Caledonia Mining Corporation PLC's (AIM:CMCL, NYSE-A:CMCL) capital spending plans are aimed at underpinning the life of the Blanket Mine in Zimbabwe through 2040, broker Panmure Liberum suggested today.
The gold miner detailed plans for US$41.8 million spending this year with a fourth-quarter trading update.
Almost US$35 million of that is earmarked for work at Blanket, up from US$30.8 million in 2024.
Panmure Liberum adds that nearly all of the 2025 budget falls in the ‘sustaining’ category with the additional expenses and the sizable increase in sustaining capex a decision by Caledonia to strategically invest in improving mining flexibility at, and modernisation, of Blanket.
“In other words, these are carefully considered expenditures, intended to build a foundation for an extended operating life and ensure reduced costs and improved profitability in the longer term.
“We understand that the investments are being taken at the behest of a largely refreshed operational team led by new COO James Mufara, previously a Regional GM at major gold producer Harmony Gold (NYSE:HMY).”
Panmure Liberum believes Caledonia’s willingness to loosen the purse strings is due to the company’s confidence now that Blanket’s life-of-mine (LOM) should extend into the mid-2040s and beyond (until 2041 based on reserves plus some inferred resources.
“Prior to that, mine life (including Inferred resources) was only until 2034, for which a ‘sweating the asset’ strategy was more appropriate."
'Buy' with a target price of 1,436p is the broker’s view.
Shares unchanged at 760p.