Caledonia aims to be the first fully indigenised company to initiate a full growth strategy, for its flagship Blanket gold mine. To this end it has announced a four-year plan to increase production at Blanket to 76kozpa by 2016, 90% above the current budgeted annual production rate of 40kozpa. The capital cost of this increase is modest (totalling US$ 37m from 2013 to 2017); with the required extra metallurgical capacity already present. The additional capex will be used predominantly for development and exploration. This capex will be sourced solely from internal cash flows with no further shareholder dilution needed. Based on CMCL successfully ramping up underground mining at Blanket, we value the company’s shares at C$0.23 on a fully indigenised (49% ownership) and diluted basis, using a10% discount rate and our long-term gold price of US$1,676/oz.