Caledonia Mining Corporation (CMCL)

[NYBob]

Caledonia Mining almost doubles profit at Blanket Gold Mine
18th May 2011, 7:30 am by Jamie Ashcroft




Secondary Crushing & Screening Circuit feeding the Mill bin.


Carbon in Leach Circuit


Genset Hall: Interior (Date taken 10 May 2011)

Caledonia said it has made significant progress in addressing
the production constraints at the Blanket mine in Zimbabwe

Caledonia Mining (LON:CMCL, TSE:CAL) revealed that it has almost doubled
profits from the Blanket gold mine in Zimbabwe during
the first quarter of 2011.

This was the result of growing production, reduced costs
and higher sale prices.

"I am very pleased to report a strong first quarter performance
for 2011,” chief executive Stafan Hayden said.

In the three months ended 31 March 2011 Caledonia produced 7,322 ounces
of gold from the Blanket Gold Mine, 17 percent more than
the preceding quarter.

Average cash costs fell 18 percent to US$648 an ounce and the
average sale price was US$1,397 an ounce.

It made a US$5.248 million gross profit for the first quarter,
almost twice as much as the US$US$2.8 million gross profit
for the fourth quarter of 2010.
It ended the period with net cash and cash equivalents
of $1.4 million.

“The increased production coupled with the continued strength
in the gold price and a reduction in Blanket's cash cost
resulted in a substantial improvement in Caledonia's
profitability and cash generation,” Hayden said.

"We have made significant progress during the current quarter
to address the remaining constraints which, once solved,
should enable us to reach our target of 10,000 ounces
per quarter.

He added: “A new ore pass was raise-bored and commissioned
on May 13, 2011.

The commissioning of the complete standby generating system
commenced on May 16, 2011 and is expected to be completed
by the end of May, after which Blanket will be able to
maintain full operations during any interruption to
the normal power supply.

“I am confident that Blanket will achieve its targeted
quarterly production from the third quarter of 2011.”

http://www.caledoniamining.com/blanket2test2.php

http://www.caledoniamining.com/blanket3test2.php



http://www.caledoniamining.com/blanket4test2.php



The group also has the Nama mining licences in Zambia’s
Copperbelt.

Caledonia has four large scale, long term, contiguous mining
licences covering more than 800 square kilometres in one of
the world premier locations for conventional copper-belt
type mineralisation.

In this morning’s update Stefan Hayden highlighted the progress
being made on the ground in Zambia.

"The drilling program at the Nama base metals project in
Zambia commenced in March 2011 to identify typical copper-belt
type mineralization,” Hayden said.

“This drilling program is expected to be completed by
the third quarter 2011."

The initial drill programme is fairly modest.

At first the plan is to drill four 800 metre holes on
the Konkola East prospect –
which borders the world class Konkola copper property where
Vale and African Rainbow Minerals is investing US$400 million
to start production in 2013.



Caledonia intend to carry out a more aggressive drilling
campaign, subject to the initial results, once it has a
better appreciation of the potential scale of
the opportunity at Nama.

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