Canada-BASED Caledonia Mining Corporation plans to invest $50 million to expand operations at its Blanket Mine in Matabeleland South between next year and 2017.
The commitment was made in Caledonia’s revised investment plan and production projections for the mine released yesterday. Caledonia expects the investment to create 400 jobs in the next five years.
Under the plan, Blanket is expected to produce between 70 000 to 75 000 ounces of gold per annum by 2021.
Another $20 million is expected to be invested in the period between 2018 and 2020.
The company said the objectives of the revised plan were to improve the underground infrastructure and logistics and allow an efficient and sustainable production build-up.
Caledonia president and chief executive Stefan Hayden said this was a vote of confidence on Zimbabwe as an investment destination.
“It is anticipated that the construction of the central shaft will substantially improve Blanket Mine’s operational efficiency and reinforce the beneficial effect of fixed costs being spread across more production ounces,” he said in a statement yesterday.
“The central shaft will also enhance the mine’s operational flexibility by reducing its current dependence on a single production shaft and give it the flexibility to continue to explore and develop at depth.”
Caledonia said Blanket Mine still offered it the best returns on investment.
It said the mine remained cash generative despite adverse market conditions and offered significant investment returns that exceed alternative investment opportunities.
“The revised strategic plan represents a vote of confidence in Zimbabwe as an investment destination,” Hayden said.
“I am pleased to say that Blanket’s indigenous shareholders and the government of Zimbabwe are both highly supportive of the revised plan.
“Implementation of the plan will result in considerable long-term benefits to all stakeholders, including Caledonia and Blanket shareholders, Blanket’s current and future employees, the surrounding community and the government of Zimbabwe.
He said the company expected to double production by 2018 and in the process create jobs.
“Implementation of the plan is expected to create approximately 400 permanent, high-quality jobs in Zimbabwe over the next five years,” Hayden said.
“By 2018, I hope that Blanket will have doubled production and further reduced its cost per ounce, which are already among the lowest of any African gold producer.
“Once these projects are completed, Caledonia and Blanket will have the critical mass and the financial capacity to consider significant new investment opportunities.”
The infrastructure improvements will include the development of a ‘Tramming Loop’ and the sinking of a new six-metre diameter central shaft from surface to 1 080 metres.
The revised plan is also expected to improve Blanket’s long-term operational efficiency, flexibility and sustainability.