-- adds share price, broker comment --
Caledonia Mining (LON:CMCL TSX:CMCL) has seen another sizeable chunk of the ore-body at the Blanket mine in Zimbabwe shifted into the higher confidence indicated resource category.
In total, a further 476,750 tonnes was upgraded of which 222,000 tonnes came from drilling in the AR South Section with the rest from the Blanket Quartz Reef, No.1 and No. 2 ore bodies.
Blanket, 49% owned by Caledonia, already has 3.47mln tonnes of Reserves and Indicated Resources following a May 2015 upgrade.
This latest upgrade represented an increase of 14% in terms of tonnes, 19% in terms of contained gold and equates to two years of production at 2014 production levels, the miner said.
Steve Curtis, chief executive, added it was a significant boost to confidence over Blanket's resources, as some 62% are now in the measured and indicated and 38% in the inferred category.
"Caledonia will continue to look to increase the life of mine by further supplementing it with resource additions and upgrades as a result of the increased exploration activity, both at Blanket and also at the satellite projects," he said.
Broker Sanlam added that the green-stone nature of the Blanket mine means that it could have a very long mine life (from now) but without much rock in reserves and/or resources at any point in time.
“Although there is always some level of geological risk, we are comfortable that ounces can be added to Blanket’s mining inventory fairly easily and this has been demonstrated in 2015.
“In May, approximately 150,000oz were added to the Indicated category and another 83,000oz have been added today.”
SP Angel added that the upgrade announced today is the result of a long term programme of resources estimation drilling over the next 3 to 4 years to establish and upgrade inferred resources below the mine’s 750m level.
These will become accessible from the new Central Shaft, which is already underway and expected to be completed to a depth of 1080 metres by June 2018.
The aim is to boost gold output from the present level of around 40,000 oz a year to approximately 65,000 oz by 2017 and 80,000 oz by 2021.
Shares rose 3% to 42.8p.