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Caledonia Mining sees "substantial improvement" in gold production from Blanket mine
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LONDON (Zimbabwe Investor) –

Caledonia Mining says it has seen a substantial improvement in gold production from its Blanket mine in Zimbabwe.

The firm produced 11,560 ounces of the yellow metal in the second quarter to June 30 - 26 per cent higher than in Q1 and 41 per cent higher than in the second quarter of 2011, it revealed.

The increase was put down to completed maintenance work on of scheduled maintenance work at the no.4 shaft which was completed in early May.

The average gold recovery during the quarter increased to 93.9 per cent, compared to 93.2 per cent in the preceeding quarter.

Meanwhile, the company's cash operating costs in the quarter decreased to US$547 per ounce compared to US$648 per ounce in Q1.

The firm also told investors that in last month alone (July), the company produced 4,708 ounces.

The average selling price was US$1,599 compared to US$1,688 in the preceeding quarter, it added.

Broker Canaccord Genuity maintained its 'buy' recommendation for the shares and 16 pence a share price target.
"Having produced a total of 20.7koz in H1/12 the company looks well positioned to reach its 2012 production target of 40koz.

"High grade ore continued to be milled in July that boosted output to 4.7koz (56koz annualised) in that month," analyst Dmitry Kalachev said.

Broker Fairfax was equally positive: "The numbers from Caledonia are impressive with production up and cash operating costs falling – despite the high royalty payments and costs of indigenisation, the company is generating good cash flow."

Stefan Hayden, the company's president and chief executive, said thisw morning: "Increased gold production, further improvements in gold recoveries and continued close attention to costs contributed to a reduction in average operating costs..."

He added: "The strong operating performance is a testament to the hard work of the management and employees at Blanket and shows the benefits of Caledonia's recent investments in the Blanket mine."
He noted the firm had made good progress in implementing indigenisation at the mine and that all of the transaction documents have been signed.

Last week the firm released some cautiously optimistic drill results from its Nama base metal project in Zambia. A total of 13 of the 18 holes drilled so far have hit copper at an average weighted grade of 0.52 per cent over 1,300 metres.

The mineralisation extends from surface to 580 metres and is open at depth and to the west and is between 10 and 27 metres thick.

Caledonia has already begun the next phase of drilling, expected to entail a further 10 holes for a total of 2,100 metres, with the aim to identify a possible westerly extension to the mineralised zone and improve the confidence level of the resource data.

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