Caledonia Mining Corporation plans to extend the depth of the central shaft at its 49% subsidiary, the Blanket mine in Zimbabwe. It said the shaft, which is currently under construction, would 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. It said: '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 extension and associated capital development of additional production levels will cost approximately $18 million which will be funded by Blanket's internal cash generation. 'The additional capital investment is not expected to have any effect on the continuation of Caledonia's existing dividend.' Caledonia said a preliminary economic assessment indicated a project NPV over the life of mine of $193 million based on a gold price of $1,260/ounce and a 10% discount rate. 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. 'Based on the strong geological indications of resource and grade continuity at depth, which was supported by our recent resource update, the excellent progress in the current shaft sinking, and most importantly the strong cash generation from Blanket's current operations, we are now in a position to continue investing for the future. 'It is significantly cheaper to continue the shaft sinking while we are in the construction phase of the project rather than to deepen a fully commissioned and operational shaft in several years' time. 'The creation of an additional two levels will also increase the mining flexibility and further de-risk the target production of 80,000 ounces per annum from 2021. 'This leaves Caledonia with a distinct window of opportunity to continue with its investment and I am grateful to both our local partners at Blanket and to the board of Caledonia for their continued support in managing the business for optimal long term value. 'The adoption of mid-shaft loading at Central Shaft will also make a contribution to reducing the logistical constraints we have experienced so far in 2017; by using the Central Shaft to haul development waste while continuing the sinking process we will be in a position to relieve the pressure on Number 4 Shaft and the associated haulages at 22 (750 metres) level to free up capacity to haul ore. 'The mid-shaft loading infrastructure should also allow the capital development on the 26 and 30 levels to commence up to ten months earlier than originally planned. 'Mid -shaft loading is not expected to have any negative effect on the plan to achieve 80,000 ounces of gold production by 2021 or to have any adverse impact on medium term production due to the increased operating flexibility the mid-shaft loading is expected to provide.'
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