Caledonia in $70 million expansion to cushion against price fluctuations

Caledonia Mining Corporation says the ongoing $70 million expansion of its Blanket gold mine in Gwanda will improve the mine’s operational efficiency and drive down production costs, cushioning it against further dips in the price of gold.

The Canadian junior miner, which owns 49 percent of the Gwanda operation, last year tabled a revised investment plan for the mine —  to spend $50 million in the period 2015-2017 and a further $20 million between 2018 and 2020 —  which seeks to increase annual output from 40 000 ounces to around 80 000oz by 2021.

Chief financial officer Mark Learmonth said implementation of the Revised Plan, was proceeding as scheduled with installation of the Tramming Loop having been completed earlier in the year, along with the sinking of the No. 6 Winze shaft.

Learmonth said 2015 will be a critical year in the mine’s operation and that production would be low and only expected to recover in 2016.

“As we move into 2016 we will see production increases again and as that happens you get not only the benefit of selling more ounces of gold but your average costs come down quickly and you end up with a turbo charged effect on your cash generation,” Learmonth said in a recent interview with Mineweb.

“Once we get into 2016, our cash situation will improve and by the time we get to 2017/8 we would expect our on mine costs to be in the mid $500’s again and all-in-sustaining-costs of below $750 (per ounce) and that really does insulate you from any adverse movements in the gold price,” he said.

In a separate update on Monday, the company said it was on track to achieve 42 000oz this year.

The price of gold fell under $1 100 per ounce during the first half of the year.- The Source

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