Zimpapers Logo

Caledonia Mining plans to invest about $70 million on the implementation of a new mine plan at Blanket Mine over the next five years

Business Reporter
Independent South African- based mining consultancy company, Minxcon (Pvt) Limited that was tasked to do a technical study at Blanket Mine by Caledonia Mining has successfully completed a report that will pave way for the implementation of a new mine plan.

Caledonia said in a statement that its board and management have completed a review of alternative expansion and diversification plans for Caledonia.

It added that the board and management had addressed the revised production projections for the Blanket Mine and the possible benefits of diversifying Caledonia’s production base.

The technical reports comprise an extension from the 750-metre level to 1 120-metre level.

Toronto Stock Exchange-listed Caledonia Mining plans to invest approximately $70 million in the project in the next five years as the group steps up efforts to increase gold production.

The objectives of the revised plan are to improve the underground infrastructure and logistics at the Blanket Mine and allow an efficient and sustainable production build-up.

The investment proposed in the revised plan is expected to raise production from resources currently defined as inferred of approximately 70 000-75 000 ounces in 2021.

This is an addition to projected production in 2021 from proven and probable mineral reserves of approximately 6 000 ounces.

The revised plan is also expected to improve Blanket’s long-term operational efficiency, flexibility and sustainability.

Commenting on the publication of the technical report, Caledonia chief executive Mr Steve Curtis said the internal rate of return and Net Present Value (NPV) are derived by Minxcon using a real gold price of $1 250 per ounce

He said NPV is calculated by Minxcon using a real discount rate of 8, 36 percent.

“I am encouraged that the revised investment plan for the Blanket Mine has been validated by Minxcon, an external independent consulting group.

The high projected internal rate of return for the investment confirms this to be a very exciting project.

“The high proportion of the investment that will be recovered from the mining of reserves and resources with a higher level of confidence than inferred resources, also supports our view that the revised investment plan has been prepared on a conservative basis.”

The PEA includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves.

The key conclusions arising from the report noted that the internal rate of return arising from the revised plan was calculated at 267 percent while the net present value for Blanket Mine arising from reserves.

The report stated that the inferred resources used in the revised plan were calculated at $147 million.

The study highlighted that only 3 percent will come from resources that are currently classified as inferred and the mining group said there is no certainty that the PEA will be realised.