Gold production at Blanket Mine doubled during 2010 from 3 100 ounces to over 6 228 ounces for the nine months ending December 2010 resulting in the company raking just over $22 million in revenues.
The increase was attributed to the completion of the No 4 Shaft Expansion Project at the end of September 2010 and the subsequent ramp-up in production.
Blanket mine, a subsidiary of Canada-based Caledonia Mining Corporation, sold 17 598 ounces of gold during the period under review.
It registered a gross profit of $8,3 million and a net income after tax of $2,257 million.
Net income was after the write-downs of $600 000 in respect of a portion of the mineral properties at Rooipoort and $1,0 million in respect of amounts owed to the Blanket Mine by the Reserve Bank of Zimbabwe.
Cash and cash equivalents on hand at December 2010 amounted to $1,1 million.
Commenting on Caledonia’s performance for 2010, Stefan Hayden, President and chief executive officer, said, “The completion of the No 4 Shaft Expansion Project dramatically improved the operating performance at Blanket due to increased production capability, particularly towards the end of the fourth quarter.
“I am hopeful that the government of Zimbabwe will adopt a pragmatic and economically sustainable approach to the issue of indigenisation which recognises the very considerable investments of companies like Blanket in Zimbabwe’s economy, infrastructure, and human capital, and which, in an amenable environment would facilitate additional investment to create new jobs and wealth for all Zimbabweans.”
The company experienced a reduction in the incidence and duration of electricity supply disruptions during the fourth quarter, due to the signing of a new supply agreement between Blanket and the Zimbabwe Electricity Supply Authority (Zesa), which also facilitated increase in production.
Stronger gold prices also positively impacted revenues from sales.
In 2010 operating costs were adversely affected by further increases in the cost of labour and electricity.
Blanket’s electricity charges increased as a result of the new supply agreement signed with Zesa. Offsetting the increased cost of electricity was a substantial reduction in disruptions to electricity supplies.
The company said electricity from Zesa remained considerably cheaper than the cost of electricity generated by Blanket’s diesel-powered standby generators.
Turning to indigenisation, Caledonia said it supported the introduction of indigenisation on a commercially acceptable basis and remained prepared to move forward with a transaction as soon as the detailed policy framework has been finalised.