Interesting broker note from Cavendish today.....9 Mar 2026 11:48
The main points -
"— Bilboes effectively already fully funded…: Caledonia is seeking US$500m to fund construction of the Bilboes gold project. US$150m in convertible notes was raised in January, a US$150m Interim Funding Facility should be in place by mid-2026, and project finance discussions are underway. We view the last as prudent but not essential, as Caledonia has purchased put options with a US$3,500/oz strike price for 3koz/month of Blanket production over 2026-28, underpinning cash receipts of cUS$200m (on our current gold price profile, exercising the options should not be necessary).
— …and could have a virtuous circle effect on market cap: Bilboes could be transformational for Caledonia, creating a ‘virtuous circle’ of scale and investability. For example, Bilboes would roughly quadruple annual attributable production to c200koz, which could attract investors with minimum investment thresholds of 100-200koz. The increased demand should support a higher market capitalisation, enabling investment from larger funds for which Caledonia was previously too small.
— Caledonia’s forward P/E valuations could be expected to rise sharply: In our experience, many investors value gold producers using 1- or 2-year forward P/E. Bilboes is currently ‘off the radar’ for them as it will not contribute to earnings until FY28E. Our model projects Basic EPS rising from 349p in FY26E to 654p in FY28E and 1920p in FY29E. Applying a 1-year forward P/E of 10.0x implies forward valuations of 6540p in FY27E and 19200p in FY28E, respectively.
— Bilboes’ payback is <1 year at spot: We believe it is worthwhile reminding readers that the recent Bilboes Feasibility Study (FS) estimated payback at 1.1 years from production start (in 2H28) at US$3,648/oz. Payback should thus be rather less than one year at current spot (cUS$5,130/oz). "
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