TORONTO (miningweekly.com) – Canada-based Caledonia Mining produced 1 822 oz of gold in July, from its Blanket mine, in Zimbabwe, and continues to see improvements in output levels, the firm said on Tuesday.

Caledonia restarted the operations at Blanket in April, after being granted a gold dealers licence from the Ministry of Finance and a gold exporters license from the Reserve Bank of Zimbabwe, under the country's new gold dealing and export policy.

Under the new policy, gold producers can market and sell their gold directly and are also allowed to keep the payment for their gold in foreign exchange.

The July production represents about 22 000 oz/y on an annualised basis, which the company has not achieved since February 2007.

Caledonia is targeting an annualised production rate of 24 000 oz/y by the end of the third quarter, and eventually plans to ramp up to 40 000 oz/y after it completes the No 4 Shaft expansion project at the mine.

The expansion will be funded by internally generated cash flow, as well as possible third-party debt funding, although the availability of loans on acceptable terms for projects in Zimbabwe remains “very limited”, Caledonia said.

“However, discussions continue with several financial institutions in this regard.”

The company reported a second-quarter net profit from continuing operations of C$19 000, before taking into account an unrealised foreign-exchange loss of C$181 000, arising from the translation of subsidiary balance sheets (other than Blanket) at the period end into Canadian dollars.

Caledonia reported revenue of C$2,36-million from the sale of 2 164 oz of gold by the Blanket mine, a gross operating profit of C$881 000 and a net loss of C$162 000.

At Blanket, the company has struggled with a shortage of working capital, and also battled continued electricity outages during the second quarter.

The mine mitigated the effect of the power outages on production by re-scheduling operations and by using surplus processing capacity to catch up on lost production, Caledonia said.

By the end of the second quarter, the frequency and duration of electricity outages had improved slightly.

Blanket has also now obtained adequate working capital facilities and continues to rebuild its stock of operating supplies and critical parts.

By June 30, Blanket had achieved plant throughput of over 400 t/d and total gold production in the second quarter was 2 746 oz.

To date, Blanket has received 100% of the proceeds of gold sales from Rand Refineries in South Africa, the firm said.

During the second quarter, Japan's Mitsubishi Corp decided it would not extend an earlier agreement, in which it could earn a stake in Caledonia's Rooipoort platinum and nickel project and the Mapochsgronde platinum project, in South Africa.

“Caledonia will explore and evaluate other strategic options in respect of the projects,” the company said on Tuesday.

Exploration also continues at the firm's Nama cobalt project, in Zambia.

By Staff reporter and agencies