Caledonia Mining Corporation plc

Operations

Blanket Gold Mine

The current Blanket mining area has eight ore shoots in the producing section of the mine. The majority of the mine production is sourced at present from the AR Main and AR South ore bodies with a lesser contribution from the Blanket, Eroica and Lima reefs.

Background

Blanket started production in 1904. Early workers tended to mine the visible gold sections of the pay shoots, i.e. pick the “eyes” out of the mine.

Significant early production milestones were: in 1965 Falconbridge acquired the property and increased gold production to an average of approximately 45 kg per month; in 1993 Kinross took over the property and built an enlarged Carbon-in-Leach (“CIL”) plant with capacity of approximately 3,800 tonnes per day (“tpd”) to treat an old tailings dump together with the run-of-mine ore.

Gold production reached a level of 110 kg per month during the tailings treatment years from 1995 to 2007. To date in excess of 1 million ounces of gold have been produced from the property.

On April 1, 2006 a wholly-owned subsidiary of Caledonia Mining Corporation completed the purchase of the Blanket Mine from Kinross. Caledonia has allowed Blanket to make considerable capital investments in its underground, surface and township facilities. These investments culminated in the commissioning of the No 4 Shaft Expansion Project at the end of September 2010 which increased Blanket’s hoisting capacity from the No. 4 Shaft from 500 tonnes per day to 3,000 tonnes per day.

The current Blanket mining area has eight ore shoots in the producing section of the mine. The majority of the mine production is sourced at present from the AR Main and AR South ore bodies with a lesser contribution from the Blanket, Eroica and Lima reefs. AR Main and AR South are massive ore bodies up to 30 m wide and are ideally suited to the long-hole open stope mining method, while the remainder of the Blanket ore bodies are tabular and better suited to underhand stoping methods.

Following the successful commissioning of the No. 4 Shaft Expansion Project in September 2010, the underground workings have increased production to approximately 1,200 tonnes of ore per day using both long-hole open stoping and underhand stoping methods. Broken ore is trammed along the 22 Level rail system by battery locomotives and the ore cars trains are self-tipped onto one of three grizzlys above the ore bins which are located between 22 Level and the 765m level crushing station. The minus 300 mm rock held in three underground storage bins, Payable ore and waste ore are held in separate storage bins and handled accordingly. Ore is gravity fed from these ore bins onto the 765m Level crushing station conveyor which discharges the ore onto a vibrating grizzly feeder which discharges the oversize into a 30 x 20 Telsmith jaw crusher.

Zimbabwe Operation Map

The underground crushing station ensures that all the run-of-mine ore is reduced to minus 150 mm in size as this provides for the optimisation and greater efficiency of the automated skip loading and hoisting operations. This allows mining and hoisting activity to continue without interruption.

Blanket No. 4 Shaft has been equipped with the first automated loading system in Zimbabwe which sequentially fills the two six tonne ore skips which are hoisted from the 789m level to surface. The use of this state of the art automation reduces the risk of ore loading accidents and injuries, reduces manpower costs, minimises spillage, reduces skip loading times, increases hoisting capacity, ensures precise ore tonnage accountability, and enhances winder efficiency while lowering loading and hoisting costs.

The double compartment No. 4 Shaft is Blanket’s main shaft for hoisting ore to surface from the loading stations at 510m and 789m below surface, and it has a proven hoisting capacity of 110 tonnes per hour from 789m. The Jethro and Eroica Shafts and the No.5 and No.6 Winzes are used for transporting personnel and materials underground, and the No.2 and Lima Shafts are also used for hoisting ore to surface.

The entire underground and surface operations of the Blanket mine, except for the Lima Shaft, including the surface compressors and the No 4 Shaft Winder can be operated by the 10,000kVA standby diesel powered generating sets which were installed and commissioned in May 2011.

This standby generating station ensures that all mining and metallurgical operations continue notwithstanding any interruptions to the electrical power supply from the grid. The level of interruptions to Blanket’s power supply has diminished considerably following the agreement of an un-interrupted power a supply agreement between Blanket and ZESA. In the year to 31 December 2012, the standby generators were used for a total of 108 hours (2011, 121 hours).

The Blanket Mine is situated in the Gwanda Greenstone Belt, a typical Archaean greenstone-hosted gold deposit. The deposit is situated on the northwest limb of the Gwanda Greenstone Belt along strike from several other prominent gold deposits. Blanket is the largest producing mine in a belt which at one time had 268 operating mines.

The Gwanda Greenstone Belt extends 80 km in an east-west direction and consists predominantly of basaltic rocks (greenstones) with minor felsic and ultramafic units. The belt has been intensely sheared and intruded by granites resulting in complex deformation structures and vertically dipping strata. The shape of the gold ore bodies is controlled by these structures, resulting in their near vertical orientation.

Near vertical shear zones are developed throughout the belt and are the loci of most of the small mines that have been discovered in the area. Most of Blanket’s prospects are of this type. Many of these now defunct small mines were shallow, had historically high recovered gold grades and closed towards the end of the 1960s when the gold price was low and the mining and metallurgical techniques available at that time were such that the mines became un-economic. The area has a long history of gold production and remains highly prospective and must therefore be regarded as an attractive exploration area as it has never been subjected to modern exploration techniques.

Active mining at the Blanket mine takes place over a 3 km strike that includes 8 discrete ore shoots. Fig NN provides a north-south vertical projection of the various Blanket ore shoots. Mineralisation occurs in near vertical shoots aligned along an approximately north-south axis. The ore shoots vary in shape from the tabular to lensoidal quartz reefs to the massive to pipe-like disseminated sulphide reefs (DSR).

Gold mineralisation occurred as a result of the reaction between rising hot fluids and the iron rich minerals in the shear zones. The reaction involved the formation of sulphide minerals, predominantly arsenopyrite, as the sulphur in solution reacted with iron in the rocks. Gold, which was also transported by the fluids, became attached to the arsenopyrite to form the gold ore. These reaction zones are located within the more ductile tensional high strain areas of the shear zone.

Blanket Mine is part of the group of mines that make up the North Western Mining Camp otherwise also called the Sabiwa group of mines. What is today referred to as Blanket Mine is a cluster of mines extending from Jethro in the south, through Blanket itself, Feudal, AR South, AR Main, Sheet, Eroica and Lima in the north. These ore shoots occur in the Blanket shear zone, a low angle transgressive shear characterised by the presence of biotite relative to the massive amphibolites forming the country rocks.

A regional sub horizontal dolerite sill intruded the above sequence and is emplaced about 500 meters below surface. The sill does not cause a significant displacement and although it truncates all the ore shoots, the mineralised shoots continue undisturbed below the sill.

Since the rock units of the Gwanda Greenstone Belt are tilted on their side and strike north-south in the vicinity of Blanket Mine, the stratigraphic sequence is exposed from the oldest in the east to the youngest in the west. The Felsic unit consisting of quartzite and sericite-quartz schists forms the base of the stratigraphy. No gold deposits have been recorded in this unit. Overlying this unit to the west is the Ultramafic-Mafic unit interlayered with banded iron formations. Gold occurs in this unit at Vubachikwe mine, which is adjacent to Blanket, where the deposits are confined to steeply dipping folds in the banded iron formation layers. The Ultramafic-Mafic unit is in turn overlain to the west by the Mafic unit, a thick sequence of tholeiitic and pillow basalts. Within the Mafic unit a prominent shear zone up to 50 meterswide runs the length of the property and is the locus of all ore bodies on the Blanket property. The sequence is completed by an Andesitic unit which caps the stratigraphic sequence.

Two main types of mineralisation are recognised; disseminated sulphide replacement reefs and quartz-filled reefs and shears.

The first type is the disseminated sulphide replacement type which comprises the bulk of the ore shoots. Typically these zones have a silicified core with fine sprays of disseminated arsenopyrite hosting the best grades. Disseminated sulphide replacement ore bodies range up to 50m in width with a strike between 60m and 90m. Free-milling gold constitutes up to 50% of the total metal content with the remainder occluded within the arsenopyrite.

Quartz-filled shear zones form the second type of mineralisation. Two quartz shears are mined at Blanket Mine, the Blanket Quartz Reef and the Eroica Reef. These reefs tend to have long strikes but are not uniformly mineralized although continuous pay shoots of over 100 m on strike are not uncommon. The Quartz Reef at Blanket has a surface strike of some 500 m, but economic mineralisation is restricted to three 90 m shoots which were defined on surface by the early workers. Grade fluctuations are more extreme in the quartz reefs than in the disseminated type reefs but on average these shears have higher grades and are used as a “sweetener” of ore to the mill.