Caledonia targets 50 000oz by 2015

HARARE - Canada-based miner Caledonia Mining Corporation (Caledonia) says plans are on course to ramp up production of its Zimbabwean gold producer Blanket Mine to over 52 000 ounces (oz) in 2015.

The local unit, 49 percent owned by Caledonia, is currently implementing a growth strategy, targeted at significantly increasing production, with 48 000 oz expected this year.

“New production areas have and are being developed,” said Stefan Hayden, Caledonia’s president and chief executive.

The gold miner, which implemented its indigenisation plan in 2012, noted that further increases in production are expected following completion of its Winze Project, intended to provide access to deeper resources below 750 meters.

Meanwhile, lower tax payments enabled the group to generate stronger cash flows in the first quarter to March 2014.

The dual-listed miner’s tax expense stood at $1,3 million during the quarter under review compared to $2,3 million in prior comparable period.

Cash from operating activities increased to $6,2 million from $2,2 million.

However, revenues dipped from $19,2 million to $17 million while pre-tax profits went down from $7,8 million to $5,5 million.

Gold sales were 12 210 ounces, up from 12 000 ounces, but profits declined as the average price per ounce fell to $1 288 from $1 600.

The all-in sustaining cost was steady at $923 per ounce.

Blanket Mine produced 10 200 ounces in the first quarter of 2012, marginally lower than 2013’s output.

Exploration work continues and is expected to boost production.

It is anticipated that an increase in “unavoidable internal dilution” due to low grade lenses within the ore zone will put pressure on the mined grade over the coming months.

The average mined grade is expected to be between 3,6 grams per tonne (g/t) and 3,7 g/t, compared with initial expectations of 3,83 g/t for the next two quarters.

The company ended March with $26,7 million in cash, up from $25,2 million the year before.

Hayden noted that underlying costs at Blanket Mine remain stable.

“There have been no significant increases in electricity or consumable costs and the 2014 labour negotiations have recently been finalised at an across-the-board increase of approximately five percent. It is expected that Blanket’s on-mine cash costs will decrease as production increases,” he said.

He added that Blanket has received all payments due from Fidelity

Printers and Refiners — to which all Zimbabwean producers must sell their gold — in-full and on-time.


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