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Caledonia's Zim gold mine boosts production

by Staff Reporter
06 Jan 2016 at 14:19hrs | Views
Toronto Stock Exchange-listed Caledonia Mining Corporation is pinning its hopes of lowering production costs on increased gold output.

The firm says it is targeting production of 50,000 ounces of gold in their 2016 business year.

Caledonia chief executive officer Steve Curtis said on Wednesday: "Due to the high fixed-cost component at Blanket [Mine] and the generally stable environment for input costs, the projected increase in production to approximately 50,000 ounces of gold is expected to result in a lower average production cost per ounce."

Blanket Mine is the Canadian firm's primary entity. Caledonia holds a 49 percent stake in the mine, having acceded to Zimbabwe's indigenisation and economic empowerment laws, which compel foreign-owned entities with a capital base of US$500,000 to sell 51 percent of their shareholding to locals.

Blanket Mine is a low-cost producer. In 2014, its on-mine costs were US$652 per ounce of gold and all-in sustaining cost was US$969 per ounce of gold produced.

Caledonia said its total production for 2015 rose to 42,806 ounces, up from 41,771 ounces in the previous year, representing a 2,5 percent increase.

"Target production for 2016 of approximately 50,000 ounces represents an increase of approximately 17 percent from the production achieved in 2015," Curtis said.

"The increased production in 2016 will be derived from No 6 Winze, which is scheduled to commence production in the middle of the first quarter of 2016, and will provide access to ore below 750 metres.

"The increased production reflects the continued progress in implementing the revised investment plan announced on November 3 2014. The completion of the tramming loop on 22-level (750m below surface) slightly ahead of schedule in mid-2015 was an important factor which contributed to the increased production by alleviating the underground logistical problems which constrained production in 2014," Curtis added.

"Production in the fourth quarter of 2015 was higher than in both the preceding quarter and the comparative quarter of 2014. Production in 2015 was also higher than the previous year and slightly exceeded our guidance."

Approximately 11,518 ounces of gold were produced during the fourth quarter of 2015, representing a 10,6 percent increase on the gold produced in Q4 2014 (10,417 ounces) and a 5,4 percent increase on the gold produced in Q3 2015 (10,927 ounces), Caledonia said.

The company added that its quarterly production profile was expected to be approximately 10,700 ounces of gold in the first quarter of 2016, increasing to approximately 14,000 ounces of gold by the fourth quarter of 2016.

In his 2016 National Budget last November, Zimbabwe's Finance and Economic Development Minister Patrick Chinamasa said the mining sector was set to rebound, "growing by 2,4 percent on the back of planned investments and largely driven by stronger performance of gold, chrome, coal, nickel, platinum and diamonds."

Chinamasa said government expected gold output of 20,1 tonnes in 2016. He said the projected growth took into consideration the constraints facing the sector, such as depressed international mineral prices, falling demand in export markets, financing issues and power shortages.

Gold was trading at US$1,083 Wednesday morning.

Source - African News Agency (ANA)