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Caledonia Mining achieves record fourth quarter gold production

Caledonia Mining expects to achieve a 19% increase in 2017 production as it continues to ramp up the Blanket mine in Zimbabwe
gold mine
Caledonia says it remains well positioned for future growth

Caledonia Mining Corporation’s (LON:CMCL, TSE:CAL) fourth quarter earnings gained, boosted by record gold production, lower costs and higher prices of the yellow metal.

Gold production jumped to 13,891 ounces (oz) in the three months to 31 December from 11,515oz in the year-ago period, supported by output at the Blanket mine in Zimbabwe, in which Caledonia owns a 49% stake.

The group also achieved record full year gold production, which rose to 50,351 oz in 2016 from 42,804 oz the prior year.

"Caledonia finished 2016 with a strong quarter with Blanket producing 13,591 ounces at an all-in sustaining cost (AISC) of $843 per ounce, a new quarterly production record for the mine,” said chief executive Steve Curtis.

“Full year 2016 production of 50,351 ounces at an AISC of $912 per ounce also represents a new annual production record for Blanket and is an achievement for which all of our staff can be justifiably proud.”

Watch: Caledonia Mining's Mark Learmonth delighted with record production

Gross profit in the fourth quarter rose to US$6.8mln from US$3.4mln and adjusted basic earnings per share (EPS) rose to 7.8c from 1.1c.

A robust fourth quarter supported full year growth with gross profit increasing to US$23.4mln from US$12.1mln and adjusted basis EPS rising to 21.4c from 8.8c.

The average realised gold price in the final three months rose to US$1,187 per oz from US$1,083 per oz a year ago while production costs fell to US$6.8mln from US$7.1mln.

Across the year gold prices averaged US$1,232 per oz, compared to US$1,139 per oz in 2015. Production costs in the full year rose to US$32.1mln from US$30.1mln.

The company ended the year with a stronger balance sheet with net cash rising to US$6.9mln in the fourth quarter from $2.3mln the previous year. For the full year, net cash jumped to US$23.0mln from US$6.8mln in 2015.

Caledonia maintained a full year dividend of 5.5c.

On the outlook for 2017, Curtis said the company expects to post a 19% increase in full year production to 60,000 oz as the ramp-up at Blanket towards 80,000 oz by 2021 continues. Caledonia estimates 2017 AISC of US$810 to US$850 per oz, down 7% and 11% respectively on 2016.

“"Caledonia remains well positioned for future growth and continues to evaluate investment opportunities as they arise. I look forward to updating the market with our continued progress over the course of 2017,” Curtis said. 

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