April 3, 2009 / 3:16 PM / 11 years ago

UPDATE 2-Caledonia to resume mining at Zimbabwe's Blanket mine

* To resume production at Zimbabwe’s Blanket gold mine * Expects mine to produce 40,000 oz gold a year

* Shares up 63 pct (Adds background, details; updates share movement) April 3 (Reuters) - Caledonia Mining Corp (CAL.TO) said it will resume mining at the Blanket gold mine in Zimbabwe, following recent changes in regulations governing gold trading in the country, sending its shares up 63 percent.

Blanket has retained most of its skilled workforce since it was forced to temporarily suspend operations in October 2008, and is in a good position to recommence production rapidly, Chief Executive Stefan Hayden said in a statement.

The mine has secured an initial working capital facility and expects to resume production once it has taken delivery of the required consumables and spares, the company said.

Shares of Caledonia were trading up 3.5 Canadian cents at 9 Canadian cents Friday on the Toronto Stock Exchange.

Caledonia, which expects the Blanket mine to produce 40,000 ounces of gold in 2010, said the mine received necessary licenses to comply with gold export regulations and market its gold to a refiner of its choice.

Recently, Zimbabwe’s central bank announced it would allow gold producers to sell their own bullion, after output slumped in 2008 by more than 50 percent. [ID:nL2157452] (Reporting by R. Manikandan in Bangalore; Editing by Ratul Ray Chaudhuri)

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