Under the agreement, Caledonia will assess mining rights, properties and/or projects in the gold sector controlled by the government, to determine whether they could be "commercially developed for mutual benefit".

The company, which operates the Blanket mine in Zimbabwe, was described as "an outstanding corporate citizen" by mines and mine development minister Winston Chitando in a joint statement.

Caledonia CEO Steve Curtis said the company believed Zimbabwe was a highly prospective region for gold discoveries.

He said the agreement was very timely, with Caledonia nearing the end of a plus-US$60 million investment in a new shaft at Blanket, which was set to increase the mine's production from about 55,000 ounces per year to 80,000ozpa from 2022.

"The increased level of production, in conjunction with the higher gold price, means that we should have the financial capacity to consider further meaningful investments in the Zimbabwe gold sector," he said.

The Jersey-headquartered company owns 64% of Blanket and was praised by Chitando for facilitating local partnerships and more than doubling employment at the operation since acquiring it from Kinross Gold in 2006.

"I am confident that Caledonia will make an even larger contribution to the economy of Zimbabwe as a result of further investments in our gold industry," Chitando said.

The news comes a day after Caledonia increased 2020 production guidance to 55,000-58,000oz; and less than a week since declaring another increased dividend. 

The company had $11.7 million in cash at June 30 before raising $13 million through an "at the market" sales agreement to fund a solar power plant for Blanket.

Its NYSE American shares (CMCL) have ranged from $6.51-$29.39 over the past year and closed down 4.1% yesterday to $17.24, valuing it about $209 million.