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Caledonia Pays Heavy Cost Of Power Disruptions

Listed gold miner-Caledonia Mining Corporation has incurred heavy costs arising from the on-going power disruptions prompting the group to invest in alternative energy sources.

In its 2021 integrated report, the company the problem was compounded by the cost of replacing diesel powered generators due to over-use.

“The quality and reliability of the grid power deteriorated substantially during 2021, which was reflected in increased diesel usage as the generators had to be run harder and for longer periods,” the group said.

In the first quarter of 2021 its primary asset, Blanket Mine used 534,000 litres of diesel which increased to 2.2 million litres in the fourth quarter.

In addition, in late 2021, Blanket lost several generator units which had been overused and had to be replaced in early 2022 at a cost of $2.2 million.

“Recognising that the electricity situation is unlikely to improve we are already evaluating a second phase for the solar project which would allow us to increase the contribution derived from solar power and displace some of the diesel-generated power. We have also approved an additional capital expenditure in 2022 of $3.2 million to install additional power correction equipment and other equipment to optimize the grid supply.”

Meanwhile, the company is aiming to increase output following the completion of the Central Shaft which now enables it to increase production from between 61,000 and 67,000 ounces in 2021, between 73,000 and 80,000 ounces in 2022 to a steady state of 80,000 ounces from 2023 going forward.

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The Central Shaft project has been a six-year project costing approximately $67 million. The capital investment project allows production from three additional levels below 22 Level (750m). A fourth level will be added via a decline construction giving access to even deeper resources.

The group said economies of scale and operational efficiencies arising from the Central Shaft are expected to reduce the all-in sustaining cost per ounce of gold and will provide access for further deep-level exploration which, if successful, may extend Blanket mine life beyond 2034.

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