Chronicle Editor
Nqobile Bhebhe, Senior Business Reporter
CALEDONIA Mining Corporation, which owns Blanket Mine, a gold operation in Gwanda, has ramped up a 40 percent increase in quarterly production of 18 515 ounces in the first quarter up from 13 197 ounces in the corresponding period last year.
This is a first quarter production record, the mining house Chief Executive Officer, Mr Steve Curtis said.
Last year, the Victoria Falls Stock Exchange-listed operator attained 67 476oz, which was above the group’s revised increased guidance of 67 000oz.
In a latest update on Tuesday, the gold producer expressed optimism that through the Central Shaft project, Blanket Mine is on track to meet its annual production target.
Caledonia has in the past five years been on an aggressive expansion drive and invested on a 1 200-metre deep central shaft, funded to the tune of US$67 million.
“I am delighted that during this quarter we have set a new first quarter production record. 18,515 ounces is ahead of our expectations and reflects the increased capacity at Central Shaft,” Mr Curtis said.
“The ramp-up in production towards our quarterly target of 20,000 ounces means that we are on track to meet our annual production target,” he added
With a production guidance of 80 000oz per year, Blanket Mine is projected to run until 2034.
In February, the resource group announced it had entered into a “cap and collar” hedge contract with an undisclosed financial counterpart over 20 000 ounces of gold produced over a five-month period.
A hedge arrangement is a financial instrument in this case between Caledonia and its unnamed financial counterpart.
It is entered into to offset financial risk as the mining group believes that the hedge provides greater certainty to its cash flows during the period of the arrangement.
The hedging contract has a cap of US$1,940 and a collar of US$1,825.
This means that, for the 4 000 ounces of gold per month for the five-month period, Caledonia would receive an effective gold price per ounce of not less than US$1,825 or greater than US$1,940 and will receive an effective spot gold price between these two levels.
Zimbabwe has set a target to achieve a US$12 billion mining industry by 2023 of which US$4 billion is a target for gold sector which is achievable riding on increased production by companies such as Caledonia Mining Corporation.
The mining sector is one of the economy’s strategically key productive sectors expected to account for the largest contribution to the gross domestic product growth in the short to medium-term.
In September last year, Caledonia announced that it had bought the Mali green project in the Gweru district for US$4m and would spend US$1.6m more over the next 18 to 24 months exploring the brownfield prospect.
Maligreen has an inferred mineral resource of approximately 940,000 oz of gold.
Two open pit mines on the prospect produced 20,000 oz of gold a year between 2000 and 2002 before they were closed.
In December 2020, the company indicated that it had bought a US$2.5m option over a gold exploration prospect Glen Hulme, also in Gweru.
— @nqobilebhebhe
Online Reporter