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Blanket Mine is on course to produce approximately 44 000 ounces in 2013, 10 percent higher than the previous projection of 40 000 ounces

Golden Sibanda Senior Business Reporter
TORONTO Stock Exchange-listed Caledonia Mining Corporation expects its Zimbabwean associate, Blanket Mine, to exceed the targeted annual gold output by 10 percent this year. The projection by Caledonia came after gold production in the 2013 second quarter came in well ahead of budget and immediate previous production records.
Output at Blanket, an indigenised associate of Caledonia Mining Corporation, however, declined to 22 060 ounces in the first half of the year from 24 739oz in the last six months of last year, having risen from 20 724oz in the first half of 2012.

“Management believes that Blanket is on course to produce approximately 44 000 ounces in 2013, 10 percent higher than the previous guidance of 40 000 ounces. Gold produced in quarter 2 was 11 588 ounces (Q1 2013, 10 472 ounces; Q2 2012, 11 560 ounces) and was ahead of the planned target of 10 000 ounces,” Caledonia said.

Gold production in the quarter increased from the previous quarter due to the planned increased mine production throughput in response to the lower gold price. The firm said Q3 production has started well. Production in July 2013 was approximately 4 480oz, 35 percent higher than the planned monthly target of 3 300oz.

Blanket’s operating cost per ounce includes labour, consumables, electricity, general and administrative costs and the 7 percent revenue royalty payable to the Zimbabwe stood at US$769 in 2012, US$856 in Q1 of 2013 and US$689 in the second quarter. But Caledonia said the adverse effect of the lower gold price on Blanket Mine’s profitability was also mitigated somewhat by lower costs in the second quarter of 2013.

“At the prevailing gold price, while Blanket can continue to sustain its current operations and invest in its growth projects, there is little remaining profit. Mining, by its very nature, requires substantial long- term investment, if production is to be increased while extending mine life,” said Blanket chairman Mr Nick Ncube.

In response to the lower gold price, Blanket Mine introduced measures to increase mine production from approximately 1 030t per day which was achieved in the first quarter of 2013, to approximately 1 125tpd in the second quarter of 2013.

Increased gold production in the second quarter was not achieved by high-grading the mine. Average realised gold grade in the second quarter was 3,82grammes per tonne, from 4,04 g/t achieved in previous quarters and closer to the average mine grade of 3,84 g/t.

Notwithstanding higher plant throughput and slightly lower grade, gold recovery was unchanged in the quarter at 93,2 percent compared to 93,3 percent in the previous quarter. Exploration at Blanket Mine below 750m and at Blanket’s satellite projects continues with encouraging results evaluated so far. Exploration drilling at the Blanket ore body below 750m produced some good intersections. Development and exploration work at GG and Mascot continues to identify gold mineralisation which warrants further evaluation.