[miningmx.com] – TORONTO-listed Caledonia Mining Corporation is to mine for gold at a depth of 750 metres at its flagship Blanket gold mine in Zimbabwe which it now owns 49% after transferring majority interest in the mine to black Zimbabwean groups in line with the country’s indigenisation laws.
The Blanket gold mine, situated in the southern part of the country, is one of the major gold producers in the country. Caledonia is hoping to expand the resource and ore body of the mine by tapping into deposits that are as deep as 750 metres below the surface.
Caledonia Mining Corporation CEO, Stefan Hyden, said his company had been buoyed by the low cost base the Blanket gold mine continues to enjoy in a Zimbabwean environment characterised by mounting revenue demands from the government.
All foreign owned miners are required to donate $10m to community share ownership schemes in addition to royalties and other normal taxes that have been deemed high. It is now also mandatory for gold miners in Zimbabwe to sell their bullion through Fidelity Printers, a division of the Reserve Bank of Zimbabwe (RBZ).
“Underlying costs at Blanket 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 per cent.
It is expected that Blanket’s on-mine cash costs will decrease as production increases,” said Hyden.
However, the company recorded a 61% rise in capital expenditure attributable to expansion purposes. The current exploration programme to tap into gold resources that are 750 metres below the surface is part of efforts to ramp up bullion production from Blanket to 52 000 ounces per year by 2015.
The company said yesterday that it was on course to produce 48 000 ounces of gold this year despite the 11% decline in revenue to 17.1 million Canadian dollars for the first quarter period. The decline in revenues for the period has been attributed to a 20% slowdown in gold prices after the company sold 12,210 ounces at $1,288 per ounce.
“Blanket has surplus metallurgical plant capacity and is sufficiently cash generative so that, provided the investment climate is acceptable, Caledonia could invest in projects with a view to further increasing production, thereby helping to maintain downward pressure on the cost per ounce of gold produced,’ the company said.
