Production from indicated and measured mineral resources at Blanket Mine in Gwanda is seen tapering off by nearly 86 percent to 6 000 ounces by 2021, but inferred resources are expected to rise significantly over the same period.
The mine expects to produce 42 000oz this year but this is likely to fall to 6 000oz by 2021. It, however, foresees increased production coming from inferred mineral resources estimated to rise from about 4 000oz up to 75 000oz by 2021.
A report commissioned by Canadian resources firm Caledonia Mining, which own 49 percent of Blanket Mine to look at its revised investment plan notes that ore reserves above 750 metres which have been measured are decreasing.
The report, which was prepared by London-headquartered Edison Investment Research, indicated that inferred mineral resources will anchor the mine in the future prompting the company to invest up $70 million to explore new projects.
Caledonia last year said it will invest up to $70 million during the period, with an aim to increase production by 88 percent to 75 000oz.
The bulk of the money, $50 million, will be spend during the period 2015-17 while the remainder will be invested from 2018 to2021.
“After 2017, production from currently defined ore reserves will start to taper off to 2021. Note that the conversion of inferred material to ore reserves will likely mean production will continue to be dominated by de-risked production beyond 2017 via Caledonia continuing to undertake resource upgrade/reserve definition drilling alongside gold production and mine development,” noted the report.
Inferred mineral resource refers to ore for which tonnage, grade and mineral content can be estimated with a low level of confidence.
It is inferred from geological evidence and assumed but not verified geologically or may not have grade continuity.
The report estimates that yearend cash positions of the company will dip in the next two years but will likely to leap again in 2017.
“Caledonia’s end-year cash positions as it implements its plan, according to our estimates, are C$19,2m in FY15; C$18,3m in FY16 and C$35,7m in FY17, as production leaps from 49koz (FY16) to 64koz of gold (FY17). Caledonia has guaranteed a payment of a 6c total dividend in FY15 and based on our view of the company’s cash flow position we include a further 6c dividend in FY16,” read the report.- The Source