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Caledonia Mining (AIM: CMCL) announced that it has entered into an option agreement that gives the company the exclusive right to explore and subsequently acquire the mining claims over an area known as Connemara North, located in the Zimbabwe Midlands.
Connemara North is the northern section of the currently closed Connemara mine which was previously owned by First Quantum Minerals and produced approximately 20,000 ounces of gold per year from an open-pit, heap leach operation. In 2001, the mine was placed on care and maintenance and in 2003, it was disposed of.
“Previous public disclosures made by First Quantum in 2001 indicated that they had plans to expand the existing open-pit operations at the Connemara mine when gold prices were approximately $300/oz,” Caledonia Mining said in a media statement.
“At this stage, it is not possible for Caledonia to verify any of the work performed by previous owners or to ascertain what proportion of any purported resource lay within the boundaries of the Connemara North property over which Caledonia has secured the option.”
Caledonia Mining’s main asset in Zimbabwe is its 49% stake in the century-old Blanket mine, which has produced over 1 million ounces of gold to date
The property is also located approximately 30 kilometres from Glen Hume, a project recently acquired by Caledonia. According to the miner, the good road access between both sites offers the potential of operating synergies should management decide to develop both areas.
The option agreement for Connemara North gives Caledonia the right to explore the area for a period of up to 18 months and, if exploration is successful, to acquire the mining claims over the area. The total consideration is an initial payment of $300,000, followed by a further payment of $5 million, payable in cash or shares at the discretion of the vendor.
“The Connemara North property [is] part of a wider area that contained a previously operational mine which shows great potential and has been lying untapped for 20 years,” Steve Curtis, Caledonia’s CEO, said in the press brief.
“If evaluation work proves successful and our exploration programs deliver favourable results, Caledonia will have a great opportunity to establish a footprint in the highly prospective Zimbabwe Midlands.”
Besides these projects, Caledonia Mining’s main asset in the African country is its 49% stake in the century-old Blanket mine, which has produced over 1 million ounces of gold to date.
