Name and Location
Blanket gold mine expansion project, Zimbabwe.

Client
Caledonia Mining Corporation (49%).

Project Description
A revised investment plan and production projection was announced in 2014.

The revised plan aims to improve the underground infrastructure and logistics and allow for an efficient and sustainable production build-up.

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. The shaft 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 80 000 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
$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.

Duration
Production is expected to start in 2021.

Latest Developments
Gold production from Caledonia’s Blanket mine increased 8.7% year-on-year for the three months to March 31.  
 
About 10 822 oz of gold were produced during the quarter – an improvement on the 9 960 oz of gold produced by the mine in the same period in 2015. However, production decreased by 6% from the previous quarter’s 11 518 oz.
 
Caledonia's CEO Steve Curtis has said that the company remains on track to achieve its full-year production target of about 50 000 oz for 2016, which is unchanged from previous guidance figures. 

The miner also expects quarterly production for the remainder of 2016 at Blanket to “increase progressively” to about 14 000 oz by the fourth quarter, as production from below 750 m will increase over the course of the year.
 
Curtis has explained that sales for the first quarter of 2016 will include production from the quarter plus the work in progress, comprising 671 oz of gold, brought forward from 2015.  
  
“Production in the first quarter was slightly higher than planned, although lower than the previous quarter, owing to the combined effects of the New Year and Easter holiday periods. 
 
“Towards the end of the first quarter, production commenced from below 750 m via the No 6 Winze and an additional decline development into the AR South orebody,” Curtis has said.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The project remains on target for first production in January 2016, with production expected to reach the target rate of 500 t/d in May 2017.

Contact Details for Project Information
Caledonia Mining, tel +1 416 369 9835 or email info@caledoniamining.com.