Caledonia to invest $37m in Blanket Mine

Blanket Mine was last year the first foreign owned mine to fully comply with the indigenisation and economic regulations when it sold 51 percent of its shareholding to indigenous groups.

In a strategy update, Caledonia said the recently reconstituted board of Blanket had approved the 2013 budget and the 2013 to 2017 strategic plan.

The mine’s capital investment would be funded from internally generated resources.

Caledonia said the capital projects were unlikely to affect payment of dividends.

“The proposed increase in production at Blanket and the exploration and pre-production development of the first three satellite projects will require a capital investment of approximately $4.7 million in addition to the normal planned capital expenditures required to sustain operations at Blanket.

“The total budgeted and projected sustaining and development capital investment at Blanket from 2013 to 2017 will be approximately $37 million, all of which is expected to be funded from Blanket’s internal cash flows.

“Subject to the strategic plan projections, including future ore production, the price of gold and operating costs and the company’s ability to adhere to the implementation timeline, both Blanket and Caledonia expect to continue to pay dividends throughout this period,” the statement said.

It said it planned to increase production by 90 percent from the targeted 40 000 ounces this year to 76 000 ounces by 2016 from deep down exploration at Blanket Mine while additional gold was expected from the development of satellite properties owned by the company.

The furthest of the satellite properties is about 42 km from Blanket Mine.

Production from the first three of the 18 satellite properties is expected to start in the fourth quarter of this year.

The three satellite properties expected to come into production are GG, Mascot and Eagle Vulture.

GG is 7 km from Blanket while Mascot is 42 km from Blanket and mostly connected by a paved road, and was previously mined down to 300m below surface. Eagle Vulture, 40km from Blanket, was previously mined down to 70m below surface.

Caledonia said Blanket’s metallurgical plant had surplus capacity and could process substantial volumes of additional ore with only a modest investment required to upgrade the existing crushing and milling circuits.