GOLD production at the Victoria Falls Stock Exchange-listed Caledonia Mining Corporation fell by 13% to 16 036 ounces during the first quarter of this year due to “several individually insignificant mechanical breakdowns and logistical issues”.
Caledonia, which is also listed in New York and London and controls Blanket Mine in Gwanda, has acquired Bilboes Gold Limited, Maligeen and Motapa gold assets.
In a shareholder update released yesterday, Caledonia said quarterly gold production at Blanket Mine was 16 036 ounces, 13% lower than the 18 515 ounces produced in the first quarter of 2022.
“Production was lower than last year due to several individually insignificant mechanical breakdowns and logistical issues which have now been resolved and production in the early part of April 2023 has been better than expected,” the update read in part.
It said Bilboes commenced production of gold from oxides derived from pre-stripping works in the last few days of the quarter, producing 105 ounces of gold.
Commencement of oxide production at Bilboes, according to the multi-gold asset has been slower than anticipated, having been adversely affected by inconsistent grades, mechanical breakdowns and the poor availability of spare parts and alternative equipment.
“Gold production at Blanket is usually lower in the first quarter of each year and increases in the following quarters,” Caledonia chief executive officer Mark Learmonth said.
“This trend is in evidence this year, albeit production in the first quarter of 2023 was below our target due to a series of issues including equipment failures and logistical issues. These issues have been resolved and production to date in April has been higher than expected.
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“The small-scale low margin oxide operation at Bilboes is effectively a pre-stripping exercise for the larger sulphide project in respect of which we have commenced work on an updated feasibility study.
“The oxide project was adversely affected by the breakdown of contractor-provided drill-rigs which are used for evaluation drilling and the limited availability in Zimbabwe of spare parts or alternative equipment.”
In light of the foregoing, Learmonth reiterated production guidance for 2023 of between 75 000 and 80 000 ounces of gold from Blanket.
The firm said on-mine cost per ounce of Bilboes oxide production was anticipated to be between US$1 200 and US$1 320.
Hence, a relatively low margin activity was primarily justified by the parallel benefit of pre-stripping in anticipation of the development of the Bilboes sulphide project, he said.
The company said it was reviewing the initial evidence of this activity given some of the initial challenges and relative to the larger sulphide project, for which a feasibility study was being updated.
“Accordingly, going forward, we will report actual production achieved each quarter at the oxides project as part of the pre-stripping activities and, accordingly, have withdrawn guidance on the low-margin oxide production,” the company said.
