HomeGoldCaledonia to resume mining operations in Zimbabwe

Caledonia to resume mining operations in Zimbabwe

The Blanket gold
operation in Zimbabwe
Toronto, Canada — MININGREVIEW.COM — 07 April 2009 – Caledonia Mining Corporation – an African focused mining company with a cobalt development project in Zambia, a gold mine in Zimbabwe and a platinum-nickel exploration project in South Africa – has announced the imminent resumption of gold mining operations at the Blanket Gold Mine in Zimbabwe.

Revealing this here, the company pointed out that, as stated in the management discussion and analysis for the year ended 31 December 2008, Blanket had applied for the necessary permission and licences, following the recent changes to the regulations governing gold trading in Zimbabwe that would enable it to re-commence gold production.

Caledonia went on to reveal that Blanket had received the necessary gold dealer’s licence from the Ministry of Finance and a gold exporter’s licence from the Reserve Bank of Zimbabwe.

These licences entitle Blanket to comply with the gold dealing and gold export regulations, and to export and market its gold bullion to a refiner of its choice. The proceeds from the sale of gold would be paid directly into Blanket’s foreign currency account at a Zimbabwean commercial bank, and Blanket would be entitled to retain 100% of the proceeds indefinitely in the FCA. Blanket had already opened the necessary account with a major precious metals refiner.

Caledonia gave the assurance that the detailed planning to return Blanket to production as soon as possible had been completed. Blanket had secured an initial working capital facility and expected to resume production once it has taken delivery of the required consumables and spares, which had been ordered for immediate delivery.

Blanket’s ability to achieve the planned production rates and complete the No 4 Shaft expansion project to increase production to 40 000 oz per annum, depends on the availability of further debt facilities and the rate of internally-generated cash flow. Caledonia is continuing discussions with several financial institutions regarding the additional capital. The ability to raise this capital and to generate internal cash flows depends on the efficient and sustained implementation of the current arrangements for Zimbabwean gold exporters.

Caledonia president and CEO Stefan Hayden commented: “The re-commencement of gold production at Blanket is a very positive development for Caledonia. Blanket has managed to retain the bulk of its skilled workforce since it was forced to suspend operations temporarily in October 2008, and accordingly is in a good position to recommence production, provided a stable operating and monetary environment is maintained in Zimbabwe.”