Development and diamond core drilling completed by the end of July and an improved geological model allowed a 13% increase in the total measured and indicated gold ounces to 805,000 ounces from 6.74 million tonnes at a grade of 3.72g/t.

CEO Steve Curtis said the increase was good news for Blanket's longer-term life of mine plan and "underscores the overall confidence level in Blanket's resources which is underpinned by the planned increases in cashflow and production as the investment in our Central Shaft comes to an end".

The market agreed it was good news, with Caledonia's shares up 3.79% Thursday to £5.47 (US$7.22).

Total inferred resources increased 9% to 963,000oz from 6.63Mt at a grade of 4.52g/t, which Curtis said also showed Blanket's longer-term potential gave the company confidence in the current Central Shaft project.

Caledonia said the M&I resources increase had upped the proven reserves and indicated resources to be used in the life of mine plan by 10% to 4.98Mt.

The company said the upgrade had led to a modest decline in the average grade of the resources in the indicated and inferred categories due to additional infill drilling data, improvements in the definition of the geological models, additional lower grade resources in peripheral areas, and upward movements of resources between categories.

"However, the average resource grade remains well above the current mill feed grade of 3.3g/t. Caledonia expects the mined grade to trend upwards over time as higher-grade resources are accessed at depth," it said.

Curtis said the upgrade increased Blanket's total resource endowment to almost 1.8 million ounces and further resource additions and upgrades were expected with more exploration activity planned for the future.

Caledonia has been continuously growing Blanket's resource, with an increase of 86% seen since 2011, despite 300,000oz being mined over the last seven years.