Caledonia completes equipping new shaft, project will lift gold output by 45%

Final touch: Surface elevation being assembled at Blanket mine's central shaft

Caledonia Mining says the equipping of the central shaft at Blanket Mine is now complete, on track for commissioning in the first quarter of 2021.

The project entailed deepening the shaft to 1,200 metres in order to access more resources. It was completed “considerably below budget” and is expected to lift annual gold output to 80,000 ounces of gold in 2022, the company says.

“Central Shaft is one of the largest gold mining investment projects in Zimbabwe and will be transformational to our business:  our target production is set to increase by 45% to 80,000 ounces by 2022 while our long-term all-in sustaining costs are expected to drop to US$700-US$800 per ounce,” said CEO Steven Curtis said on Monday.

“Central Shaft will also position us to step-up our deep level exploration which, if successful may extend Blanket’s life of mine, which is currently to 2034.”

The headgear – the structure that wheels miners and ore up and down shafts and is a marker for any mine – will be completed by the end of 2020.

Caledonia investment

Caledonia says the US$60 million it has spent on the project is lower than the initial sinking contractor estimates of about US$100 million.

“We’ve invested approximately $60 million in this project since we first announced it in 2015 and it has been owner-built and fully funded through internal cash flow and has been completed at a cost that is well below initial quotes received,” Curtis said.

Completing the central shaft project now frees up capital for the company, and focus will now turn to Caledonia’s approach to new investment. The company recently signed an agreement with government to explore possible investment in state-owned mines. Beyond that, the company is looking for brownfield investments that do not demand significant capital to restore.

“Initially, those (new opportunities) could be quite small, they could just be getting access to do exploration on new properties, but it’s going to be a step in the right direction,” according to Caledonia Chief Financial Officer Mark Learmonth.