Increased investment in triple-listed Caledonia Mining’s 49%-owned Blanket gold mine, in Zimbabwe, as set out in the mine’s revised plan, was expected to give rise to yearly production from inferred resources of 70 000 oz to 75 000 oz by 2021, the company said last week.
The company stated that this was in addition to projected production in 2021 of about 6 000 oz from proven and probable mineral reserves, adding that the revised plan was also expected to improve Blanket’s long-term operational efficiency, flexibility and sustainability.
Caledonia said the objectives of the revised plan, which would see investment of $50-million in the mine between 2015 and 2017, and another $20-million between 2018 and 2020, were to improve the underground infrastructure and logistics and ensure an efficient and sustainable production build-up.
The infrastructure improvements would include the development of a “tramming loop” and the sinking of a new 6-m-diameter central shaft from the surface to 1 080 m.
“It is anticipated that the construction of the central shaft will substantially improve the Blanket mine’s operational efficiency and reinforce the beneficial effect of fixed costs being spread across more production ounces. The central shaft will also enhance the mine’s operational flexibility by reducing its current dependence on a single production shaft and give it the flexibility to continue to explore and develop at depth,” Caledonia president and CEO Stefan Hayden commented.
The required capital expenditure would come from Blanket’s internal cash flows and existing facilities; however, Caledonia had net cash resources of C$25.8-million as at June 30, which would, if necessary, be used to provide appropriate financial support for Blanket, subject to agreement of acceptable terms between Caledonia and Blanket and securing the necessary regulatory approvals.
"Implementation of the [revised] plan will result in considerable long-term benefits for all stakeholders, including Caledonia and Blanket shareholders, Blanket’s current and future employees, the surrounding community and the government of Zimbabwe,” Hayden said.
He added that the implementation of this plan was expected to create about 400 permanent, high-quality jobs in Zimbabwe over the next five years.
“By 2018, I hope Blanket will have doubled production and further reduced its cost per ounce, which are already among the lowest of any African gold producer. Once these projects are completed, Caledonia and Blanket will have the critical mass and the financial capacity to consider significant new investment opportunities,” Hayden said.
Caledonia indicated that it intended to maintain its current dividend policy in 2015, while it was expected that Blanket would suspend dividend payments until early 2016.