JOHANNESBURG (miningweekly.com) – Production at dual-listed Caledonia Mining’s 49%-owned Blanket mine, in Zimbabwe, decreased to 10 417 oz in the quarter ended December 31, owing to a lower head grade.
The mine had produced 11 429 oz in the fourth quarter of 2013.
Production for the full 2014, at 41 771 oz, was also lower than the 45 527 oz produced in 2013, again owing to lower head grades.
Caledonia recorded a C$316 000 loss for the quarter and a C$6.57-million profit for the full year.
CEO Steve Curtis commented that 2014 had been a challenging year, owing to the lower gold price and lower production.
“Despite the tough environment, Caledonia still generated C$3-million of cash and paid C$3.2-million in dividends to its shareholders, after C$6.8-million was invested at the Blanket mine, in Zimbabwe,” he noted.
Blanket also achieved a creditable all-in sustaining cost of $969/oz for the year, albeit on 8.3% fewer ounces of gold production.
"Towards the end of 2014, Caledonia announced a revised investment plan under which almost C$70-million will be invested at the Blanket mine over the next seven years, with the aim of doubling production and reducing costs,” Curtis added.
The implementation of the revised plan, aimed at improving the underground infrastructure and logistics and allowing an efficient and sustainable production build-up, remained on track.
The infrastructure improvements would include the development of a tramming loop and the sinking of a new 6-m-diameter central shaft from surface to 1 080 m.
The increased investment was expected to give rise to an increased production profile, which could result in additional production from resources currently in the inferred category of 70 000 oz to 75 000 oz in 2021, in addition to projected production in 2021 from current mineral reserves of 6 000 oz.
The revised plan was also expected to improve the mine’s long-term operational efficiency, flexibility and sustainability.
"In December, we published a preliminary economic assessment, which confirmed the robust economics of the revised plan, which has an internal rate of return of 267%,” Curtis said, adding that Caledonia's cash in 2014 remained strong, increasing from C$23.4-million to C$26.8-million.
Further, with the commercial environment in Zimbabwe continuing to improve, the royalty rate payable to the Zimbabwe government was reduced from 7% of turnover to 5%.
Earlier this year, the discount payable on gold sales was reduced from 1.5% to 1.25% and thewage negotiations were concluded rapidly with an average increase agreed at 3%.