Name of the Project
Blanket gold mine expansion project.

Location
Zimbabwe.

Client
Caledonia Mining Corporation (49%).

Project Description
A revised investment plan and production projection were announced in 2014.

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

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 the new 6-m-diameter, four-compartment Central shaft.

Meanwhile, Caledonia Mining announced in November 2017 that it was planning to extend the depth of the Central shaft at the Blanket mine by 250 m to 1 330 m.

The extension, which will cost about $18-million, is expected to be commissioned by the first quarter of 2020.

Caledonia is still constructing the Central shaft and states that extending the shaft before it has been completed, equipped and commissioned is cheaper, quicker and less disruptive than a subsequent extension after commissioning.

The extension will add two further production levels than those already planned. They will provide access to the indicated and inferred resources below 30 Level and potentially increase Blanket's projected life-of-mine by a further four years to 2031.

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

Potential Job Creation
Not stated.

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
The shaft extension and the additional production levels are estimated to cost about $18-million and will be funded by Blanket’s in-house cash generation.

Caledonia has spent about $60-million, comprising sustaining capital of about $15-million and about $45-million in expansion capital, since the start of the project.

The company expects to spend $21-million this year, $21-million in 2019 and $21-million in 2020, inclusive of all sustaining, expansion and drilling capital.

“Once we are in production in 2021, we will be in a position where production is rising, as a result of the investment made. Costs are expected to decrease, owing to the benefits of economies of scale. Therefore, after 2020, Caledonia will be in a convenient position,” Caledonia Mining corporate development and investor relations VP Maurice Mason has said.

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
Caledonia Mining believes that its Blanket gold mine will achieve continued record production in future, owing to the company’s drive for expansion.

The Blanket mine expansion will increase underground and operational flexibility and rapid access to the Blanket zone below 750 m and potentially expand the mine’s life by another four years to 2031.

Caledonia Mining’s plan to extend the depth of the Central shaft by 250 m to 1 330 m will create an additional two levels, which will increase mining flexibility and further derisk target production. This leaves Caledonia with a distinct window of opportunity to continue with its investment.

“The Central shaft is already a transformational project for our business, and to extend the project by an additional 250 m in depth, including development on 34 and 38 levels, will potentially secure Blanket’s operating future for the next 20 years, taking exploration potential into account,” CEO Steve Curtis has stated.

The Central shaft has reached a depth of 990 m, with the station for the second new haulage level completed. Shaft sinking is under way.
 

Caledonia has also initiated a midshaft loading system at Blanket using the existing Central shaft infrastructure to handle development waste. This is expected to improve Blanket’s waste handling capacity and alleviate pressure on Shaft 4, which, in turn, should have a positive effect on production flexibility and horizontal development.

While the extension of the Central shaft and the introduction of midshaft loading are expected to extend the completion date for the shaft from late 2019 to early 2020, it should not delay the target production of 80 000 oz/y by 2021.

Exploration at Blanket is also continuing “with encouraging results”. In November, the resource was upgraded, which increased the gold contained in the measured and indicated resources by 6% to 714 000 oz. The gold contained in the inferred resources increased by 47% to 887 000 oz.

Mason points out that, while there are several exploration targets, the shaft has to be sunk further to continue exploration drilling.

Caledonia is exploring the main exploration targets at the mine and pursuing several satellite projects around it.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The project remains on target for first production in January 2016, with production expected to reach the target rate of 500 t/d in May 2017.

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