Caledonia to buy Zimbabwe gold project in $53 million all-share deal

(Reuters) - Caledonia Mining Corporation has agreed to buy Zimbabwe's Bilboes Gold Limited in a $53 million all-share deal that could quadruple Caledonia's annual production.

Caledonia currently owns 64% of Zimbabwe's Blanket gold mine, where output is expected to reach 80,000 ounces this year thanks to a new shaft.

The Bilboes project, which Anglo American sold out of in 2003, could add 168,000 ounces of gold to Caledonia's annual production, CEO Mark Larmonth said, calling this a "transformational" asset for the miner hoping to become a multi-asset mid-tier producer.

The transaction is subject to the current owners of Bilboes receiving confirmation from Zimbabwean authorities that the mine will be able to export gold directly and retain the sale proceeds in U.S. dollars rather than domestic currency.

Caledonia will also have to arrange electricity supply for the project. It expects to restart the mine within six months of deal completion.

Bilboes Gold Limited is currently owned by Toziyana Resources Limited with a 50% stake, Baker Steel Resources Trust Limited (24%), and Infinite Treasure Limited (26%).

(Reporting by Nelson Banya, Editing by Helen Reid, Kirsten Donovan)