Caledonia Mining plans to increase gold production by 90%

Caledonia Mining Corporation (LON:CMCL) (TSE:CAL) has set out plans to increase gold production by 90% by 2016.

This would take output to 76,000 ounces of the precious metal compared with 40,000 this year.

It will be achieved in stages, with work to unearth an additional 12,000 ounces starting in the first quarter of next year.

This will come from the company’s already-producing Blanket operation in Zimbabwe, where it will be mined from above the 750 metre level.

A further 24,000 ounces of gold will come from the Number Six Winze Project, below the 750 metre level.

Not included in the figures is the planned production from the first three of Blanket's portfolio of 18 satellite properties expected to begin production in the fourth quarter.

Their eventual output “will be determined by the success of on-going exploration and mining development work”, the company said.

The plans require an additional US$4.7mln of capital expenditure taking the investment budget for the period 2013-17 to US$37mln. This will be funded internally.

The upgrade builds on a year of significant progress during which Caledonia became the first foreign owned gold mine in Zimbabwe to comply with local indigenisation legislation.

Operationally, output has exceeded the company’s guidance, while costs have been below those forecast by the market.

Marking its transition to becoming cash generating business, the company has said it will pay a maiden dividend – marking it out as a rarity in the junior mining sector.