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Caledonia Mining Corporation

Caledonia Mining boosts gold production, benefits from foreign exchange gain

Caledonia has signed a new power supply agreement which appears to have reduced the incidence of load-shedding

Caledonia Mining Corporation -
Gold production is set to rise to 80,000 ounces per year, from 2020

Caledonia Mining Corporation PLC (LON:CMCL)(TSE:CAL) produced 12,712 ounces of gold from its Blanket mine in Zimbabwe in the second quarter of 2019, up 6.4% on the amount produced in the first quarter.

Gross profit for the second quarter was US$7mln, 37% higher than in the second quarter of 2018, due to lower on-mine costs. 

Operating profit for the quarter before foreign exchange gains was just over US$6mln, 21% higher than the corresponding period a year earlier.

Net profit attributable to shareholders for the quarter increased by almost 800% to US$23.3mln, due to the substantial devaluation of the newly introduced Zimbabwe currency which resulted in some cost savings and a large net foreign currency gain.

Adjusted earnings per share, which excludes unrealised foreign exchange gains, was US$0.268, 19.5% lower than in the second quarter of 2018, due to deferred tax adjustments arising from the calculation of Blanket's taxes in local currency.

Cash generated by operating activities during the first half was US$8.4mln.

Due to operational difficulties relating to grade and unreliable power, production guidance for 2019 has been reduced from a range of 53,000 to 56,000 ounces to a range of 50,000 to 53,000 ounces. 

However, the company has not reduced earnings guidance for 2019, which remains in the range of US$0.86 to US$1.17 per share due to a higher than expected gold price and lower than expected costs. 

Blanket has recently signed a new power supply agreement which appears to have reduced the incidence of load-shedding.   

After the end of the quarter, on 24 July 2019, the company announced the completion of the shaft sinking at Central Shaft. 

This important milestone marks a very significant step towards completing the investment programme at Blanket in the second half of 2020, after which production is expected to increase to the target level of 80,000 ounces per annum from 2022.

Following the implementation of indigenisation in September 2012, Caledonia owns 49% of the Blanket Mine in Zimbabwe. Caledonia continues to consolidate Blanket and the operational and the financial information set out below is on a 100 per cent basis unless otherwise indicated. The company continues to work with the relevant regulatory bodies in Zimbabwe to obtain the outstanding approvals so that it can complete the purchase of the 15% shareholding in Blanket that is owned by one of its indigenous shareholders.  

 

Quick facts: Caledonia Mining Corporation

Price: £5.85

Market: AIM
Market Cap: £62.96 m
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