Wednesday, January 09, 2013 12:04:10 PM
Caledonia Mining Corporation-Strategy Update: Blanket Mine Expects To Increase Gold Production By 90%
TORONTO, ONTARIO--(Marketwire - Jan. 9, 2013) -
Caledonia Mining Corporation
("Caledonia" or the "Company") (TSX:CAL)(OTCQX:CALVF)(AIM:CMCL)
provides an update on its strategic objective to increase
gold production from current NI 43-101 compliant resources at
the Blanket Mine in Zimbabwe ("Blanket") to approximately
76,000 ounces of gold per annum (oz pa) by 2016,
a 90% increase on Blanket's targeted gold production
for 2013 of approximately 40,000oz.
As a fully indigenised entity, Blanket can now develop and
implement its long term growth strategy.
Blanket's newly re-constituted Board of Directors, which includes
representatives of the Indigenous Zimbabwean shareholders, has
approved a budget for 2013 and strategic plan which covers the
period 2013 to 2017.
Highlights
Blanket's highly efficient metallurgical plant has considerable
surplus capacity:
Blanket can process substantial volumes of additional ore with
only a modest investment required to upgrade the existing
crushing and milling circuits;
Development of the existing ore resources above and below the
current lowest mining level (750m) at Blanket has started and
is planned to produce an additional 36,000oz pa of gold by 2016:
12,000oz pa planned to start in Q1 2014 from further development
at the Blanket mine above the 750 m level;
24,000oz pa planned to start in Q4 2015 from the No. 6 Winze
Project below the 750m level;
The above results in a combined 90% increase to 76,000oz pa from
Blanket's targeted 2013 gold production of approximately
40,000oz;
Increased production is also expected to come from the first
three of Blanket's portfolio of 18 satellite properties which are
expected to commence production in Q4 of 2013.
The eventual rate of production from these properties will be
determined by the success of on-going exploration and mining
development work. Production from these properties has not been
included in the 76,000oz gold target as the resources are
undefined at present;
Blanket's total capital investment between 2013 and 2017 is
anticipated to be approximately US$37 million:
Funded entirely from Blanket's internal cash flows;
Modest initial investments and early cash flows will enhance
Blanket's financial performance; and
Subject to achieving successful exploration results at
Blanket below 750m and the sequential development of
Blanket's remaining satellite properties a longer term potential
exists for further increases in gold production.
Surplus Plant Capacity
Since Caledonia purchased Blanket in early 2006, it has ensured,
with an eye to the future, that all the numerous plant upgrades
it has designed and installed at Blanket, have resulted, not only
in a highly efficient operation, but also in substantial surplus
capacity in its hoisting and carbon-in-leach ("CIL") circuit.
Blanket's current gold production of approximately 40,000oz pa
equates to throughput of 1,000 tonnes per day ("tpd").
Blanket currently has hoisting capacity of 3,000tpd and
CIL circuit capacity of 3,500tpd.
Blanket's crushing capacity will be increased to 3,000tpd after
minor amendments to the crushing circuits;
the existing milling capacity of 1,460tpd will be increased
to 2,900tpd following the budgeted investment of $850,000
on new rod mills.
Accordingly, Blanket will be able to process a substantial
amount of additional compatible ore following the planned
increases in the capacity of the crushing and milling circuits.
Caledonia has two approaches to accessing additional ore:
(i) exploration and subsequent development at
Blanket's satellite properties, and
(ii) down-dip exploration and development at the Blanket Mine.
Work has already commenced on development projects at
Blanket which are expected to progressively give rise
to increased annual gold production of 36,000oz pa.
The first increase in gold production is expected in early 2014,
and the targeted 36,000oz increase is expected to be achieved
in 2016.
Additional gold production will also spread Blanket's fixed costs
over more ounces of gold and could mitigate some of the
anticipated increased production costs.
The most recent quarter ended September 30th 2012 reported
cash costs of $508/oz, the lowest level yet recorded at Blanket.
Increase in Production Funded by Internal Cash Flows
The proposed increase in production at Blanket and
the exploration and pre-production development of
the first three satellite projects will require a capital
investment of approximately $4.7 million in addition to
the normal planned capital expenditures required to sustain
operations at Blanket.
The total budgeted and projected sustaining and development
capital investment at Blanket from 2013 to 2017 will be
approximately $37 million, all of which is expected to be funded
from Blanket's internal cash flows.
Subject to the strategic plan projections, including future ore
production, the price of gold and operating costs, and the
company's ability to adhere to the implementation timeline, both
Blanket and Caledonia expect to continue to pay dividends
throughout this period.
Two Part Growth Strategy Comprising:
1. Exploration and Development at Satellite Properties
Blanket holds 18 licenced satellite exploration properties,
the furthest of which is 42 km from Blanket's plant, on which
there has been some small-scale historic gold mining activity.
Any ore mined from the satellite properties will be crushed and
transported to Blanket for processing in
Blanket's metallurgical plant.
Three satellite properties, GG, Mascot and Eagle Vulture, are
currently undergoing exploration and underground development work.
GG:
This project is 7 km from Blanket, connected by an existing un-
paved road, and was previously a small, shallow, open-pit
operation.
In 2012, work started on sinking a shaft to 120m which will be
used for underground exploration, development and production.
The shaft has currently been sunk to a depth of 60m and work has
commenced on excavating the first development level at
60m below surface.
Further stations will be cut at the 90m and 120m levels.
In the process of sinking the shaft,
gold mineralization has been intersected
between 40 and 60 metres below surface with grab-sample
gold grades of between 3.5g/t and 6.0g/t.
Budgeted pre-production investment at
GG for 2013 is about $422,000;
Mascot:
This project is 42 km from Blanket,
mostly connected by a paved road, and was previously mined down
to 300m below surface.
Drilling undertaken by Blanket indicated the existence of two
mineralised zones 50 to 70 metres on either side of the mined out
area with gold grades of between 3.5g/t to 4.6g/t.
The existing shaft at Mascot has now been re-accessed down to
180m below surface and has been found to be in good condition.
Development work will commence towards the two identified
mineralised zones.
Budgeted pre-production investment at Mascot for
2013 is $366,000;
Eagle Vulture:
This project is 40km from Blanket, mostly connected by a paved
road, and was previously mined down to 70m below surface.
Surface exploration work undertaken by Blanket indicated the
existence of two extensive, un-mined mineralised zones on
either side of the old mine working zone.
Development has commenced towards the identified mineralised
zones.
Budgeted and projected pre-production investment at
Eagle Vulture is $702,000.
GG and Mascot
are expected to commence production in Q4 2013
whilst production at Eagle Venture is anticipated to
commence in early 2015.
The eventual production rate from GG, Mascot and Eagle Vulture and
their life-of-mine will be determined once exploration and
development work and metallurgical test-work on the mined
mineralization has been completed and a resource base has been
identified.
Two further satellite properties have been identified for near-
term development:
Abercorn,
which is approximately 20km from Blanket, and Sabiwa, which is
adjacent to Blanket but is not connected to
Blanket's underground infrastructure.
The combined budgeted investment at Sabiwa and Abercorn in
2013 is $1,269,000;
further investment of $4.5 million is projected for the four
years 2014 to 2017.
No guidance as to future production levels from
Sabiwa and Abercorn can be provided until exploration work
has been completed.
2. Exploration and Development at Blanket
Exploration and development at Blanket is focused on
the following projects:
No.6 Winze Project:
The deepening of the No. 6 Winze to the 1,080m level
will allow more rapid access to the Blanket ore body
below the 750m level.
The pre-production investment in this project is estimated to be
US$3.0 million.
Work on this project has commenced.
Production is expected to start in Q4 2015 and progressively
increase to approximately 600tpd, which will give rise to
incremental gold production of approximately 24,000oz pa.
This production will be in addition to the target production
from other areas of Blanket mine of 1,200 tpd (or approx.
48,000oz gold per annum) following completion of the extensions
of the 510-Level and 630-Level Haulages;
510 and 630-Level Haulages:
These projects will open up new mining areas on known resources
at AR South and Lima and will allow a
200tpd increase in ore production
commencing in Q1 of 2014 increasing to 300tpd in 2015 and
should result in gold production of
approximately 8,000oz in 2014 and a further
4,000oz in 2015; and
750-Level Haulage: This project will connect the No. 4 Shaft
with the known ore bodies at Eroica and Lima on 22-Level (750m
below surface) and will provide access for mining at
Eroica and Lima between 630m and 750m below surface.
Cross-cuts from the 750 Level Haulage will provide platforms
for further exploration of the existing ore bodies above and
below 750m.
It is envisaged that the 750-Level Haulage and related exploration
will be completed by 2016.
Budgeted investment on the 750-Level Haulage and related
exploration drilling for 2013 is $669,000 and $261,000
respectively.
Projected further investment on the 750-Level Haulage in the years
2014 to 2017 is $2,188,000.
No guidance as to future production arising from this project can
be provided until the exploration work and subsequent feasibility
study have been completed.
Further information regarding Caledonia's exploration activities
and operations along with its latest financials and Management
Discussion and Analysis may be found at
www.caledoniamining.com
Contact Information:
Caledonia Mining Corporation
Mark Learmonth
+ 27 11 447 2499
marklearmonth@caledoniamining.com
www.caledoniamining.com
Canaccord Genuity Limited
Andrew Chubb/Sebastian Jones
+ 44 20 7523 8000
Newgate Threadneedle
Beth Harris/Adam Lloyd
+44 20 7653 9850
CHF Investor Relations
Jeremy Hill
+1 416 868 1079 x 222
jeremy@chfir.com
http://tmx.quotemedia.com/article.php?newsid=57109970&qm_symbol=CAL
God Bless
TORONTO, ONTARIO--(Marketwire - Jan. 9, 2013) -
Caledonia Mining Corporation
("Caledonia" or the "Company") (TSX:CAL)(OTCQX:CALVF)(AIM:CMCL)
provides an update on its strategic objective to increase
gold production from current NI 43-101 compliant resources at
the Blanket Mine in Zimbabwe ("Blanket") to approximately
76,000 ounces of gold per annum (oz pa) by 2016,
a 90% increase on Blanket's targeted gold production
for 2013 of approximately 40,000oz.
As a fully indigenised entity, Blanket can now develop and
implement its long term growth strategy.
Blanket's newly re-constituted Board of Directors, which includes
representatives of the Indigenous Zimbabwean shareholders, has
approved a budget for 2013 and strategic plan which covers the
period 2013 to 2017.
Highlights
Blanket's highly efficient metallurgical plant has considerable
surplus capacity:
Blanket can process substantial volumes of additional ore with
only a modest investment required to upgrade the existing
crushing and milling circuits;
Development of the existing ore resources above and below the
current lowest mining level (750m) at Blanket has started and
is planned to produce an additional 36,000oz pa of gold by 2016:
12,000oz pa planned to start in Q1 2014 from further development
at the Blanket mine above the 750 m level;
24,000oz pa planned to start in Q4 2015 from the No. 6 Winze
Project below the 750m level;
The above results in a combined 90% increase to 76,000oz pa from
Blanket's targeted 2013 gold production of approximately
40,000oz;
Increased production is also expected to come from the first
three of Blanket's portfolio of 18 satellite properties which are
expected to commence production in Q4 of 2013.
The eventual rate of production from these properties will be
determined by the success of on-going exploration and mining
development work. Production from these properties has not been
included in the 76,000oz gold target as the resources are
undefined at present;
Blanket's total capital investment between 2013 and 2017 is
anticipated to be approximately US$37 million:
Funded entirely from Blanket's internal cash flows;
Modest initial investments and early cash flows will enhance
Blanket's financial performance; and
Subject to achieving successful exploration results at
Blanket below 750m and the sequential development of
Blanket's remaining satellite properties a longer term potential
exists for further increases in gold production.
Surplus Plant Capacity
Since Caledonia purchased Blanket in early 2006, it has ensured,
with an eye to the future, that all the numerous plant upgrades
it has designed and installed at Blanket, have resulted, not only
in a highly efficient operation, but also in substantial surplus
capacity in its hoisting and carbon-in-leach ("CIL") circuit.
Blanket's current gold production of approximately 40,000oz pa
equates to throughput of 1,000 tonnes per day ("tpd").
Blanket currently has hoisting capacity of 3,000tpd and
CIL circuit capacity of 3,500tpd.
Blanket's crushing capacity will be increased to 3,000tpd after
minor amendments to the crushing circuits;
the existing milling capacity of 1,460tpd will be increased
to 2,900tpd following the budgeted investment of $850,000
on new rod mills.
Accordingly, Blanket will be able to process a substantial
amount of additional compatible ore following the planned
increases in the capacity of the crushing and milling circuits.
Caledonia has two approaches to accessing additional ore:
(i) exploration and subsequent development at
Blanket's satellite properties, and
(ii) down-dip exploration and development at the Blanket Mine.
Work has already commenced on development projects at
Blanket which are expected to progressively give rise
to increased annual gold production of 36,000oz pa.
The first increase in gold production is expected in early 2014,
and the targeted 36,000oz increase is expected to be achieved
in 2016.
Additional gold production will also spread Blanket's fixed costs
over more ounces of gold and could mitigate some of the
anticipated increased production costs.
The most recent quarter ended September 30th 2012 reported
cash costs of $508/oz, the lowest level yet recorded at Blanket.
Increase in Production Funded by Internal Cash Flows
The proposed increase in production at Blanket and
the exploration and pre-production development of
the first three satellite projects will require a capital
investment of approximately $4.7 million in addition to
the normal planned capital expenditures required to sustain
operations at Blanket.
The total budgeted and projected sustaining and development
capital investment at Blanket from 2013 to 2017 will be
approximately $37 million, all of which is expected to be funded
from Blanket's internal cash flows.
Subject to the strategic plan projections, including future ore
production, the price of gold and operating costs, and the
company's ability to adhere to the implementation timeline, both
Blanket and Caledonia expect to continue to pay dividends
throughout this period.
Two Part Growth Strategy Comprising:
1. Exploration and Development at Satellite Properties
Blanket holds 18 licenced satellite exploration properties,
the furthest of which is 42 km from Blanket's plant, on which
there has been some small-scale historic gold mining activity.
Any ore mined from the satellite properties will be crushed and
transported to Blanket for processing in
Blanket's metallurgical plant.
Three satellite properties, GG, Mascot and Eagle Vulture, are
currently undergoing exploration and underground development work.
GG:
This project is 7 km from Blanket, connected by an existing un-
paved road, and was previously a small, shallow, open-pit
operation.
In 2012, work started on sinking a shaft to 120m which will be
used for underground exploration, development and production.
The shaft has currently been sunk to a depth of 60m and work has
commenced on excavating the first development level at
60m below surface.
Further stations will be cut at the 90m and 120m levels.
In the process of sinking the shaft,
gold mineralization has been intersected
between 40 and 60 metres below surface with grab-sample
gold grades of between 3.5g/t and 6.0g/t.
Budgeted pre-production investment at
GG for 2013 is about $422,000;
Mascot:
This project is 42 km from Blanket,
mostly connected by a paved road, and was previously mined down
to 300m below surface.
Drilling undertaken by Blanket indicated the existence of two
mineralised zones 50 to 70 metres on either side of the mined out
area with gold grades of between 3.5g/t to 4.6g/t.
The existing shaft at Mascot has now been re-accessed down to
180m below surface and has been found to be in good condition.
Development work will commence towards the two identified
mineralised zones.
Budgeted pre-production investment at Mascot for
2013 is $366,000;
Eagle Vulture:
This project is 40km from Blanket, mostly connected by a paved
road, and was previously mined down to 70m below surface.
Surface exploration work undertaken by Blanket indicated the
existence of two extensive, un-mined mineralised zones on
either side of the old mine working zone.
Development has commenced towards the identified mineralised
zones.
Budgeted and projected pre-production investment at
Eagle Vulture is $702,000.
GG and Mascot
are expected to commence production in Q4 2013
whilst production at Eagle Venture is anticipated to
commence in early 2015.
The eventual production rate from GG, Mascot and Eagle Vulture and
their life-of-mine will be determined once exploration and
development work and metallurgical test-work on the mined
mineralization has been completed and a resource base has been
identified.
Two further satellite properties have been identified for near-
term development:
Abercorn,
which is approximately 20km from Blanket, and Sabiwa, which is
adjacent to Blanket but is not connected to
Blanket's underground infrastructure.
The combined budgeted investment at Sabiwa and Abercorn in
2013 is $1,269,000;
further investment of $4.5 million is projected for the four
years 2014 to 2017.
No guidance as to future production levels from
Sabiwa and Abercorn can be provided until exploration work
has been completed.
2. Exploration and Development at Blanket
Exploration and development at Blanket is focused on
the following projects:
No.6 Winze Project:
The deepening of the No. 6 Winze to the 1,080m level
will allow more rapid access to the Blanket ore body
below the 750m level.
The pre-production investment in this project is estimated to be
US$3.0 million.
Work on this project has commenced.
Production is expected to start in Q4 2015 and progressively
increase to approximately 600tpd, which will give rise to
incremental gold production of approximately 24,000oz pa.
This production will be in addition to the target production
from other areas of Blanket mine of 1,200 tpd (or approx.
48,000oz gold per annum) following completion of the extensions
of the 510-Level and 630-Level Haulages;
510 and 630-Level Haulages:
These projects will open up new mining areas on known resources
at AR South and Lima and will allow a
200tpd increase in ore production
commencing in Q1 of 2014 increasing to 300tpd in 2015 and
should result in gold production of
approximately 8,000oz in 2014 and a further
4,000oz in 2015; and
750-Level Haulage: This project will connect the No. 4 Shaft
with the known ore bodies at Eroica and Lima on 22-Level (750m
below surface) and will provide access for mining at
Eroica and Lima between 630m and 750m below surface.
Cross-cuts from the 750 Level Haulage will provide platforms
for further exploration of the existing ore bodies above and
below 750m.
It is envisaged that the 750-Level Haulage and related exploration
will be completed by 2016.
Budgeted investment on the 750-Level Haulage and related
exploration drilling for 2013 is $669,000 and $261,000
respectively.
Projected further investment on the 750-Level Haulage in the years
2014 to 2017 is $2,188,000.
No guidance as to future production arising from this project can
be provided until the exploration work and subsequent feasibility
study have been completed.
Further information regarding Caledonia's exploration activities
and operations along with its latest financials and Management
Discussion and Analysis may be found at
www.caledoniamining.com
Contact Information:
Caledonia Mining Corporation
Mark Learmonth
+ 27 11 447 2499
marklearmonth@caledoniamining.com
www.caledoniamining.com
Canaccord Genuity Limited
Andrew Chubb/Sebastian Jones
+ 44 20 7523 8000
Newgate Threadneedle
Beth Harris/Adam Lloyd
+44 20 7653 9850
CHF Investor Relations
Jeremy Hill
+1 416 868 1079 x 222
jeremy@chfir.com
http://tmx.quotemedia.com/article.php?newsid=57109970&qm_symbol=CAL
God Bless
My opinions are my own and and DD I post should be confirmed as unbiased
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
