Gabriel Masvora, Business Editor
CANADIAN gold producer Caledonia Mining Corporation has set aside $18 million to extend its central shaft at Blanket Mine in Gwanda by a further 250 metres that will see mining operations being carried out at 1 333 metres below the surface.
The company announced on Friday that the project was likely to be commissioned by the end of the first quarter in 2020.
“The extension of the central shaft will add two further production levels on 34 (1,110 metres) and 38 (1,230 metres) levels, in addition to the two levels that are already planned on 26 (870 metres) and 30 (990 metres) levels. The extension and associated capital development of additional production levels will cost approximately $18 million which will be funded by Blanket’s internal cash generation,” the company said.
The capital investment is divided into two with $10 million used for the extension of the central shaft while the additional development of the two production levels below 30 level (990m) is expected to cost approximately $8 million. Caledonia Mining added that the new capital investment was not expected to have any effect on the continuation of Caledonia’s existing dividend.
“The addition of two further production levels will provide access to the Indicated and Inferred resources below 30 level and potentially increase Blanket’s projected life of mine by a further four years to 2031,” added the company.
It said that the Indicated Resource below 30 level of 37 000 ounces, as a stand-alone project, justified the investment of $18 million for the shaft deepening and the additional two production levels.
“Total production from Measured and Indicated resources over the life of the mine is expected to be approximately 420 000 ounces and production from Inferred Resources is expected to be approximately 550 000 to 600 000 ounces between 2018 and 2031. Caledonia expects that its long term All-In Sustaining Cost guidance is expected to remain in the range of $700 to $800 per ounce.”
The company said the extension of the central shaft before it had been completed, equipped and commissioned is understood to be significantly cheaper, quicker and less disruptive than a subsequent extension after commissioning.
Caledonia Mining also said it has initiated a mid-shaft loading system at Blanket using the existing Central Shaft infrastructure to handle development waste.
“This is expected to improve Blanket’s waste handling capacity and alleviate pressure on Number 4 shaft which should have a positive effect on both production flexibility and horizontal development.
The central shaft at Blanket Mine has been under construction since the first quarter of 2015 and was scheduled to be in production during the fourth quarter of 2018. The shaft is currently at a depth of 950 metres below surface, closer to the previously designed depth of 1,080 metres below surface.
The shaft was previously expected to support Blanket’s Mine life until 2027 by adding an extra two production levels (26 and 30 levels).
The company announced that with the new investment, total project capital investment involved in completing the central shaft and developing four production levels below 22 level (750m) is estimated to be approximately $51 million over the period 2018 to 2022 which includes $18 million of incremental capital to sink the central shaft to the greater depth and develop two additional production levels.
“Sustaining capital over the anticipated extended mine life is expected to be approximately $63 million over the period 2018 to 2031 (approximately $4 million to $5 million per year) and an additional $11 million of deep level exploration drilling is budgeted for exploration below 22 level. Total life of mine capital investment from 2018 to 2031 (including the extension) for Blanket is expected to be approximately $125 million.”