Caledonia Mining Corporation says it has completed its shaft sinking at the new central shaft at Blanket Mine, part of the London and New York-listed firm’s plan to ramp up gold production.
The project has been in progress since early 2015 and the company says it has spent US$44 million sinking a new shaft from surface to a depth of over 1,200 meters.
The project now moves to the equipping phase prior to commissioning, which is expected during the third quarter in 2020, Caledonia said in a statement. Production from Blanket mine is then expected to progressively increase to the target of 80,000 ounces of gold per year from 2022 onwards.
The company expects the increased production, combined with economies of scale and lower future capital investment, will result in significant increases in Caledonia’s profit and distributable cash.
“Completion of the shaft sinking is an important milestone in Caledonia’s investment plan,” said Steve Curtis, Caledonia’s Chief Executive Officer.
“We now commence the equipping phase, which will take approximately 12 months, after which we can commence the production ramp-up towards our target of 80,000 ounces of gold in 2022.”
Approximately 12,712 ounces of gold were produced at Blanket during the quarter to June 2019, 6.4% above the 11,948 ounces produced in the first quarter of 2019. Gold produced for the first half of 2019 was 24,660 ounces, approximately 3.4% below the 25,582 ounces produced in the first half of 2018.
Caledonia maintains its 2019 full year production guidance of 53,000 to 56,000 ounces and remains on track with progress towards its target of 80,000 ounces by 2022.
Presenting his mid-term budget statement on Thursday, Finance Minister Mthuli Ncube said Zimbabwe projects a 20% decline in gold production in 2019, from an all-time high of 35 tonnes in 2018 to 28 tonnes this year. In 2017, gold output was 24 tonnes.
Foreign currency shortages have slowed output across the gold sector, a crisis that peaked with RioZim suspending production temporarily last year. However, Caledonia has said “production at the Blanket Mine has continued without interruption”.