes gold project in Zimbabwe, with a $150m interim bank facility due to close as early as October.
The company plans to spend just under $600m on the project when interest and working capital are included.
Speaking during a capital markets day in New York on Wednesday, Caledonia Mining CFO Ross Jerrard said various funding sources were already secured or being worked on which meant Bilboes was effectively fully funded.
In January, Caledonia raised $150m through a seven-year convertible bond. This leaves between $263m and $303m to be raised through senior debt and other facilities, depending on the gold price and cash generated by Blanket, its only operating mine.
At a gold price of $3,500/oz, cash from Blanket would contribute $115m towards the Bilboes funding plan, rising to $155m at $4,000/oz. Caledonia also has $172m in cash.
Jerrard said the company was in the final stages of due diligence and documentation for the $150m interim facility, with as many as eight Zimbabwean and South African banks potentially taking part.
“We are in the final stages … with the facility imminent, and hopefully we will get that closed in October 2026,” he said.
The facility would be secured against Blanket’s cash flows and serve as a bridge while Caledonia arranges longer-term project finance for Bilboes.
Talks on the longer-term funding are also well advanced with regional and global financial institutions. Caledonia aims to secure the funding within six to nine months, Jerrard said.
The longer-term debt would be secured against Bilboes rather than Blanket, and would replace the interim loan.
Hedge
Caledonia has also hedged its share of Blanket’s gold production at a floor of $3,500/oz from January 2026 to December 2028, covering the Bilboes construction period.
Jerrard described the hedge as an “insurance policy” that protected cash generation from Blanket while allowing Caledonia to benefit from gold prices above $3,500/oz. It also allowed Caledonia to borrow more from banks, he added.
Delays were the biggest threat to the project’s value, making it important to have money available early enough to order long-lead items and keep construction on schedule.
Victor Gapare, executive director at Caledonia, said execution was the project’s biggest risk. Advance funding, early talks with contractors and contingency in its capital cost estimate would help limit this risk.
During question time, Gapare added that Caledonia had “analysed this project to paralysis” and built contingencies into its capital cost estimate, although costs such as oil had risen sharply since the study.
Mark Learmonth, Caledonia’s CEO added that procurement was already under way, with firmer project costs due by November.
Blanket costs
Caledonia is also cutting costs and raising output at Blanket, which will help fund Bilboes.
Learmonth said costs at Blanket had risen as the underground mine became deeper and expanded. Caledonia’s presentation showed on-mine costs more than doubled between 2020 and 2025, while the cost per ounce rose 60%.
The company attributed the rise in unit costs to the deeper mine and lower grades, which cut gold output. Its cost-reduction plan includes recovering grade and raising production.
Caledonia also introduced a seven-day shift system in June that has added about 100,000 tons a year of run-of-mine capacity (ore) without additional capital spending, Learmonth said.
Overtime costs fell by about 50% between May and June, while broken-ton stockpiles were rebuilt.
Caledonia is also upgrading its processing plants to handle more ore, which could add about 8,000 oz a year to production.
Learmonth said management was focusing on areas it could control, including labour productivity, power use and consumables.
