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Harare - Toronto-listed Caledonia Mining is to sink a new shaft at its cash-yielding Blanket gold mine in Zimbabwe, a development expected to give the company an additional 75 000 ounces of the yellow metal in seven years’ time.
The investment into a new shaft at Blanket comes at a time when other mining investors are treading carefully in Zimbabwe. Aquarius Platinum [JSE:AQP] and Impala Platinum [JSE:IMP] - which jointly own the Mimosa mine - are no longer pursuing sinking of a second shaft at the platinum mine.
Platinum miners in Zimbabwe have been accused of dragging their feet in building a platinum group metals refinery in Zimbabwe, and now face a ban on unprocessed platinum exports. However, miners of other minerals in the country such as nickel and gold are progressing with their investments, with Mwana Africa also keen to revive and expand its nickel mining and smelting operations in the country.
Caledonia said on Monday that "planned Investment of approximately $50m in the period 2015-2017 and approximately $20m further in the period 2018-2020" would be sunk into a programme to expand production at its flagship Blanket gold mine through the new shaft.
All the financial resources required for the new shaft will be sourced from cash generated from the mine. By the end of March this year, the mine was operating on a debt-free book and had about $26.7m in cash resources.
"The new Central Shaft will provide access to the current inferred mineral resources below 750 metres and allow for further exploration, development and mining in these sections along the known Blanket strike, which is approximately 3 km in length," the company said in a revised investment strategy note released on Monday.
Stefan Hyden, the company's CEO, said it will explore other investment options in Zimbabwe on conclusion of the expansion project, which will add on about 400 new permanent employees.
The new four-compartment shaft will be 6 metres in diameter and reach as deep as 1 080 metres below the surface. It will help the company reach its 75 000 oz production target by 2021 and an additional 6 000 oz of gold from proven and probable reserves by the same year.
"The Central Shaft will also enhance the Mine's operational flexibility by reducing its current dependence on a single production shaft and give it the flexibility to continue to explore and develop at depth.
"By 2018 I hope that Blanket will have doubled production and further reduced its cost per ounce, which are already amongst the lowest of any African gold producer," said Hyden.
- Fin24
