Blanket Mine to inject US$21m into operations

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GWANDA-BASED mining concern Blanket Mine intends to invest about US$21,1 million this year to maintain its existing operations and implement the Central Shaft, the company revealed in a report.

— BY MTHANDAZO NYONI

In its latest management discussion and analysis of the consolidated operating results and financial position for the year ended December 31 2019 and for the period ended March 18 2020, Caledonia Mining Corporation (Caledonia), which holds a 64% shareholding in Blanket, said the funds would be used to implement the Central Shaft.

Caledonia announced in July last year that the Central Shaft had reached its target depth of 1 204 metres after pumping in about US$18 million.

Work on equipping the shaft has commenced and is expected to be completed in the fourth quarter of 2020, after which production from Central Shaft would commence, the company revealed.

Production this year is expected to be between 53 000 ounces and 56 000 ounces while production next year is expected to be approximately 75 000 ounces, increasing to the target rate of approximately 80 000 ounces in 2022.

Completion of the shaft-sinking phase at Central Shaft is a significant milestone and substantially de-risks the remainder of the project.

“The capital expenditure commitments relate primarily to materials and equipment which have been ordered by Caledonia in South Africa to equip the Central Shaft,” read part of the analysis report.

“In addition to the committed purchase obligations set out above, Blanket currently intends to invest approximately US$21.1 million between January 2020 and December 2020 which is not yet committed and a further US$23 million in the years 2021 and 2022, which is also uncommitted.”

The company said the committed and uncommitted investment will be used to maintain Blanket’s existing operations and implement the Central Shaft.

“Committed and uncommitted purchase obligations are expected to be met from the cash generated from Blanket’s existing operations and Blanket’s existing borrowing facilities,” it said.
Caledonia said it continues to evaluate further investment opportunities in Zimbabwe that would not fall underneath Blanket’s ownership.

Production for the year 2019 was 55 182 ounces, which exceeded the guidance range of 50 000 to 53 000 ounces.