Caledonia Mining Corporation, one of Zimbabwe’s biggest gold producers, plans to spend $37 million towards significantly ramping up bullion output from its flagship Blanket gold mine.
Zimbabwe’s gold mining industry is slowly recovering from operational constraints occasioned by the hyper-inflation period which forced miners to cancel expansion projects and to halt further exploratory work. The deregulation of the selling of gold has also enabled Zimbabwean gold miners to sell directly to world markets.
Caledonia is planning to ramp up gold production from its Blanket mine in southern Zimbabwe by as much as 90 percent to 76 000 ounces this year. It is expected that its production for 2012 surpassed the 40 000 ounces mark.
The $37 million in capital expenditure will be spend over the period to 2017, the company said on Wednesday. Caledonia’s capital investment into its gold mining activities is despite uncertainty by investors over the indigenisation policy and elections that could be held this year to end the current coalition government set-up.
“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.”
The envisioned 90 percent increase in the Blanket mine production will however require about $4.7 million while the other capital expenditure will be spent on satellite gold properties as well as other projects in close proximity of the mine.
“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,” added the company.
The Africa-focused mining and exploration company is now fully indigenised in Zimbabwe. An analyst told Ventures Africa that this will allow the company to focus more on its core activity – mining gold. The company’s compliance with the contentious indigenisation policy follows recent disagreements and haggling with the government over the issue.
Local investors now account for 51 percent shareholding of Blanket gold mine and these include black Zimbabwean groups, the community around which the company operates and a grouping of the company’s employees empowered under an employee share ownership scheme.
The company intends to develop three satellite gold properties. Two of these properties are expected to be fully operational in the last quarter of 2013. In the third quarter to the end of September last year, the Blanket mine reached a new record of 12,918 ounces compared to 9,743 ounces produced in the previous contrasting period.