Name and Location
Blanket gold mine expansion project, Zimbabwe.

Client
Caledonia Mining Corporation (49%).

Project Description
A revised investment plan and production projection have been announced for the Blanket mine.

The revised plan aims to improve the underground infrastructure and logistics and allow for an efficient and sustainable production build-up.

The infrastructure improvements will include the continuation of the No 6 Winze  shaft the development of a tramming loop 650 m below surface and the sinking of a new 6-m-diameter, four-compartment Central shaft, which will eventually be sunk to 1 080 m below surface, providing access to the current inferred mineral resources below 750 m and allowing for further exploration, development and mining in these sections along the 3-km-long Blanket strike.

The revised plan thus considers the expansion project below 750 m as a standalone project.

The increased investment pursuant to the revised plan is expected to increase production from inferred resources of about 70 000 oz in 2015 to 80 000 oz in 2021, in addition to projected production in 2021 from proven and probable mineral reserves of about 6 000 oz.

The revised plan is also expected to improve Blanket’s long-term operational efficiency, flexibility and sustainability.

Net Present Value/Internal Rate of Return
Based on the revised plan, the best-estimated net present value of the extension project has been calculated at $65-million at a real discount rate of 8.36%. The internal rate of return has been calculated at 42%.

Value
$50-million is expected to be spent from 2015 to 2017 and about $20-million from 2018 to 2020.

All capital expenditure is expected to be funded from Blanket’s in-house cash flows and existing facilities.

Duration
Production is expected to start in 2021.

Latest Developments
Construction of the Blanket gold mine is “going as planned” and progressing well, Caledonia Mining has reported.

CFO Mark Learmonth has said the company’s $70-million development plan, which will be executed over the next five years, will double production at the mine to about 80 000 oz/y by 2021.

Work on the Central shaft, which started late last year, is “going fantastically well” he has added.

The area on which Caledonia is working is much bigger than the company expected and it has excavated a hole where it is going to place the shaft column where the headgear will be erected.

“This is about 9 m × 9 m × 5 m deep. Once the concrete has set, we can actually start the serious business of sinking the shaft,” Learmonth says, adding that the shaft should be completed by early 2018.

The mine has acquired the required winders from South Africa’s Harmony Gold, stating that one winder is “currently being shipped up to the mine”, while the other winder is being refurbished in Johannesburg.

The smaller components of the expansion project, which includes the sinking of a subvertical shaft, are also progressing well.

The shaft was completed last month and is now being equipped, which should have been completed by the end of August, with first production from that shaft expected in January next year.

Meanwhile, the smallest part of the mine’s revised development plan – the tramming loop 650 m below surface – has been completed.

The company expects to produce about 32 000 oz this year, ramping up to 50 000 oz next year.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Caledonia Mining, tel +1 416 369 9835 or email info@caledoniamining.com.