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Blanket mulls US$36m investment

GWANDA-BASED gold miner, Blanket says it is planning to invest US$35,8 million in plant maintenance and the implementation of its new underground operation called Central Shaft.

The massive capital outlay will also be deployed towards setting up the firm’s solar power plant, which is key to ameliorating hurdles caused by erratic electricity supplies.

Blanket Mine is controlled by the New York Stock Exchange-listed Caledonia Mining Corporation, which has announced plans to expand its footprint in Zimbabwe.

In its latest management discussion and analysis report, Caledonia said the capital expenditure commitments related primarily to materials and equipment had been ordered by the company and would be sold to Blanket.

“In addition to the committed purchase obligations set out above, Blanket currently intends to invest a further US$35,8 million in 2021 which is also uncommitted and includes US$12,4 million on the solar project and US$1,8 million on the optioned exploration properties,” said the report.

“Other than the proposed investment on the solar project and at the exploration properties, the committed and uncommitted investment will be used to maintain Blanket’s existing operations and implement the Central Shaft,” it said.

The company said committed and uncommitted purchase obligations were expected to be met from cash generated from Blanket’s existing operations and its existing borrowing facilities.

In respect of the cost of the proposed solar project, proceeds of a share offer will be used.

The company also revealed that it has leased properties for its administrative offices in Jersey, Harare and Johannesburg.

As of December 31, 2020, Caledonia had potential liabilities for rehabilitation work on Blanket — if the mine is permanently closed — at an estimated discounted cost of US$3,6 million.

Caledonia revealed that production in the year 2020 was 57 899 ounces, which was at the top end of the guidance range and was a new record for annual production.

It said the strong performance, despite the impediments arising from the COVID-19 pandemic, reflected the measures taken in previous quarters to improve tonnes mined and increase metallurgical recoveries. The company said the robust operating performance was supported by a rising gold price.

Profit for the year to December 2020 was US$46,6 million — almost 50% higher than that generated during the same period in 2019.

Caledonia said two weeks ago that it had received a major boost after being admitted to the MVIS Global Junior Gold Miners (GDXJ) Index for the first time.

The admission followed the GDXJ Index’s first quarter 2021 review.

The GDXJ Index forms the basis of various passive gold sector investment funds in the North American market, the most significant being the US$5,2 billion Van Eck Vectors Junior Gold Miners ETF, Caledonia said.

Caledonia chief executive officer Steve Curtis said the listing of the company’s shares on the NYSE American had increased the miner’s liquidity significantly and its inclusion on the index should “further raise its profile among retail and institutional investors”.

“The listing of our shares on the NYSE American has increased our liquidity significantly and our inclusion on the Index should further raise our profile among retail and institutional investors,” he said.

NYSE American, formerly known as the American Stock Exchange and more recently as NYSE MKT, is an American stock exchange situated in New York City.

It was previously a mutual organisation that was owned by members. Until 1953, it was known as the New York Curb Exchange.

“The addition of Caledonia to the Index will be an important milestone for our business and will come at an exciting time for the company with the commissioning of Central Shaft due to be completed in the first quarter of this year,” Curtis added. Newsday


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