Caledonia Mining Corporation plans to extend the depth of central shaft at its 49 percent-owned Blanket Mine at a cost of approximately $18 million to be funded by the gold mine’s internal resources.
The central shaft (which is currently under construction) will be extended by a further 250 metres to a shaft bottom depth of 1 330 metres and fully commissioned by the end of the first quarter of 2020.
The extension of the central shaft will add two further production levels on 34 (1 110 metres) and 38 (1 230 metres) levels, in addition to the two levels that are already planned on 26 (870 metres) and 30 (990 metres) levels.
The mining company said the additional capital investment is not expected to have any effect on the continuation of Caledonia’s existing dividend.
Caledonia Mining chief executive Steve Curtis said: “We are very pleased that the long track record of sustained resource growth at Blanket, particularly the continued discovery of resources at depth with good grade continuity, supports an extension of the central shaft project at Blanket.
“The central shaft is already a transformational project for our business and to extend the project an additional 250 metres in depth including development on 34 and 38 levels, will potentially secure Blanket’s operating future for the next 20 years taking exploration potential into account,” said Mr Curtis.
The company said a Preliminary Economic Assessment indicates a project NPV over the life of mine of $193 million based on a gold price of $1 260/ounce and a 10 percent discount rate.
The addition of two further production levels will provide access to the indicated and inferred resources below 30 level and potentially increase Blanket’s projected life of mine by a further four years to 2031.
Caledonia said the indicated resource below 30 level of 37 000 ounces, as a standalone project, justifies the investment of $18 million for the shaft deepening and the additional two production levels.
Total production from measured and indicated resources over the life of the mine is expected to be approximately 420 000 ounces and production from Inferred resources is expected to be approximately 550 000 to 600 000 ounces between 2018 and 2031.
The extension of the central shaft before it has been completed, equipped and commissioned is understood to be significantly cheaper, quicker and less disruptive than a subsequent extension after commissioning.
The mining company also initiated a mid- shaft loading system at Blanket using the existing central shaft infrastructure to handle development waste.
Caledonia said this is expected to improve Blanket’s waste handling capacity and alleviate pressure on Number 4 shaft, which should have a positive effect on both production flexibility and horizontal development.