Gold mining company Caledonia Mining’s Blanket gold mine, in Zimbabwe, expects to commission its new central shaft in the fourth quarter of this year, following which production will ramp up.

Shaft sinking at the central shaft was completed in July last year to the target depth of 1 204 m. Since then, work has started on equipping the shaft.

The company said in a statement that its quarterly dividend had increased by 9% to 7.5c a share in January owing to its improved financial and operating performance as well as the enhanced outlook as it approaches the end of the central shaft project.

Caledonia Mining expects this year’s gold production to be between 53 000 oz and 56 000 oz, which is similar to last year’s production, pending the completion of the new central shaft.

Once the central shaft is commissioned and production ramps up, the company is targeting production of about 75 000 oz next year and about 80 000 oz in 2022.

This year’s on-mine costs are expected to be between $693/oz and $767/oz, with an all-in sustaining cost of between $951/oz and $1 033/oz. Meanwhile, costs per ounce are expected to decline after the central shaft is commissioned.

“The central shaft continues to be the main focus of our investing activities. When the new shaft is commissioned towards the end of 2020, Blanket will be able to increase production from 2022 onwards,” says Caledonia Mining CEO Steve Curtis.

He adds that the central shaft-related substantial capital investment period is expected to be completed in the third quarter of 2020.

Improved In-Country Operating Conditions

In parallel with the improved financial and operating performance, Curtis says that there has been an improvement in the operating environment in Zimbabwe.

“Although the country continues to face challenges, the introduction of the interbank rate early in 2019 allowed us to better protect our workers from the effects of high inflation.”

Curtis notes that the interruptions to the supply of electricity from the grid which were experienced in July and early August last year have largely been addressed following the conclusion of an agreement whereby Blanket mine, among other gold producers in the region, now purchases power that is imported into Zimbabwe.

“This power is cheaper than under the previous arrangements prior to the devaluation of the Zimbabwe currency and Blanket can manage the reduced incidences of power interruptions using its increased suite of diesel generators,” he claims.

Curtis adds that the mine is well-advanced in the evaluation of a solar project to provide some of Blanket’s power supply and reduce its dependence on imported power during daylight hours.

“I expect 2020 to be a pivotal year for our business with the commissioning of the central shaft and the improved operating performance.”

He concludes that the level of the gold price and the effects of the Covid-19 pandemic are being closely monitored, and that stakeholders will be appropriately updated on any developments.