Caledonia sets group capital expenditure
VICTORIA Falls Stock Exchange (VFEX)-listed mining entity, Caledonia Mining Corporation Plc, fresh from a successful 2023, producing 75,416 gold ounces has set a group capital expenditure of US$34,4 million this year as the entity is focused on unlocking value and delivering multi-asset growth pipeline in Zimbabwe.
The mining house has it on record that it is eyeing consolidating its strategy of becoming a multi-asset gold producer by acquiring several lucrative mining assets.
Over the years, the firm has been creating a solid base at becoming a multi-asset gold producer by making significant investments in operations.
For instance, in 2022, the resource group expanded its footprint by purchasing Motapa Mining Company UK Limited and signed a US$53,2 million agreement to buy Bilboes Gold Limited as part of its expansion drive.
Bilboes Gold is a gold mining entity that owns three major gold mines in Matabeleland North and was once ranked among the country’s 10 biggest gold producers.
However, it is presently under care and maintenance with effect from October.
Added to that, to be energy sufficient, in 2020, Caledonia announced that it was constructing a US$14 million 12,2 MWac solar power as part of efforts to address electricity constraints that have over the years affected the mining industry.
The project, connected to the Blanket grid in November 2022 is in line with the Government’s strategy to boost power production.
The solar plant provides approximately 27 percent of Blanket’s average daily electricity demand.
This has seen a marked reduction in the amount of diesel consumed at the mine and has reduced the frequency of interruptions to production.
However, late last year, it said it had received an offer from a yet to be named global solar operator to buy the solar plant.
According to the firm, it is proposed that the new owner exclusively supplies Blanket with electricity from the current plant, on a take-or-pay basis and in doing so secures some of Blanket’s future power supply.
In an update on Friday, Chief Executive Officer, Mr Mark Learmonth noted that investments in the last seven years has doubled production.
The firm withstood a challenging first six months of 2023 to produce 75,416 gold ounces.
Money – Image taken from Pixabay
In 2022 the firm produced a record 80 775 ounces against a target of 80 000 ounces.
“Our significant investment in Blanket over the past seven years and completion of the Central Shaft has nearly doubled production, extended the mine life and allowed the restart of underground exploration in 2023; in July we announced that the Eroica zone persists to depth and grades are significantly higher than previously thought,” said Mr Learmonth.
The mining house is not resting on its laurels but will build on the momentum and push ahead with exploration programmes.
“We continue to progress with the underground exploration programme and we expect to publish further exploration results in the first quarter of 2024 and a revised resource statement in the following quarter.
“Our wider capital expenditure programme continues to focus on unlocking value and delivering our multi-asset growth pipeline in Zimbabwe with Motapa and Bilboes, while maintaining a disciplined focus on cost and capital allocation,” he added.
Commenting on 2023 production levels, Mr Learmonth, “I am pleased that, after a challenging first-half, we successfully met production guidance for the year, producing 75,416 gold ounces.
“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,” he said.
According to Mr Learmonth, anticipated group capital expenditure of US$34,4m includes approximately US$20m of sustaining investment (which is included in all-in sustaining cost guidance) and US$14,4m of expansion expenditure, which includes investment in a new tailings storage facility with a life of approximately 12 years and further underground development.
Further to that, expansion expenditure also includes US$2m on preliminary exploration at Motapa and US$3,5m on further work on the Bilboes feasibility studies.
“Caledonia continues to work on the feasibility studies in respect of the Bilboes sulphide project to determine the optimal implementation strategy for the project.
“This work includes updating the existing feasibility study for a project producing approximately 170 000oz of gold per annum and work on an alternative phased approach to the project,” he noted.
“We continue to progress our feasibility studies for the Bilboes sulphide project with a view to determining the best option for Caledonia stakeholders and I look forward to providing an update in due course.”
Caledonia’s 75,416 gold ounces produced last year comes as the country’s gold deliveries declined by 14,7 percent last year to 30,1 tonnes compared to a record high of 35,3 tonnes realised in 2022 official figures show.
Gold is the country’s major foreign currency earner whose output was projected to reach 40 tonnes last year having missed the same projection in recent years largely due to factors such power supply challenges.
In 2019, stakeholders in the gold sector set themselves a 40-tonne target, which is yet to be achieved due to a cocktail of challenges including smuggling of the mineral and intermittent power supplies that affected production.
Latest statistics from the country’s exclusive buyer of the metal, Fidelity Gold Refinery (FGR), indicate that of the 30,1 tonnes delivered last year, small-scale miners who traditionally produce the bulk of the gold, again last year maintained the momentum producing 18,7 tonnes.
In 2023, primary producers who are the large-scale miners delivered 11,4 tonnes.-chronicle
