Power cuts hamper Blanket Mine investment plan

Caledonia Mining Corporation Plc says the implementation of its Blanket Mine’s investment plan is being hampered by frequent power cuts.


The plan entails Caledonia extending the lifespan of its mine near Gwanda by extending to deeper levels for production and further exploration.

“Implementation of the investment plan remains on target in terms of timing and cost. Caledonia’s board and management believe the successful implementation of the investment plan is in the best interest of all stakeholders because it is expected to result in increased production, reduced operating costs and greater flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket’s long-term future,” said Caledonia, in a statement accompanying the company’s financial results yesterday.

“Caledonia’s cash position is expected to improve as a result of the implementation of the investment plan; Caledonia will continue to assess new opportunities to invest surplus cash in addition to returning cash to shareholders.”

However, the statement went on to state that the electricity situation worsened considerably in July and early August resulting in Blanket Mine experiencing frequent and long interruptions to its power supply.

“To address this problem, Blanket has procured additional back-up diesel generators which will be installed in the coming weeks. We have had constructive engagement with the State electricity utility and the Chamber of Mines resulting in Blanket signing a new electricity supply agreement in terms of which it will receive un-interrupted imported power at a lower cost than it previously paid,” Caledonia chief executive officer Steve Curtis, said.

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“Caledonia is at an advanced stage of evaluating a solar PV generating facility which would reduce Blanket’s dependence on grid power. Although the electricity situation has improved in recent days, we feel it prudent to continue to implement plans to protect Blanket from any recurrence of this problem.”

Meanwhile, Caledonia reported that gold production in the second quarter ended June 30, 2019 was slightly below the group’s target although it improved by 6,4% to 12 712 ounces (oz) compared to 11 948 oz recorded in the previous quarter.

“Production of 12 712 ounces was marginally higher than the first quarter of 2019, although below plan. Production was adversely affected by lower than expected grade as problems with mining dilution adversely affected the grade and mine production continued to be disrupted due to the instability of the incoming power supply. Grade continues to receive close management attention,” Curtis said.

Gross profit for the quarter under review was $7 million, 37% higher than in the second quarter of 2018 due to lower on-mine costs.

Further, operating profit for the period under review, before foreign exchange gains, was just over $6 million, 21% higher than the comparable quarter.

Caledonia warned that due to operational difficulties relating to grade and unreliable power, Caledonia reduced its total production projection for 2019 to a range of 50 000 to 53 000 oz from a range of 53 000 to 56 000 oz.

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