Caledonia revises Blanket mine expansion

Markets
ONTARIO- Caledonia Mining has reworked the preliminary economic assessment for the expansion of operations at its Blanket mine in Matabeleland South, after the Ontario Securities Commission asked it to consider expansion below the 750 metre level as a standalone project.

ONTARIO – Caledonia Mining has reworked the preliminary economic assessment for the expansion of operations at its Blanket mine in Matabeleland South, after the Ontario Securities Commission asked it to consider expansion below the 750 metre level as a standalone project.

In its initial plans Caledonia had put forward the proposed development below 750 metres as part of its ongoing activities at Blanket.

The mine has been producing at the rate of around 10,000 ounces per quarter for the past few quarters at an all-in sustaining cost of under US$1,000 per ounce.

Now, though, the new PEA shows the economic implications of working below 750 metres without factoring in the existing workings and cashflow.

The results make for interesting reading.

Under these new parameters, which assume the project is funded from new money rather than existing cashflow, the net present value of Blanket stands at $$65 million, while the internal rate of return comes out at an impressive 42%.

That’s considerably lower than the numbers produced in the original study released in November of last year, but still make for an attractive enough project.

The basic assumptions used in the original PEA remain in place, and the expectation is still that the sinking of a new shaft and the installation of new underground infrastructure will result in a significant increase in production and corresponding paring back of costs. – Prospective Investors