Construction of the Blanket gold mine is “going as planned” and progressing well, Caledonia Mining has reported.

CFO Mark Learmonth says the company’s $70-million development plan, which will be executed over the next five years, will double production at the mine to about 80 000 oz/y by 2021.

Work on the Central shaft, which started late last year is “going fantastically well”, says Learmonth. “The area that we are working on is enormous – much bigger than we expected – and we have excavated this hole where we are going to place the shaft column, where the headgear will stand.

“This is about 9 m by 9 m by 5 m deep. Once the concrete has set, we can actually start the serious business of sinking the shaft,” Learmonth says, adding that the shaft should be finished by early 2018.

The mine has already acquired the required winders from South Africa’s Harmony Gold, and says that one winder is “currently being shipped up to the mine”, while the other winder is being refurbished in Johannesburg. The smaller components of the expansion project, which includes the sinking of a subvertical shaft, are also progressing well.

First production from that shaft is expected in January next year. Meanwhile, the smallest part of the mine’s revised development plan – the tramming loop 650 m below surface – has been completed.

The company expects to produce about 32 000 oz this year, ramping up to 50 000 oz next year.

Project Description
A revised investment plan and production projection have been announced for the Blanket mine.

The revised plan aims to improve the underground infrastructure and logistics and allow for an efficient and sustainable production build-up. The infrastructure improvements will include the continuation of the No 6 Winze shaft, the development of a tramming loop 650 m below surface and the sinking of a new 6-m-diameter, four- compartment Central shaft, which will eventually be sunk to 1 080 m below surface, providing access to the current inferred mineral resources below 750 m and allowing for further exploration, development and mining in these sections along the 3-km-long Blanket strike.

The revised plan thus considers the expansion project below 750 m as a standalone project. The increased investment pursuant to the revised plan is expected to increase production from inferred resources of about 70 000 oz in 2015 to 75 000 oz in 2021, in addition to projected production in 2021 from proven and probable mineral reserves of about 6 000 oz. The revised plan is also expected to improve Blanket’s long-term operational efficiency, flexibility and sustainability.

Net Present Value/Internal Rate of Return
Based on the revised plan, the best estimated net present value of the extension project has been calculated at $65-million at a real discount rate of 8.36%. The internal rate of return has been calculated at 42%.

Value
An amount $50-million is expected to be spent from 2015 to 2017 and about $20-million from 2018 to 2020. All capital expenditure is expected to be funded from Blanket’s in-house cash flows and existing facilities.