Caledonia Mining Corporation
("Caledonia") (TSX:CAL - News)(OTC.BB:CALVF - News)(AIM: CMCL) is
pleased to provide the following update on the gold production increase and
the installation of standby generators at the Blanket Mine in Zimbabwe.
Following the successful commissioning
of the No. 4 Shaft Expansion Project at the end of September 2010, Blanket
Mine commenced the production ramp-up to the targeted annualized rate of
40,000 ounces of gold by the end of 2010. During the final 2 weeks of
December, 2010, production reached an annualized rate of 39,670 ounces,
determined after taking into consideration a Public Holiday on Christmas Day
and downtime due to power interruptions during this period.
Monthly gold production from September
2010 to December 2010 was as follows:
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Month September October November December
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Gold Production (ounces) 1,740 1,841 1,521 2,865(i)
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(i) Includes Work in Progress
The production rate achieved by the end
of 2010 is over 99 per cent of the target of 40,000 ounces per year and
represents a very substantial increase in Blanket's production capacity. More
importantly the level of production achieved at the end of December 2010
conclusively proved that key aspects of the No. 4 Shaft Expansion Project,
namely the underground crushing station, the automated skip loading system
and the increased milling capacity all operate well within their design
capacity.
Blanket is now in a position to address
the historic under-investment in mine development, equipment and machinery.
Underground development work has commenced in order to ensure that production
levels in years to come can be maintained, as well as providing platforms for
underground exploration with a view to potentially increasing production
above the currently planned rate of 40,000 ounces per annum. This development
work, in conjunction with re-investment in equipment and machinery, is
expected to have a temporary effect on production in Quarter 1 of 2011, but
it is still anticipated that Blanket will produce 40,000 ounces in 2011.
Blanket has experienced considerable
unexpected delays with the delivery of the 33kV electrical switchgear which
is required for the installation and commissioning of the four generating
sets. It is anticipated that the entire 10 Megawatt generating system will be
operational by the end of March 2011 at which point Blanket will be able to
maintain all mining, hauling and milling operations during interruptions to
the electricity supply. Subsequent to Blanket entering into a new supply
agreement with the Zimbabwe Electricity Supply Authority, electricity supply
has been more stable. Whilst Caledonia welcomes the improvement in
electricity supply it still believes it is prudent to proceed with its plans
to equip Blanket with full standby generating capacity to safeguard
production against any future power interruptions.
Further information regarding
Caledonia's exploration activities and operations along with its latest
financials may be found at www.caledoniamining.com.
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