Blanket's gold production declines

HARARE - Blanket Mine (Blanket) gold production declined to 41 771 ounces in 2014 from 45 527 ounces registered in 2013 due to lower head grade.

Steve Curtis, chief executive of Caledonia Mining Corporation (Caledonia) — the parent company of Blanket — said 2014 was another challenging year due to the lower gold price and lower production.

“Despite the tough environment Caledonia still generated $3 million of cash and paid $3,2 million in dividends to its shareholders after $6,8 million was invested at the Blanket Mine,” he said.

Curtis noted that the Gwanda-based miner also achieved a creditable all-in sustaining cost of $969 per ounce of gold compared to $973 per ounce in 2013, albeit on 8,3 percent fewer ounces of gold production.

Towards the end of 2014 Caledonia announced a revised investment plan under which approximately $70 million will be invested at the Blanket Mine over the next seven years, with the objectives of doubling production and reducing costs.

“Implementation of the revised plan remains on track,” said Curtis.

In December 2014 the company published a preliminary economic assessment which confirmed the robust economics of the revised plan which has an internal rate of return of 267 percent.

“Caledonia’s cash generation in 2014 remained strong and Caledonia increased its net cash from $23,4 million to $26,8 million as at December 31, 2014,” he said.

Curtis noted that the commercial environment in Zimbabwe continues to show signs of improvement.

“In the fourth quarter of 2014 the royalty rate payable to the Zimbabwe government was reduced from seven percent of turnover to 5 percent. In early 2015 the discount payable on gold sales was reduced from 1,5 percent to 1,25 percent and the 2015 round of wage negotiations has been settled rapidly with an average increase agreed at three percent,” he added.


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