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Caledonia Mining Announces Growth Agenda

|Includes: Caledonia Mining Corp PLC (CMCL)

Our Zimbabwe based gold miner, Caledonia Mining (CAL.T) announced this week the company's growth plan for the next few years. The company plans on raising production by 90% to 76k ounces per year by 2016.

  • Blanket''s highly efficient metallurgical plant has considerable surplus capacity: Blanket can process substantial volumes of additional ore with only a modest investment required to upgrade the existing crushing and milling circuits;
  • Development of the existing ore resources above and below the current lowest mining level (750m) at Blanket has started and is planned to produce an additional 36,000oz pa of gold by 2016:
    • 12,000oz pa planned to start in Q1 2014 from further development at the Blanket mine above the 750 m level;
    • 24,000oz pa planned to start in Q4 2015 from the No. 6 Winze Project below the 750m level;
    • The above results in a combined 90% increase to 76,000oz pa from Blanket''s targeted 2013 gold production of approximately 40,000oz;
  • Increased production is also expected to come from the first three of Blanket''s portfolio of 18 satellite properties which are expected to commence production in Q4 of 2013. The eventual rate of production from these properties will be determined by the success of on-going exploration and mining development work. Production from these properties has not been included in the 76,000oz gold target as the resources are undefined at present;
  • Blanket''s total capital investment between 2013 and 2017 is anticipated to be approximately US$37 million:
    • Funded entirely from Blanket''s internal cash flows;
    • Modest initial investments and early cash flows will enhance Blanket''s financial performance; and
  • Subject to achieving successful exploration results at Blanket below 750m and the sequential development of Blanket''s remaining satellite properties a longer term potential exists for further increases in gold production.

As I have indicated before, there is quite a bit to like about this company and the only thing holding it back is the fact that it operates in Zimbabwe. However as they continue to show earnings and increase production, along with the initiation of a dividend this year I am hopeful capital appreciation will be on the horizon.

Disclosure: I am long CALVF.OB.