Caledonia sets aside US$34m to expand its gold mining projects in 2024

Caledonia Mining is to spend US$34 million to expand gold production in 2024, including plans to step up exploration at its newly acquired mining assets.

The company produced 75,416 ounces of gold in 2023, according to its latest update. This was 6.6% lower than the 80,775 ounces produced in 2022, which was a record for the company. However, despite the dip, the 2023 output was still within the 75,000-80,000 ounces that the company had projected at the start of the year.

For 2024, the company is spending US$34.4 million, an increase from the US$21 million that it budgeted for capex last year. This year, Caledonia will spend $20 million to sustain current operations and another $14.4 million for expansion. This includes investment in a new tailings storage facility with a life of 12 years as well as more underground development at Blanket Mine. Expansion expenditure also includes $2 million for exploration at Motapa and US$3.5 million on further work on the Bilboes feasibility studies. Caledonia bought Motapa from Metallon in 2022 and completed the acquisition of Bilboes early last year in a transaction worth US$65.7 million

Mark Learmonth, Chief Executive Officer, says the company made a comeback after a tough first half. The company expects gold output to be stable at within the current range in 2024.

“Our 2024 guidance of 74,000 to 78,000 ounces assumes that Blanket will broadly maintain the production rate achieved in 2023 and reflects the prudent decision to suspend mining in lower margin areas which include lower grades and volumes, and higher costs,” says Learmonth.

The company is benefitting from its investment in a central shaft, which has almost doubled production. Now the company wants more growth by investing in more assets to add to Blanket. Caledonia believes exploration at Bilboes would confirm a project able to produce 170,000 ounces per year, which would made it the country’s biggest gold mine.

“Our wider capital expenditure programme continues to focus on unlocking value and delivering our multi-asset growth pipeline in Zimbabwe with Motapa and Bilboes, whilst maintaining a disciplined focus on cost and capital allocation.”

Zimbabwe’s gold deliveries fell by 15% in 2023, as the industry felt the impact of rising costs, power shortages and government’s policy on the currency.

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