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Zimbabwe's foreign currency crisis may derail Caledonia's Central Shaft project

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Zimbabwe's foreign currency crisis may derail Caledonia's Central Shaft project

Caledonia Mining Corp. PLC said Nov. 14 that the shortage of foreign currency in Zimbabwe may derail its plans to extend the Central Shaft project at its 49%-owned Blanket gold mine.

The Central Shaft, under construction since 2015, was originally intended to extend the mine's life to 2027 with the addition of two production levels. The additional extension, which will add another two production levels, is expected to increase the mine's life by four more years to 2031.

Under the plan, the Central Shaft project will be extended another 250 meters to a depth of 1,330 meters. Full commissioning is anticipated by the end of the first quarter of 2020.

With the development, Caledonia Mining said it intends to evaluate other investment opportunities in Zimbabwe outside of Blanket, which is being monitored by management and the authorities. Operations are continuing as normal, and the mine remains on track to meet its production target of 80,000 ounces of gold per year by 2021 the company said.

A preliminary economic assessment on the expansion project defined a net present value of US$193 million, using a 10% discount rate and a gold price of US$1,260/oz.