Mark Learmonth

CALEDONIA Mining has made light work of difficult trading conditions in Zimbabwe in the past, but even it struggled following a 40% currency devaluation in September in yet another new-fangled plan, dubbed Zimbabwe Gold or ZiG for short. There were also “uncomfortably high” costs at Caledonia’s normally dependable Blanket Gold Mine. The supercharged gold price has been a deliverance. Learmonth will be hoping gold remains buoyant. 

The company intends to fasten down a debt/equity package for its $400m Bilboes, a 100,000-ounce-a-year project, once a bankable feasibility is finalised in the first half of this year. The company is also hoping it has enough money to continue exploring Motapa, a prospect adjacent to Bilboes where promisingly high grades have been drilled. In the meantime, Caledonia’s balance sheet was bolstered by the sale of its solar plant for a $14.3m profit (Blanket will continue to be supplied by the new owner). 

All helpful as Caledonia is also building its inventory, recorded as another cost in a year of already high mining inflation. It’s worth it, says Learmonth, who wants to build some resilience for when the company starts to focus on the construction of Bilboes. 

Shares in Caledonia fell last year when they should have been buoyant. Presumably investors are concerned by cost increases and the size of the potential equity component in financing Bilboes. It tees Learmonth up for a challenging year as he tries to prise Caledonia from its single-asset mould.