CEO Mark Learmonth called Bilboes a "transformational" asset for Caledonia which will help launch the company into multi-asset, mid-tier status.

Subject to financing the capital expenditure, and once brought into full production, it could produce three times the company's current 64% attributable share of gold production from Blanket—which is also in Zimbabwe, he said.

A previous feasibility study viewed production of 168,000oz per year with a 10-year life of mine.

"We have followed the progress of Bilboes for several years," Learmonth said.

The deposit, about 75 kilometres north of Bulawayo, has probable reserves of 1.96 million ounces at 2.29g/t.

Its measured and indicated resources stand at 2.56 million oz at 2.26g/t.

And inferred resources are 577,000oz at 1.89g/t.

Caledonia is to acquire the project through the purchase of Bilboes Gold for a total consideration of 5.12 million shares, representing about 28.5% of its equity, which at the US$10.40 per share closing price on July 20 is valued at about $53.28 million.

Bilboes Gold will also be granted a 1% net smelter royalty on revenues.

For the deal to go ahead, Caledonia wants confirmation from Zimbabwe that it'll be able to export gold directly and retain 100% of the sale proceeds in US dollars with no requirement to convert revenues into domestic currency for the life of mine.

The company also wants guarantees of sufficiently reliable and affordable electricity.

Bilboes was formerly owned and explored by Anglo American prior to its exist from the Zimbabwean gold sector in 2003.

Caledonia plans to conduct its own feasibility study which is to include a phase development to minimize the initial capital investment and reduce the need for third party funding.