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The transaction could more than double Caledonia’s annual production, potentially making it Zimbabwe’s top gold miner. It would also help the company become a multi-asset mid-tier producer.

“We are delighted to have signed an agreement for the purchase of Bilboes, the premier gold development project in Zimbabwe, and indeed one of the best gold development projects in Africa,” chief executive Mark Learmonth said in the statement.

According to the latest feasibility study, the asset has the potential for an open-pit gold mine producing an average of 168,000 ounces per year over a 10-year life of mine.

Caledonia said it plans to conduct its own feasibility study to determine the “most judicious way” to commercialize the deposit. One approach that will be considered is a phased development which would minimise the initial capital investment and reduce the need for third party funding, the company said.

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 US dollars rather than domestic currency.

Prior to closing the deal, Bilboes will restart oxide operations with the expectation of returning to profitable operations within six months.

Caledonia currently owns 64% of the Blanket gold mine, in the southwest of Zimbabwe, which is expected to produce 80,000 ounces this year thanks to a new shaft.