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Blanket CFO casts doubt on 80 000oz target

RESOURCES outfit, Caledonia Mining Corporation said on Tuesday achieving its targeted production of 80 000 ounces (oz) of gold next year might not be guaranteed as a range of factors would have to be considered after commissioning Central Shaft this quarter.

In an exclusive interview with NewsDay Business, Caledonia chief financial officer (CFO) Mark Learmonth came short of revealing that the 80 000 oz, which the firm had projected at the Gwanda-based Blanket Mine, might not be achieved in 2022.

The target was announced in 2015, as the AIM and Jersey-listed resources outfit kicked off development of its US$60 million Central Shaft project, with an ambition to transform Blanket into one of Zimbabwe’s largest gold producers.

The firm projects a maximum 67 000 oz at the end of 2021.

“It is not simply that we switch on the central shaft and it starts to run at full capacity,” Learmonth told NewsDay Business.

“The Central Shaft will not be commissioned until later in Q1 2021 and there is still some further underground development that is required before we can achieve full production of 80 000 oz in 2022,” he said.

According to Caledonia’s latest update, Blanket Mine registered a 5% annual growth in gold output for the period to December 2020 at
57 899 oz despite the global COVID-19 pandemic, which has grounded economies worldwide.

However, last quarter production dipped to
15 012 oz, compared to 16 876 oz produced during the prior comparable period.

Learmonth said: “It is inadvisable to read too much into quarter-on-quarter fluctuations in production. Q4 (fourth quarter) of 2019 was an extraordinarily good quarter. Q4 of 2020 was less extraordinarily good, but it did exceed our expectations”.

Key features of the Central Shaft project include increased exploration by providing access for further deep-level examination which, if successful, may extend Blanket mine’s life beyond 2034.

Caledonia recently said the shaft allowed the company to build another mine below the existing one.

On Monday, chief executive officer Steve Curtis said the firm produced a record 57 899 oz of gold in 2020.

Caledonia had its guidance set at between
55 000 oz and 58 000 oz during the period.

About 15 012 oz of total output was produced in the fourth quarter alone, the firm said.

It said it had set its gold production guidance for this year at between 61 000 oz and 67 000 oz.

“Despite the challenges of the COVID-19 pandemic, 2020 was a record year for Caledonia operationally, and we are on track for commissioning of Central Shaft to be completed in the first quarter of 2021,” Curtis said.

“In December, we also announced that we had entered into option agreements on two properties in Zimbabwe, delivering on our strategy of organic growth, while increasing the dividend for the fourth time at the start of January to 11 cents a share, creating genuine value and returns for our shareholders,” Curtis added. Newsday

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