LONDON (ShareCast) - (Sharecast News) - Caledonia Mining Corporation announced gold production from the Blanket Mine in Zimbabwe for the quarter and year ended 31 December on Monday, with approximately 14,952 ounces of gold produced during the quarter, which was 7% higher than the previous quarter.
The AIM-traded firm said total gold production for the year to 31 December was around 54,512 ounces, which was in line with 2018 production guidance, which was a range of 54,000 to 56,000 ounces.

Caledonia advised investors that gold production for 2019 was expected to be between 53,000 and 56,000 ounces.

The company said it remained on track to achieve production of approximately 80,000 ounces of gold per annum from 2021, following completion of the central shaft.

It said the central shaft was currently at a depth of 1,150 meters, and would be sunk to a depth of 1,204 meters.

Caledonia anticipated that shaft sinking would be completed towards the middle of 2019, after which the shaft will be equipped and commissioned.

Following an increase in exploration activity at Blanket, since early 2015 the company had announced seven successive increases in the resource base, as a result of which its life-of-mine was extended from six years as at the end of 2014, to 14 years as at the end of 2018.

Exploration was continuing at Blanket, with the objective of further extending the life-of-mine.

Caledonia also said it had entered into gold price hedging contracts for the five months from February until June for 22,500 ounces of production, through the purchase of put options with a strike price of $1,250 per ounce.

The board said the hedge would ensure that Caledonia received a minimum price of $1,250 per ounce of gold for the duration of the contracts, while maintaining full upside participation.

"We are pleased to see consistent production performance from Blanket in the fourth quarter of 2018 to deliver 14,952 ounces for the quarter and 54,512 ounces for the full year," said Caledonia Mining chief executive officer Steve Curtis.

"Until the central shaft has been commissioned in 2021, production from Blanket is expected to remain at broadly the same level as we achieved in 2017 and 2018.

"We therefore expect to produce between 53,000 and 56,000 ounces in 2019."

Curtis note dthat Blanket finished 2018 with "adequate" mining and development infrastructure in place to deliver on that target, and said the firm had made a "good start" to 2019.

"Completion of the central shaft is the key to Blanket achieving its planned production of approximately 80,000 ounces of gold per annum from 2021 onwards.

"I expect that sinking work at Central Shaft will be completed by mid-year after which we will start to equip the shaft."

Curtis said that part of the central shaft project was relatively capital intensive, adding that in light of the firm's "significant" capital expenditure commitments, it believed it was "prudent" to take advantage of the recent strengthening of the gold price.

"We have therefore secured a minimum received gold price of $1,250 per ounce for the five months to June 2019, whilst maintaining full upside exposure to the gold price through a cost-effective option structure.

"The central shaft project is in the final 18 months of construction; we expect capital investment on this project to be lower in the second half of 2019 and to reduce further in 2020 as it nears completion.

"Caledonia will continue to monitor the gold price in conjunction with our projected cash position and review our hedging strategy as appropriate."

Caledonia Mining said it expected to release its results for the year to 31 December on or about 20 March.

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