Blanket Mine Costs Rise to $950–$1,050 per Ounce
Victoria Falls Stock Exchange-listed, gold-focused miner Caledonia Mining Corporation’s Blanket Mine in Gwanda is grappling with rising costs. On-mine costs are now projected at $950–$1,050 per ounce of gold, according to the company’s results for the quarter and nine months ended September 30, 2024.
By Rudairo Mapuranga
According to Caledonia CEO Mark Learmonth, the increase in operational costs is driven primarily by higher labour and electricity expenses, marking a significant rise from the previous forecast of $870–$970 per ounce.
However, Learmonth stated that the company is taking steps to manage costs while maintaining production targets.
In the report, Learmonth acknowledged the impact of rising costs but emphasized the company’s commitment to finding solutions:
“We continue to explore ways to reduce on-mine costs at Blanket—particularly the cost of electricity and labor, where several initiatives are being implemented, and further measures are under consideration,” Learmonth said.
One of the major cost drivers at Blanket Mine is electricity. Zimbabwe’s unreliable power supply has led to increased reliance on alternative sources, often at a higher cost. To combat this, Caledonia has been integrating renewable energy into its operations.
In September, Caledonia signed a conditional agreement to sell the company that owns its 12.2MWac solar plant for $22.35 million. This sale, expected to close soon, will generate a profit on the plant’s $14.3 million construction cost while securing a long-term energy supply for Blanket Mine. The solar facility currently provides around 20% of the mine’s electricity needs, helping reduce the impact of rising power costs.
In addition to managing electricity costs, Caledonia is reviewing labor costs, which have also risen in the past year. The company is implementing efficiency measures across the workforce and exploring options to streamline operations.
Despite these cost challenges, Caledonia remains focused on meeting its 2024 gold production target of 74,000–78,000 ounces at Blanket Mine. The mine’s gold production for the quarter stood at 18,992 ounces, lower than the record 21,772 ounces produced in the same period last year. Nevertheless, gold output for the nine months reached 56,815 ounces, slightly higher than the 55,244 ounces produced in 2023.
To support operations and avoid disruptions, Caledonia increased its inventory levels by $2.3 million during the quarter. The company plans to invest an additional $2.7 million in inventory by the end of 2024 to bolster preventative maintenance initiatives and prevent potential production delays.
Despite the rising costs, Learmonth remains optimistic about Blanket Mine’s future, supported by the company’s exploration activities and cost-management strategies.
“Blanket remains a solid foundation for our growth profile in Zimbabwe. We continue to make encouraging progress towards identifying and implementing cost-saving measures,” Learmonth said.