Caledonia Mining Corporation plc (LON:CMCL) VC Corporate Development’s Maurice Mason caught up with DirectorsTalk for an exclusive interview to discuss the option agreement for another prospect in Zimbabwe, why the property was put on care and maintenance and other acquisitions going forward.
Q1: Caledonia Mining Corporation announced earlier that you’ve entered into an option agreement for another prospect in Zimbabwe. Maurice, what can you tell us about the deal?
A1: It’s an option, actually over an old mining property which was shut down in the early 2000’s, it’s a property called Connemara. For those people who’ve been following the mining industry for many years will remember this was a mine run by First Quantum Minerals back when they were invested in Zimbabwe, and before they expanded into Zambia.
It’s a good property and it was run at about 20,000 ounces a year and then they had some plans to expand the property and then declined to expand that property and it’s been sitting dormant really for 20 years.
We’ve acquired an option over it, we think there’s good potential there and that’s the deal we’ve announced today.
Q2: Connemara North is close to the other property that you acquired last week, Glen Hume. Can you tell us a bit about this area in Zimbabwe, is it well known for mining?
A2: It is well known for mining, yes. Geologically we’ve made this point many times that Zimbabwe is blessed geologically with lots of potential for gold mining.
Connemara North is in the Zimbabwe Midlands area so between Kwekwe and Gweru, the other two major towns there, it’s about as far away from Bulawayo to the North East as Blanket is to the south from Bulawayo. So, not too far away in geographic terms but obviously not at an economic distance to Blanket to be useful.
It is a major gold hub in that part of the world and in Zimbabwe and it’s quite prospective territory.
Q3: Why did First Quantum Minerals put the property on care and maintenance?
A3: First of all, we should remember that gold prices were about $270 an ounce back then so very very depressed gold market. That said, in that gold market, they still saw an economical viable property and an economical viable project.
Unfortunately, this was back before Zimbabwe hyperinflation, Zimbabwe passed legislation that affected the mining industry and affected the currency in which they were paid for their gold. First Quantum, at the time, had exhausted the oxides and we’re looking at expanding to about 50,000 ounces in the sulphides via a flow plant at Connemara and when the legislation changed to say that they had to be paid in Zimbabwe dollars rather than US dollars, that drove them to decide not to make that investment. Therefore, the oxides were exhausted and they decided to put the property on care and maintenance and divested fairly soon after that.
It’s a peculiar situation where an economically viable project which was deemed viable at gold prices below $300 an ounce has been sitting for 20 years, not getting the investments that it’s needed and not realising it’s potential.
So, we hope to take advantage of that.
Q4: Are there any other acquisitions that Caledonia Mining Corporation are looking at?
A4: We are actively looking in-country, we’ve announced two in the last weeks and we’ve been working on these for quite some time. We can’t obviously speak about things we haven’t concluded yet but yes, we do have other irons in the fire and we’re hopeful.
Like we’ve said previously, we think Zimbabwe is one of the last gold mining frontiers in Africa, we think it’s highly prospective and we’re looking at other opportunities. If and when those materialise, we’ll certainly discuss them with you on forums like this.