TORONTO (miningweekly.com) – Canada-based Caledonia Mining plans to restart its Blanket gold mine, in Zimbabwe, “as soon as possible”, after receiving the permissions and licences it needs under the country's new regulations governing gold trading, the firm announced on Friday.

Caledonia shares leapt 63,6% on the news, to C$0,09 apiece by 15:59 in Toronto.

The company has secured an initial working capital facility and ordered the consumables and spares needed to start-up, and expects to start producing as soon as they are delivered.

Caledonia will target an initial production rate of 25 000 oz/y, but hopes to increase to 40 000 oz/y next year, by completing a shaft expansion project, said CEO Stefan Hayden.

The Blanket mine has been granted a gold dealer's license from the Ministry of Finance and a gold exporter's license from the Reserve Bank of Zimbabwe, which entitles the company to meet the new gold-dealing and gold-export requirements.

Under the new policy, gold producers can market and sell their gold directly and are also allowed to keep up to 92,5% of the payment for their gold in foreign exchange.

The proceeds from the sale of gold will be paid directly into Blanket's foreign currency account (FCA) at a Zimbabwean commercial bank and Blanket will be entitled to retain 100% of the proceeds indefinitely in the FCA.

Blanket has already opened the necessary account with a major precious metals refiner, Caledonia reported.

“The re-commencement of gold production at Blanket is a very positive development for Caledonia,” Hayden said in a statement.

“Blanket has managed to retain the bulk of its skilled workforce since it was forced to temporarily suspend operations in October 2008 and accordingly is in a good position to recommence production rapidly.”

The mine's ability to ramp up to 40 000 oz/y in 2010, through the completion of the No 4 shaft expansion project, will depend on the availability of further debt facilities and the rate of internally-generated cash flow, he said.

The company is in talks with a number of potential lenders, but its ability to raise capital will depend on the “efficient and sustained implementation of the current arrangements for Zimbabwean gold exporters”, he emphasised..

Caledonia announced in October last year that it had temporarily suspended gold production at Blanket because of “continuing nonpayment” of foreign exchange by the country's Reserve Bank, for the sale of gold delivered to the Bank's Fidelity Printers and Refiners.

Zimbabwean law required all gold produced in the country be sold and delivered to Fidelity regardless of whether previous sales had been paid for or not.

However, in the first quarter of this year, the country announced revised export procedures, and allowed companies to operate in foreign currency accounts.

Companies including New Dawn Mining and Mwana Africa have since announced they will reopen closed operations.

Caledonia also has a cobalt project in Zambia and platinum/nickel prospects in South Africa.