Caledonia pours more capital on back of record year

CALEDONIA Mining Corporation, is in a buoyant mood after achieving a record 80,775 ounces last year against a set target of 80 000 ounces as it plans to pour millions of dollars in capital expenditure.

It said the achievement is a huge milestone for the company that is moving towards consolidating its strategy of becoming a multi-asset gold producer by acquiring several lucrative mining properties.

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.

The Bilboes oxides project is a small-scale, two-to-three-year project which entails the stripping of overburden to a depth of approximately 40 meters to expose the oxidized material which will be processed on-site using an existing heap leach facility which has been in operation for the past 10 years.

Ore production from the Bilboes oxides project is expected to start in mid-February and the firm expects to start recovering gold from the heap leach from March.

The project had an initial capital requirement of approximately $540 000, which was expended in 2022.
Announcing the production milestone, chief executive officer, Mr Mark Learmonth said in 2014, the mining house announced a plan to sink a new central shaft to 1 200 metres from surface, all funded through internal cashflow, with a long-term target of achieving an annual production rate of 80 000 ounces.

President Mnangagwa last Novembmer commissioned a US$67 million Central Shaft project at Blanket Gold Mine in Gwanda, one of Caledonia Mining Corporation’s flagship gold investments and deepest shafts in the country.

The 2022 annual production represents a 19,7 percent increase on the 67,476 ounces produced in 2021.
The record production levels come on the backdrop of annual increase in gold deliveries to Fidelity Printers and Refiners by 19,3 percent to 35,3 tonnes in 2022 compared to 29,6 tonnes in the prior year.

Small to medium-scale miners continue to lead in terms of production volumes after they delivered a cumulative 24,1 tonnes compared to 11,2 tonnes by large-scale miners.

According to statistics from Fidelity Printers and Refiners, November 2022 had the highest deliveries of 3,84 tonnes and December had the lowest at 1,98 tonnes.

October had 3,79 tonnes followed by September with 3,38 tonnes, August 3,35 tonnes, July 2,96 tonnes, June 2,81 tonnes, May 2,99 tonnes, April 2,48 tonnes, March 2,56 tonnes, February 2,26 tonnes and January 2,87 tonnes.

The strong performance of the gold sub-sector indicates that it has the potential to meet the US$12 billion mining industry target by 2023.

Mr Mark Learmonth

Mr Learmonth said production guidance for 2023 assumes that Blanket mine will broadly maintain the production rate achieved in 2022.

This year’s guidance also includes the estimated production from the small oxides project at Bilboes.
“Cost guidance at Blanket and Caledonia (i.e. excluding the costs of the Bilboes oxides project) is consistent with the costs we have historically incurred,” said Mr Learmonth.

“The on-mine cost of the small oxides project at Bilboes reflects the low grade of the oxide material. The oxides project is not expected to be representative of the much larger sulphide project at Bilboes in terms of grade, production levels or cost profile.

Nevertheless, the oxides project is expected to contribute to the group’s cash generation whilst at the same time allowing us to pre-strip to the deeper sulphide material,” added Mr Learmonth.

On capital expenditure outlay at Blanket, he said it includes approximately US$9,6 million in respect of a new tailings facility and a further US$9,8 million of deep-level capital development so that operations can be maintained in future years.

However, the mining firm anticipates that approximately US$2 million will be incurred in the preparation of a revised feasibility study for the larger sulphide project at Bilboes.-chronicle.co.zw