Caledonia Mining's Blanket mine exceeds expectations

Caledonia Mining said its final production results for 2015 were higher than expected thanks to the Blanket mine in Zimbabwe, of which it holds a 49% stake.

The AIM-listed miner said approximately 11,518 ounces of gold were produced in the fourth quarter, a 10.6% increase on the same period a year earlier and a 5.4% increase on the third quarter.

Total gold production at Blanket in 2015 was approximately 42,806 ounces, which was a 2.5% increase over 2014 and a 1.9% bonus on the production guidance for the year of 42,000 ounces.

"The increased production reflects the continued progress in implementing the Revised Investment Plan, announced on November 3, 2014", said Caledonia chief executive officer Steve Curtis.

"The completion of Tramming Loop on 22-level (750m below the surface) slightly ahead of schedule in mid-2015 was an important factor which contrbuted to the increased production, by alleviating the underground logistical problems which constrained production in 2014", he added.

Caledonia was already sizing up 2016, with a lofty target of 50,000 ounces at Blanket, a figure it had already indicated.

The firm's board said the rate of production was expected to increase over the course of this year, as production increases from new areas.

Quarterly production is expected to be around 10,700 ounces in the first quarter, reaching around 14,000 ounces by the fourth quarter of 2016.

"Due to the high fixed cost component at Blanket and the generally stable environment for input costs, the projected increase in production to approximately 50,000 ounces of gold is expected to result in a lower average production cost per ounce", Curtis said.

Caledonia also said it anticipated its final results for the year to 31 December 2015 would be released before the end of March.