Caledonia pins hopes on Blanket Mine

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LONDON – Caledonia Mining Corp Chairman Leigh Wilson Monday said the company is focused on disposing of its non-core operations and improving its flagship Blanket gold mine in Matabeleland South, and proposed a new incentive plan for the company’s executives that is directly linked to the performance of the mine.

In a speech he is set to deliver at the company’s annual general meeting on Thursday, Wilson said 2014 was a “year of substantial change” for Caledonia.

“2014 was a year of substantial change and significant progress for Caledonia. It reflects a sustained effort by your board to sharpen the company’s focus on its primary operation and to close and dispose of non-core operations, thereby reducing operating expenses,” he said in a statement.

The miner acquired a stake in the Blanket gold mine near Gwanda in 2006, and currently holds a 49% interest.

In November, Caledonia announced a revised investment plan for the Blanket mine to try to increase production to around 80,000 ounces of gold per year by 2021 following the investment of approximately $70 million.

“It is designed to increase production and extend the mine life of the Blanket mine. Successful implementation of the plan will also improve Blanket’s operational efficiency, re-enforce its position as one of Africa’s lowest-cost gold producers and create a platform for Blanket’s long-term development,” said Wilson on Monday.

“Your board believes Caledonia can look to the future with confidence and we are gratified that the Blanket mine remains cash generative in the current adverse market conditions,” he added.

Wilson said the company is also looking for other new opportunities and proposed a new omnibus incentive compensation plan for executive management. Wilson said the incentive plan is “integral” to restructuring the company’s compensation policy.

“The board believes that incentivising management over the long term is clearly in the interest of shareholders,” he said.

“The performance objectives of the awards that the board intends to grant under the plan will be aligned strongly with long-term shareholder interests. The board intends to grant awards that will reward management for specific and measurable performance objectives that are embodied in, and compatible with, objectives of the revised life of mine plan,” added Wilson.

No specific details about the proposed plan were released, but Wilson said the objectives would include increasing production, generating cash and growing the resource base at the Blanket mine. The board also will consider the company’s financial situation and share price performance when awarding the plan, it said.

Shareholders will vote on the new plan on the meeting due to be held on Thursday.

– Alliance News