Caledonia Mining Corporation PLC has raised $150 million through a bond offering in the United States to help fund development of its Bilboes gold project in Zimbabwe, a move the company says puts it on track to begin major procurement later this year.
The Jersey-based miner said the debt sale attracted strong demand from American investors, with total orders exceeding $600 million.
The company initially aimed to raise $100 million but increased the size of the deal twice during marketing, eventually closing on $150 million after underwriters exercised their full option to purchase extra notes.
Mark Learmonth, Caledonia’s chief executive, said: “Receiving more than $600 million of demand from high-quality North American investors is a tremendous endorsement of our strategy, the quality of our assets, our operational track record, and the long-term prospects of the company.”
The deal was led by Cantor Fitzgerald and consisted of convertible senior notes, a form of debt that pays interest but can also be converted into shares under certain conditions.
The notes will mature in 2033 and pay annual interest of 5.875%. Caledonia also bought options that limit how much equity it would need to issue if the bonds are converted into shares, a tactic known as a capped call.
After fees and hedging costs, the company said it would retain about $130 million in net proceeds.
The fundraising forms part of a broader four-part financing plan to bring the Bilboes mine into production. Caledonia acquired the project in 2022 and published a feasibility study in November last year.
Alongside the convertible bond issue, the company has locked in a minimum gold price of $3,500 per ounce on 3,000 ounces per month of production from its existing Blanket Mine.
This hedging arrangement runs until the end of 2028 and is intended to protect revenues during Bilboes’ development phase.
A third plank of the funding strategy is a planned interim facility of up to $150 million from regional banks in Zimbabwe and South Africa, which Caledonia hopes to secure by mid-2026. The facility would be backed by Blanket Mine’s cash flows.
Finally, the company expects to launch a formal process for long-term project finance later this quarter, in talks with both regional and international lenders. That process, which typically includes independent technical reviews, could take more than a year.
Broker Cavendish said: “In our view, the above represent (to borrow Caledonia’s words) “tremendous validation” of the company’s strategy, the quality of its assets, its operational track record and its long-term prospects.”
Its price target is 3,280p, a significant premium to the valuation of 2,070p. In the last six months, the stock has advanced 31%.
Source: Proactive Investors
