Southern Africa-focused gold miner Caledonia Mining Corporation “is progressing well” with the sinking of a central shaft at its Blanket gold mine, in Zimbabwe, Caledonia CFO Mark Learmonth tells Mining Weekly.
The company is “very happy” with the progress made thus far, he says, with the second-quarter shaftsinking results better than Caledonia expected.
The new shaft is being developed from surface to just below 1 000 m, with the shaft currently 870 m below surface. The company began sinking the shaft in August 2015 and aims to complete the project by the end of 2018.
However, Learmonth notes shaftsinking challenges during the second quarter, owing to a deficiency in the quality of the power supply from State-owned power utility the Zimbabwe Electricity Supply Authority. This intermittent power supply impeded work on the central shaft, requiring the sourcing of generators to mitigate shaftsinking delays and protect equipment against power surges.
Caledonia initially ringfenced $43-million – which Learmonth indicates is still applicable – to upgrade the mine’s infrastructure, which includes the sinking of the central shaft.
The central shaft, once completed, is expected to enable the mine to produce 80 000 oz by 2021. It will extend the life of operations at the Blanket mine and add to its current single production shaft, enabling greater production efficiency. Operating efficiency will also be enhanced by allowing for faster transportation of employees to mining areas and shorter tramming distances, as well as less time required to haul ore to the surface.
Caledonia’s second-quarter results, released last month, paint a picture of an operationally challenging period for the Blanket mine. Gold production was flat at 12 521 oz, compared with 12 510 oz during the same period in 2016. Gross profits fell 15% to $5-million from $5.9-million during the corresponding period in 2016.
The biggest challenge Caledonia had to deal with during the second quarter was the perpetuation of logistical problems from the first quarter. Learmonth says substantial material volumes are being moved underground at 22 Level, which is 750 m below surface. Unfortunately, Caledonia does not have the space and required equipment to move this material, restricting operations underground. It has, for the past two years, been unable to undertake normal mining activities to blend high and low ore-grade areas and has, instead, been limited to mining the latter.
Consequently, the ore grade for the second quarter was 3.08 g/t, falling short of the company’s target of 3.3 g/t, which is also lower than that of the first quarter. Although tonnes milled increased by 13%, compared with the second quarter of 2016, this lower grade adversely affected yields.
The underground logistical constraints are exacerbated by the development that is required prior to the completion of the central shaft, all of which negatively affected production during the second quarter, notes Learmonth.
However, the low-grade situation is temporary, as Caledonia expects this issue to be fully alleviated once the central shaft has been completed, allowing it to blend the ore grade back to the average resource grade, owing to higher-grade areas being made accessible. Moreover, Caledonia corporate development VP and investor relations manager Maurice Mason asserts that the new shaft will probably compensate for the years the company has been “low grading”.
Mason estimates that the grades will improve from the 3 g/t of the second quarter to 3.8 g/t in the long term. “This will make a very big difference to the company, as it is extra gold for no extra work.”
Despite the operational challenges of the second quarter, Caledonia is still striving towards achieving its 80 000 oz gold production target by 2021, set in a revised investment plan in November 2014. “With the shaft into the new mine being sunk and progress above expectations, this medium-term goal is well on its way to being achieved,” says Mason.
Caledonia now owns 49% of the Blanket mine, and Zimbabweans 51%, which is in line with the country’s Indigenisation and Economic Empowerment Act, effective from September 5, 2012.
Learmonth enthuses that Caledonia is seeing constructive efforts from the Zimbabwe government to assist the company in further developing its Blanket operations.
He expounds on Zimbabwe’s challenging economic circumstances, noting difficulties with regard to the limited availability of foreign currency, holding up telegraphic transfers from some mines to foreign suppliers by up to four months, according to Zimbabwe’s Financial Gazette.
However, Learmonth commends government for accommodating Caledonia’s needs by ensuring that foreign currency is available to enable the Blanket mine to pay for imported consumables and capital equipment such as drills.
“The constructive engagement we have with the Zimbabwe government translates into its ensuring that we can continue to operate.”