adminSenior Business Reporter
CALEDONIA Mining Corporation, which owns Blanket Mine, targets to increase gold production from 42,000 ounces in 2015 to 50,000oz this year on the back of its Revised Investment Plan at its Gwanda-based plant. In 2014, the parent firm announced a Revised Investment Plan for Blanket Mine, which entails spending $50 million in the period 2015-2017 and a further $20 million between 2018 and 2020. The investment plan aims to increase annual output from 40,000oz to around 80,000oz by 2021.
In a quarterly report for the period that ended March 31, 2016, Caledonia indicated that gold output at Blanket Mine in Matabeleland South in the first quarter rose by 8.7 percent to 10,822oz compared to 2015’s first quarter output of 9,960oz due to higher ore production.
This follows the completion of the tramming loop and improved recovery, offset by a slightly lower grade.
During the period under review, it also indicated that on-mine costs decreased 3,8 percent to $689 from $716 in the 2015 first quarter as fixed costs were spread across higher production and sales ounces. The corporation’s president and chief executive officer, Steve Curtis, said progress on implementing their revised investment plan remains on track.
He said this year’s anticipated increase in production is expected to result in improved cash generation due to higher sales volumes and lower cost per ounce of gold as fixed costs are spread over more gold produced.
“Progress on implementing the Revised Investment Plan at Blanket remains on track. Towards the end of the quarter, production commenced as planned from the No 6 Winze and from an additional development, which provides access to ore below the 750 metre level.
“These developments have substantially improved operational flexibility and are expected to be the main reason for the projected increase in production from 42,800oz in 2015, to approximately 50,000oz in 2016,” said Curtis.
He said capital investment was expected to moderate somewhat over the remainder of 2016 as work at the Central Shaft moves into the main sinking phase.
Curtis said the higher gold price, if sustained, would further enhance cash generation.
“I therefore expect that Caledonia’s treasury will begin to improve in the second half of 2016 when Blanket resumes dividend payments, which will also result in the resumption of the repayment of the facilitation loans from Blanket’s indigenous Zimbabwean shareholders,” he added.
Curtis said a huge amount has been achieved at the Central Shaft since work commenced in late 2014. He said the first quarter of 2016 the main sinking headgear was assembled while the winders have been commissioned and sinking was expected to recommence within a few days. “Completion of the central shaft remains on track for mid-2018 and will re-establish Blanket’s position as a low cost operation with excellent prospects to extend the existing mine life,” said Curtis.
He expressed optimism that 2016 would be a transformational year for Caledonia and Blanket.
Curtis said the financial and operating results for the first quarter were better than expected. “Production, as previously reported, was marginally better than target. As expected, Caledonia’s net consolidated cash was lower than at the end of December 2015 due to the continued suspension of dividends from Blanket as a result of investments at Blanket Mine and the continuation of Caledonia’s dividend,” he said.
“Net cash at March 31 2016 was better than expected due to the combined effects of slightly better than expected production, good cost control and the higher gold price.”
Blanket Mine is 49 percent owned by Caledonia Mining Corporation.
derick.khumalo