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TSX -and AIM-listed Caledonia Mining is aiming to increase gold production from its Blanket gold mine in Zimbabwe to approximately 76 000 ozpa of gold by 2016. This is a 90% increase on the mine’s targeted gold production for 2013 of approximately 40 000 oz.

Blanket’s newly re-constituted board of directors, which includes representatives of the indigenous Zimbabwean shareholders, has approved a budget for 2013 and strategic plan which covers the period 2013 to 2017.As a fully indigenised entity, Blanket can now develop and implement its long term growth strategy.

Since Caledonia purchased Blanket in early 2006, it has ensured that all the numerous plant upgrades designed and installed at Blanket have resulted in a highly efficient operation with substantial surplus capacity in its hoisting and carbon-in-leach (CIL) circuit.

Blanket’s 40 000 ozpa current gold production equates about 1000 Tpd. Blanket currently has hoisting capacity of 3 000 Tpd and a CIL circuit capacity of 3 500 Tpd

Blanket’s crushing capacity will be increased to 3000tpd after minor amendments to the crushing circuits; the existing milling capacity of 1460tpdwill be increased to 2 900 Tpd following the budgeted investment of US$850 000 on new rod mills. Accordingly, Blanket will be able to process a substantial amount of additional compatible ore following the planned increases in the capacity of the crushing and milling circuits.

Caledonia has two approaches to accessing additional ore which include exploration and subsequent development at Blanket’s satellite properties and down-dip exploration and development at Blanket as well.

Work has already commenced on development projects which are expected to progressively give rise to increased annual gold production of 36 000ozpa. The first increase in gold production is expected in early 2014, and the targeted 36 000 oz increase is expected to be achieved in 2016.

Additional gold production will also spread Blanket’s fixed costs over more ounces of gold and could mitigate some of the anticipated increased production costs.

The proposed increase in production at Blanket and the exploration and pre-production development of the first three satellite projects will require a capital investment of approximately US$4.7 million in addition to the normal planned capital expenditures required to sustain operations at Blanket.

The total budgeted and projected sustaining and development capital investment at Blanket from 2013 to 2017 will be approximately US$37 million, all of which is expected to be funded from Blanket’s internal cash flows

Subject to the strategic plan projections, including future ore production, the price of gold and operating costs, and the company’s ability to adhere to the implementation timeline, both Blanket and Caledonia expect to continue to pay dividends throughout this period.

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