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PEA determines IRR of 267% for Blanket mine

2nd December 2014

By: Leandi Kolver

Creamer Media Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – A preliminary economic assessment (PEA) based on triple-listed Caledonia Mining’s 49%-owned Blanket mine’s revised investment plan has determined an internal rate of return (IRR) of 267% for the project.

The study also calculated a net present value for the mine, arising from reserves and the inferred resources used in the revised plan, at $147-million. It further found that, of the ounces that had to be produced for the cumulative cash flow arising from the revised plan to become positive, only 3% would come from resources that were currently classified as inferred.

“I am encouraged that the revised investment plan for the Blanket mine has been validated by Minxcon, an external independent consulting group. The high projected IRR for the investment confirms this to be a very exciting project. 

"The high proportion of the investment that will be recovered from the mining of reserves and resources with a higher level of confidence than inferred resources, also supports our view that the revised investment plan has been prepared on a conservative basis,” Caledonia CEO Steve Curtis said in a statement on Tuesday.

The revised plan would see investment of $50-million in the mine between 2015 and 2017, and another $20-million between 2018 and 2020, to improve the underground infrastructure and logistics and ensure an efficient and sustainable production build-up.

The increased investment was expected to give rise to yearly production from inferred resources of about 70 000 oz to 75 000 oz by 2021, in addition to projected production, in 2021, of about 6 000 oz from proven and probable mineral reserves.

Caledonia said the revised plan was also expected to improve Blanket’s long-term operational efficiency, flexibility and sustainability.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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