Caledonia Mining Corporation has announced that, in addition to entering into an option agreement for Glen Hume, it has now entered into an additional option agreement for another area in Zimbabwe
This option agreement gives the company the exclusive right to explore and subsequently, if exploration is successful and at its sole discretion, to acquire mining claims in an area known as Connemara North, a property which like Glen Hume, is located in the Gweru mining district of the Zimbabwe Midlands, which has historically produced significant quantities of gold.
Connemara North is the northern section of the currently closed Connemara mine, formerly owned by First Quantum Minerals; it was put into care and maintenance in 2001 and subsequently disposed of in 2003. It has not been commercially mined since this time, but before it was put into care and maintenance, the Connemara mine produced approximately 20,000 ounces of gold per year from an open pit heap leach operation.
Previous public disclosures made by First Quantum in 2001 indicated that they were planning to expand existing open pit operations at Connemara mine, where gold prices were approximately US$300/oz.
At this stage it is not possible for Caledonia to verify any of the work performed by previous owners or ascertain what proportion of any purported resource lay within the boundaries of the Connemara North property over which Caledonia has secured the option. The property is approximately 30km from Glen Hume with good road access between them offering the potential of operating synergies should Caledonia develop both areas.
The option gives Caledonia the right to explore the area for up to 18 months and subsequently, if exploration is successful and at its sole discretion, to acquire the mining claims over the area. The total consideration is an initial payment of US$300,000, followed by a further payment of US$5mn (payable in cash or shares at the discretion of the vendor) which would be payable should Caledonia decide to exercise its right to acquire the mining claims. Caledonia has also agreed to pay a 1% net smelter royalty to the vendor on gold it produces from Connemara North.
Steve Curtis, CEO, said, “We are pleased to enter into this option agreement which gives us the right to explore and subsequently to acquire mining claims over the Connemara North property, part of a wider area that contained a previously operational mine which shows great potential and has been lying untapped for 20 years.
“Connemara North is also in close proximity to the Glen Hume property over which we have already acquired an option. We are excited at the prospectivity of these two properties and if evaluation work proves successful and our exploration programmes deliver favourable results, Caledonia will have a great opportunity to establish a footprint in the highly prospective Zimbabwe Midlands which could deliver operating synergies between the two sites.”
