Modern Mining

In its results for the fourth quarter and year ended 31 December 2017, Caledonia Mining Corporation says that the Blanket gold mine near Gwanda in Zimbabwe produced 16 425 ounces of gold during the quarter, 14 per cent more than the 14 396 ounces produced in the third quarter of 2017, which was itself a new production record.

Production for the year was 56 133 ounces 11,5 per cent more than in 2016., and a new record for the company. Caledonia – which owns 49 % of Blanket and is listed on the NYSE American, London’s AIM and the TSX – attributes the increased production to higher tonnes mined, as the remedial measures that were taken in previous quarters to address logistical constraints bore fruit and improved grades.

Grade during the year improved from 2016, as expected, due to the increased production from higher grade areas below 750 m. The grade is expected to continue to trend upwards towards 4 g/t as production from below 750 m increases further. Recoveries were higher than in 2016 but are still lower than the 94 % that could be achieved with a better oxygen supply. Caledonia plans to install a new oxygen plant, subject to funds being available.

Unit costs are also down, with Caledonia’s AISC for the year being US$847/oz, a 7 per cent reduction on the 2016 figure.

Commenting on the results, Steve Curtis, Caledonia’s CEO, said: “The combination of increased production and lower costs and a small increase in the gold price resulted in a 14 per cent increase in profit attributable to shareholders. The strong operational and financial performance translated once more into very strong cash flows. During the year the Group generated over US$24 million of cash from operations (2016: US$23 million). From these cash flows and cash resources, Blanket funded US$18 million of expansion capital investment, US$3,5 million of sustaining capital expenditure and repaid US$1,5 million of debt; Caledonia also paid US$2,9 million of dividends.

“During the year we made excellent progress on implementing the Investment Plan at Blanket Mine with the objective of increasing production to 80 000 ounces of gold per year by 2021. The Central Shaft has reached a depth of 990 metres, the station for the second new haulage level has been completed and shaft sinking has re-commenced.

Curtis said that exploration was continuing at Blanket with encouraging results. “In November 2017, we announced a resource upgrade which increased the gold contained in measured and indicated resources by 6 per cent to 714 000 ounces. The gold contained in inferred resources increased by 47 per cent to 887 000 ounces.

“Following the resource upgrade, we have extended the scope of the Central Shaft project by increasing the depth of the shaft by a further 250 metres to a shaft bottom depth of 1 330 metres. The extension will allow for a further two production levels (in addition to the two new levels that were already planned) and will potentially extend Blanket’s life of mine by four years to 2031.

“The shaft extension and the new production levels will cost approximately US$18 million – much less than if we had done this work after the shaft had been completed and commissioned to the original target depth of 1 080 metres,” he continued. “The extension of the shaft is not expected to delay the achievement of the target production of approximately 80 000 ounces per year by 2021 but it will improve operational flexibility.”

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