TIDMCMCL
RNS Number : 1131W
Caledonia Mining Corporation PLC
10 November 2017
Caledonia Mining Corporation Plc
(NYSE American: CMCL; AIM: CMCL; TSX: CAL)
Extension of Central Shaft Project
St Helier, November 10, 2017: following the announcement of an
updated resource statement on November 2, 2017 Caledonia Mining
Corporation Plc (the "Company" or "Caledonia") announces that it
plans to extend the depth of the Central Shaft at its 49%
subsidiary, the Blanket Mine in Zimbabwe ("Blanket").
Highlights
-- 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 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.
-- A Preliminary Economic Assessment ("PEA") indicates 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.
-- The addition of two further production levels will provide
access to the Indicated & Inferred resources below 30 level and
potentially increase Blanket's projected life of mine by a further
four years to 2031.
-- The Indicated Resource below 30 level of 37,000 ounces, as a
standalone project, justifies the investment of $18 m 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.
Caledonia expects that its long term All-In Sustaining Cost
("AISC") guidance is expected to remain in the range of $700 to
$800 per ounce.
-- 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.
-- Caledonia has also initiated a mid-shaft loading system at
Blanket using the existing Central Shaft infrastructure to handle
development waste. 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.
Commenting on the project update, CEO Mr 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."
Note: This announcement includes inside information as defined
in Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Background
The Central Shaft has been under construction since the first
quarter of 2015 and was scheduled to be in production during the
fourth quarter of 2018. The shaft is currently at a depth of 950
metres below surface and is well advanced towards the previous
design depth of 1,080 metres below surface. The shaft was
previously expected to support Blanket's Mine life until 2027 by
adding an extra two production levels (26 and 30 levels).
Increased Resource
On November 2, 2017 Caledonia announced an increase in Measured
and Indicated resources at Blanket from 671,000 ounces at a grade
of 4.23g/t at December 31, 2016 to 714,000 ounces at a grade of
3.95g/t, a 6% increase in contained gold. In addition, Inferred
Resources increased by 47% from 604,000 ounces at a grade of
4.99g/t at December 31, 2016 to 887,000 ounces at a grade of
4.99g/t at August 31 2017.
Extension of the Central Shaft
In light of the increased resource base, the boards of Blanket
and Caledonia have approved a decision to invest further in the
deepening of the Central Shaft to a depth of 1,330 metres to be
fully commissioned and operational by the end of the first quarter
2020.
The extension of the Central Shaft is expected to cost
approximately $10 million and additional development of the two
production levels below 30 level (990m) is expected to cost
approximately $8 million. Total incremental project capital
expenditure is therefore expected to be an increase of $18 million.
The capital cost of deepening the shaft before it is commissioned
is expected to be significantly lower and less disruptive than
would be the case if the shaft is extended after it's commissioning
by eliminating the duplication of infrastructure at the bottom of
the shaft and site re-establishment of shaft sinking equipment and
sinking crew.
The deepening of the Central Shaft is not expected to adversely
affect the production target of 80,000 ounces of production by 2021
and is expected to extend the life of Blanket by potentially an
additional four years beyond the current mine life, based on the
existing Indicated and Inferred resources below 30 level to support
operations at Blanket until 2031. It is also expected to enable
significantly increased operational flexibility at the mine as the
deeper shaft will support operations over four production levels
rather than the previously planned two levels. This is expected to
enable production to continue at the rate of 80,000 ounces until at
least 2029 based on the current Inferred Resources below 30 level
and potentially longer depending on future exploration success at
depth extensions of known ore bodies above 30 level which will also
enable exploration below 38 level (1230m).
Mid-Shaft Loading
Blanket implemented a mid-shaft loading system at the beginning
of November 2017 to enable Central Shaft to handle development
waste, thereby alleviating some of the logistical pressure on
Number 4 Shaft and ensuring that the horizontal development on 26
and 30 levels can start at least ten months earlier than the
original project schedule. The implementation of mid-shaft loading
is also intended to allow Number 6 Winze to hoist ore rather than
ore and waste and should reduce waste haulage and hoisting via
Number 4 Shaft due to the use of Central Shaft for the hoisting of
development waste.
Capital expenditure
The total project capital investment involved in completing the
Central Shaft and developing four production levels below 22 level
(750m) is estimated to be approximately $51 million over the period
2018 to 2022 which includes $18 million of incremental capital to
sink the Central Shaft to the greater depth and develop two
additional production levels. Sustaining capital over the
anticipated extended mine life is expected to be approximately $63
million over the period 2018 to 2031 (approximately $4 million to
$5 million per year) and an additional $11 million of deep level
exploration drilling is budgeted for exploration below 22 level.
Total life of mine capital investment from 2018 to 2031 (including
the extension) for Blanket is expected to be approximately $125
million.
Production Estimates
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. Caledonia expects
that its long term AISC guidance is expected to remain in the range
of $700 to $800 per ounce. Given the existing resource
classification of Indicated and Inferred resources down to 38
level, a PEA has been prepared in respect of the Inferred Resources
which is preliminary in nature and includes Inferred Resources that
are considered too speculative geologically to have economic
considerations applied to them that would enable them to be
classified as mineral reserves. There is no certainty that the PEA
will be realised.
The changes to the Central Shaft project as stated above result
in a revised life of mine plan for the Blanket Mine (the "LOMP") in
terms of which it is anticipated that the approximate production
from existing Proven and Probable mineral reserves above 34 level
will be as set out below:
Approximate Production from Proven & Probable Mineral
Reserves (2018 - 2024)
---------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024
------------------ ------ ------ ----- ----- ----- ----- -----
Tonnes milled
(000's) 564 570 640 720 673 430 133
------------------ ------ ------ ----- ----- ----- ----- -----
Gold Production
(koz) 59 61 68 80 80 56 19
------------------ ------ ------ ----- ----- ----- ----- -----
The deepening of the Central Shaft is expected to provide access
to the current Inferred Resources down to 38 level and allow for
further exploration, development and mining in these sections along
the known Blanket strike, which is approximately three kilometers
in length. The PEA has been prepared in respect of the Inferred
Resources down to 38 level. Based on the PEA, approximate
additional production from current Inferred Resources (excluding
the projected production set out above) may be achieved in the
following indicative ranges:
Approximate Production from Inferred Mineral Resources
(2023 - 2031)
-----------------------------------------------------------------------------------------
2023 2024 2025 2026 2027 2028 2029 2030 2031
----------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Tonnes milled
(000's) 215 494 573 544 594 596 614 425 400
----------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Gold Production 20 57 76 76 76 76 76 56 52
(koz) - 24 - 62 - 80 - 80 - 80 - 80 - 80 - 60 - 56
----------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Diamond drilling and development is planned to be continued with
the objective of increasing confidence in order to upgrade the
categorisation of the resources. The LOMP and the PEA have been
reviewed by Mr. Dana Roets, Chief Operating Officer, and Mr. Paul
Matthews, Caledonia's Qualified persons for National Instrument
43-101 Standards of Disclosure for Mineral Projects reporting
purposes. A technical report prepared in compliance with National
Instrument 43-101 which summarises the revised LOMP and the PEA
will be filed on SEDAR before December 17, 2017. The LOMP,
Pre-Feasibility Study ("PFS"), PEA, Resource estimation and Reserve
conversion have been reviewed by independent consulting firm
Minxcon (Pty) Ltd. Minxcon also assisted the Qualified Persons with
the compilation of the technical reports. The most important
assumptions on which the PEA is based include: a gold price of
US$1,260 per ounce; achievement of the targeted production set out
above and the accuracy of the projected capital costs.
Funding
Assuming a gold price of US$1,260 per ounce and that all the
production projections set out above are achieved, it is expected
that all capital expenditure and increased working capital
requirements will be funded from Blanket's internal cash flows and
its existing unused credit facilities. It is expected that
Caledonia's net cash resources of $10.8 million as at June 30, 2017
will not be required to fund the project.
Competent and Qualified Persons Statement
The technical information contained herein relating to all
technical information, excluding resource estimation, is based on,
and fairly represents, information compiled by Mr. Dana Roets, P.
Eng who is registered with the Engineering Council of South Africa
(ECSA), which is currently included as a "Recognized Overseas
Professional Organization" in a list promulgated by the ASX from
time to time. Mr. Roets is a full time employee of Caledonia Mining
South Africa Proprietary Limited and is not "independent" within
the meaning of National Instrument 43-101. However, he is a
"Qualified Person" as defined in National Instrument 43-101. Mr.
Roets has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Qualified Person
under National Instrument 43-101. Mr. Roets has consented to the
inclusion in this document of the matters based on his compiled
information in the form and context in which they appear in this
document.
The technical information contained herein relating to the
mineral resource estimates is based on, and fairly represents,
information compiled by Mr. Paul Matthews, Pr.Sci.Nat. who is
registered with the South African Council for Natural Scientific
Professions, which is currently included as a "Recognized Overseas
Professional Organization" in a list promulgated by the ASX from
time to time. Mr. Matthews is a full time employee of Caledonia
Mining South Africa Proprietary Limited and is not "independent"
within the meaning of National Instrument 43-101. However, he is a
"Qualified Person" as defined in National Instrument 43-101. Mr.
Matthews has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to
the activity which he is undertaking to qualify as a "Qualified
Person" under National Instrument 43-101. Mr. Matthews has
consented to the inclusion in this document of the matters based on
his compiled information in the form and context in which they
appear in this document.
About Caledonia
Following the implementation of indigenisation in Zimbabwe in
September 2012, Caledonia's primary asset is a 49% interest in an
operating gold mine in Zimbabwe ("Blanket"). Blanket plans to
increase production from 50,351 ounces in 2016 to approximately
80,000 ounces in 2021. Blanket's target production for 2017 is
54,000 to 56,000 ounces. Caledonia's current dividend policy is to
pay a quarterly dividend which is currently 6.875 cents per share,
or 27.5 cents per share on an annualised basis.
For further information please contact:
Caledonia Mining Corporation
Plc Tel: +44 1534 679 802
Mark Learmonth Tel: +44 759 078 1139
Maurice Mason
WH Ireland
Adrian Hadden/Ed Allsopp Tel: +44 20 7220 1751
Blytheweigh
Tim Blythe/Camilla Horsfall/Megan Tel: +44 207 138 3204
Ray
Cautionary Note Concerning Forward-Looking Information
Information and statements contained in this news release that
are not historical facts are "forward-looking information" within
the meaning of applicable securities legislation that involve risks
and uncertainties relating, but not limited to Caledonia's current
expectations, intentions, plans, and beliefs. Forward-looking
information can often be identified by forward-looking words such
as "anticipate", "envisage", "believe", "expect", "goal", "plan",
"target", "intend", "estimate", "could", "should", "may" and "will"
or the negative of these terms or similar words suggesting future
outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions or statements about future events or
performance. Examples of forward-looking information in this news
release include: production guidance, estimates of future/targeted
production rates, and our plans and timing regarding further
exploration and drilling and development. This forward-looking
information is based, in part, on assumptions and factors that may
change or prove to be incorrect, thus causing actual results,
performance or achievements to be materially different from those
expressed or implied by forward-looking information. Such factors
and assumptions include, but are not limited to: failure to
establish estimated resources and reserves, the grade and recovery
of ore which is mined varying from estimates, success of future
exploration and drilling programs, reliability of drilling,
sampling and assay data, assumptions regarding the
representativeness of mineralization being inaccurate, success of
planned metallurgical test-work, capital and operating costs
varying significantly from estimates, delays in obtaining or
failures to obtain required governmental, environmental or other
project approvals, inflation, changes in exchange rates,
fluctuations in commodity prices, delays in the development of
projects and other factors.
Securityholders, potential securityholders and other prospective
investors should be aware that these statements are subject to
known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from those suggested by
the forward-looking statements. Such factors include, but are not
limited to: risks relating to estimates of mineral reserves and
mineral resources proving to be inaccurate, fluctuations in gold
price, risks and hazards associated with the business of mineral
exploration, development and mining, risks relating to the credit
worthiness or financial condition of suppliers, refiners and other
parties with whom the Company does business; inadequate insurance,
or inability to obtain insurance, to cover these risks and hazards,
employee relations; relationships with and claims by local
communities and indigenous populations; political risk;
availability and increasing costs associated with mining inputs and
labour; the speculative nature of mineral exploration and
development, including the risks of obtaining or maintaining
necessary licenses and permits, diminishing quantities or grades of
mineral reserves as mining occurs; global financial condition, the
actual results of current exploration activities, changes to
conclusions of economic evaluations, and changes in project
parameters to deal with unanticipated economic or other factors,
risks of increased capital and operating costs, environmental,
safety or regulatory risks, expropriation, the Company's title to
properties including ownership thereof, increased competition in
the mining industry for properties, equipment, qualified personnel
and their costs, risks relating to the uncertainty of timing of
events including targeted production rate increase and currency
fluctuations. Shareholders are cautioned not to place undue
reliance on forward-looking information. By its nature,
forward-looking information involves numerous assumptions, inherent
risks and uncertainties, both general and specific, that contribute
to the possibility that the predictions, forecasts, projections and
various future events will not occur. Caledonia undertakes no
obligation to update publicly or otherwise revise any
forward-looking information whether as a result of new information,
future events or other such factors which affect this information,
except as required by law.
This information is provided by RNS
The company news service from the London Stock Exchange
END
DRLLFFELLILAIID
(END) Dow Jones Newswires
November 10, 2017 02:00 ET (07:00 GMT)
Caledonia Mining (LSE:CMCL)
Historical Stock Chart
From Apr 2024 to May 2024
Caledonia Mining (LSE:CMCL)
Historical Stock Chart
From May 2023 to May 2024