Reunion to develop Zimbabwe copper

A subsidiary of Caledonia Mining (TSE) plans to develop its Sanyati copper oxide project in Zimbabwe.

Reunion Mining estimates the cost to be US$8.7 million. The news comes after the completion of a feasibility study in which proven and probable, open-pit, oxide reserves are calculated as being 5.8 million tonnes grading 1.1% copper. The orebody also contains 1.1% zinc, which, pending further test work, may be recoverable.

At a production rate of 20,000 tonnes of ore per month, the deposit would yield 2,500 tonnes of cathode copper per year. Using solvent extraction-electrowinning, operating costs would be less than 45 cents per lb. During the third year of production, annual output would be increased to 5,000 tonnes of cathode, which would reduce the mine life to 10 from 16 years. The Zimbabwe government has granted Reunion a 6-year option to explore and undertake feasibility studies on the sulphide orebodies at Sanyati, which contain 14.2 million tonnes grading 1.25% copper, 3.22% zinc and 0.96% lead. Reunion can earn a 75% interest in the deposits by taking them to production. Reunion has meanwhile increased to 75% from 60% its interest in the oxide project, with Zimbabwe Mining Development holding the remaining 25% as a carried interest.

To finance development of Sanyati, Reunion plans to issue a private placement of between 666,000 and 933,000 units at about US$15 per unit, to raise US$10-14 million. Each unit will consist of three shares and one warrant. The warrant will be exercisable at US$7.50 for three years.

Caledonia has a 46% interest in Reunion.