admin
Prosper Ndlovu Business Editor
CALEDONIA Mining Corporation says it would increase investment to $70 million at its Gwanda-based Blanket Mine in the next five years which will boost output by up to 75,000 ounces per annum and create 400 additional jobs by 2021.
The mining conglomerate’s revised investment plan and production projections (2015 to 2021) issued yesterday indicates that Blanket Mine remains the company’s cash cow despite the adverse economic conditions affecting the sector.
“Caledonia has concluded that the best returns on investment remains Blanket Mine in Zimbabwe, which continues to be cash generative in the current adverse market conditions and also offers significant investment returns that exceed other alternative investment opportunities,” said the company in a statement.
The highlights of the investment plan include a planned investment of approximately $50 million in the period 2015-2017 and approximately $20 million further in the period 2018-2020.
“Target production of approximately 70-75,000 ounces of gold per annum by 2021 from inferred resources and additional production in 2021 of 6,000 ounces of gold from proven and probable mineral reserves,” it said.
Stefan Hayden, Caledonia’s president and chief executive officer, said the implementation of the plan would result in considerable long term benefits to all stakeholders, including Caledonia and Blanket shareholders, Blanket’s current and future employees, the surrounding community and the government of Zimbabwe.
“The implementation of the plan is expected to create approximately 400 permanent jobs in Zimbabwe over the next five years. By 2018 I hope that Blanket will have doubled production and further reduced its cost per ounce, which are already among the lowest in Africa.
“Once these projects are completed, Caledonia and Blanket will have the critical mass and the financial capacity to consider significant new investment opportunities,” he said.
The board and management said they have completed a review of alternative expansion and diversification plans and addressed the revised production projections for Blanket Mine and the possible benefits of diversifying the corporation’s production base.
The company said the objective of the revised plan was to improve the underground infrastructure and logistics and allow an efficient and sustainable production build-up.
The infrastructure improvements, it said, would include the development of a “tramming loop” and the sinking of a new six-metre diameter central shaft from surface to 1,080 metres.
The increased investment pursuant to the revised plan is expected to improve Blanket’s long term operational efficiency, flexibility and sustainability.
The company is also aiming at improving its underground logistics and accelerate access to deeper levels while maintaining its dividend policy up to 2015.
Viewed as the largest investment to be undertaken by either Blanket Mine or Caledonia, the revised plan would be implemented under the direction of Dana Roets, Caledonia’s chief operating officer, who developed the plan and scope of work and has considerable experience of successfully implementing similar projects.
Roets, who has over 20 years of deep level mining experience at South Africa’s largest gold fields, will work closely with Caxton Mangezi, Blanket’s general manager.
The corporation’s board has since established a committee of directors that will closely monitor progress on implementing the revised plan with regular updates set for publishing on quarterly reports.
Caledonia owns 49 percent of equity at Blanket Mine in line with the implementation of country’s indigenisation regulations, which reserves at least 51 percent of shares to locals.
Hayden said the planned construction of the central shaft will substantially improve 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,” he said adding: “The revised strategic plan represents a vote of confidence in Zimbabwe as an investment destination. I’m pleased to say that Blanket’s indigenous shareholders and the government of Zimbabwe are both highly supportive of the revised plan.”
The giant mining corporation had net cash resources of $25.8 million as at June 30, which will, if necessary, be used to provide appropriate financial support to Blanket subject to agreement of acceptable terms between Caledonia and Blanket and securing the necessary regulatory approvals, it said.
Online Reporter