Tawanda Karombo (Harare) – CALEDONIA Mining Corporation, which operates the Blanket gold mine in Zimbabwe, realized C$4.15 from the sale of 3,408 ounces of gold for the second quarter ended June 30 2010 and registered a gross operating profit of $1.26 million.
Net profit from continuing operations was C$322,000 or $0.001 per fully diluted share.
The company’s gold mining operations were however dented by “electricity supply interruptions” which averaged over 30 percent, said Stefan Hayden, Caledonia’s chief executive officer.
“The high levels of electricity interruptions contributed substantially to an increase in the average cost per ounce of gold produced due to the high level of fixed costs at Blanket Mine, the lower production and the unproductive labor directly caused by the continual power disruptions,” added Hayden.
Gold output during the second quarter was 9 percent higher on the previous quarter, mainly as a result of increased focus and concentration on “mining activities on higher grade” areas. This was despite an increase in the average cost per ounce of gold produced which went up “slightly from US$804 in the first quarter to U$$810” during the quarter under review.
The company’s gold output for July rebounded to 1,852 ounces, a figure that represents over 50 percent of the production for the entire second quarter and an annualized rate of over 22,000 ounces. The increase in the production figure of gold for the month of July has been attributed to the installation of the first standby generator which has allowed both mining and the underground installation of the equipment and steelwork for the No 4 Shaft Expansion Project to continue during electricity interruptions.
Caledonia continued with work on the No. 4 Shaft Expansion Project despite frequent interruptions due to the high level of power supply interruptions, putting the project behind schedule by about two weeks.
The No. 4 shaft expansion project, said Hayden, is expected to be commissioned by end of the fourth quarter this year. This is projected to result in a ramping up of production. “Ramp-up of production to an annualized rate of 40,000 ounces of gold per annum will commence in the fourth quarter,” Hayden said.
Exploration work at the firm’s Nama Base Metals project in Zambia is also on course. Caledonian revealed that it was still engaged in discussions with prospective partners in respect of the company’s South African PGE exploration projects, Rooipoort and Mapochsgronde