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Gold glitters for Caledonia

Leonard Makombe

CALEDONIA Mining Corporation, which owns Blanket Mine, increased gold production by 46% to 2 865 ounces in December as the company seeks further reinvestment to lift output to 40 000 ounces annually.

Caledonia, which has since resumption of operations in 2009 bemoaned the intermittent power supply, finally installed standby generators at Blanket mine. The installation of standby generators, expected to be operational by March this year, came at a time the company noted slight power supply improvements.

The company is listed on Toronto Stock Exchange (TSX).

“The production rate achieved by the end of 2010 is over 99% of the target of 40 000 ounces per year and represents a very substantial increase in Blanket’s production capacity,” said the mining firm in a statement released on TSX on Tuesday.  “More importantly the level of production achieved at the end of December 2010 conclusively proved that key aspects of the No. 4 Shaft Expansion Project, namely the underground crushing station, the automated skip loading system and the increased milling capacity all operate well within their design capacity.”

Caledonia said the focus after increasing production was to address the historic under-investment in Blanket mine development, equipment and machinery.

“Underground development work has commenced in order to ensure that production levels in years to come can be maintained, as well as providing platforms for underground exploration with a view to potentially increasing production above the currently planned rate of 40 000 ounces per annum.
“This development work, in conjunction with reinvestment in equipment and machinery, is expected to have a temporary effect on production in Quarter 1 of 2011, but it is still anticipated that Blanket will produce 40 000 ounces in 2011,” added the mining company.

Caledonia said they were mitigating against power cuts but Blanket had experienced considerable unexpected delays with the delivery of the 33kiloVolt electrical switchgear which was required for the installation and commissioning of the four generating sets.

“It is anticipated that the entire 10 Megawatt generating system will be operational by the end of March 2011 at which point Blanket will be able to maintain all mining, hauling and milling operations during interruptions to the electricity supply,” said Caledonia.

“Subsequent to Blanket entering into a new supply agreement with the Zimbabwe Electricity Supply Authority, electricity supply has been more stable. Whilst Caledonia welcomes the improvement in electricity supply it still believes it is prudent to proceed with its plans to equip Blanket with full standby generating capacity to safeguard production against any future power interruptions.”

Electricity supply remained the debilitating factor in the full recovery of the mining sector and analysts point that while standby generators could mitigate the effects, the downside was increased operating costs.

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