Caledonia Mining continues to build strength in Zimbabwe
Last updated: 09:35 18 Mar 2024 GMT, First published: 06:36 09 Feb 2024 GMT
Snapshot
- Former Caledonia Mining CEO steps down as non-exec, new director appointed
- Caledonia Mining reiterating 2024 guidance reassuring, says broker
- Caledonia Mining Corporation hits 2023 guidance despite challenging start
About the company
Caledonia Mining Corporation PLC is a profitable cash-generative gold producer with a strong growth profile. The company's primary asset is the Blanket Mine in Zimbabwe.
Production in 2023 was in line with guidance at around 75,100 ounces following the completion of a new central shaft at Blanket.
Caledonia has also invested in other projects with a strategy to become a multi-asset gold producer in Zimbabwe.
How it is doing
Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) has appointed Tariro Gadzikwa as a new independent director. At the same time, Steve Curtis, former CEO, will step down from the non-executive role he has held since June 2022.
Chairman John Kelly said: "I am delighted to welcome Tariro to Caledonia's board. She has significant board experience and particular expertise in audit, risk management, corporate finance and finance strategy development. Her skills will be of great value to the board.
"As a Zimbabwean national based in Johannesburg, Tariro will add further depth to the board's considerable experience in Southern Africa.
"I would also like to thank Steve for his continued contribution to the board in a non-executive capacity since stepping down as chief executive officer in June 2022 and am pleased he has agreed to remain a consultant to Caledonia, where management can continue to benefit from his experience and insight."
Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) warned that one-off costs will mean a reduction in profits this year even with a strong production performance from its Blanket gold mine in Zimbabwe.
Production for 2023 was 75,416 ounces of gold with revenues in line with expectations, but increased costs and several significant one-off charges in the final quarter of the year have resulted in lower profits, said the statement.
Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL)’s update from the deep-level drilling programme at its Blanket Mine was encouraging, says broker Cavendish with grades and widths generally better than expected.
As a result, the overall resource should increase and so lead to an extension of the mine life.
What the brokers say
Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL)’s comment that production and costs at the 64%-owned Blanket mine for 2024 to date have been consistent with guidance provides some reassurance in the profit warning, notes house broker Liberum.
Zimbabwe-focused Caledonia has already guided this year to production of 74-78,000oz (100% basis) at US$870-970/oz on-mine cost and US$1,370-1,470/oz AISC.
Caledonia also indicated that most of the causes of the profit downturn were one-offs and will drop out of the 2024 numbers.
What management says
Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) CEO Mark Learmonth speaks to Thomas Warner from Proactive London after the Zimbabwe-focused gold producer released an update on production at its Blanket Gold Mine for calendar year 2023.
Learmonth explains that Caledonia managed to meet its guidance for the year despite a very challenging start to the period. For 2024, the company anticipates a slightly lower production of 74,000-78,000 ounces, due to strategic decisions to suspend mining in certain lower-grade areas.
Learmonth emphasises the company's ongoing shift towards more efficient mining practices, facilitated by the newly operational central shaft. This transition includes phasing out older, less efficient infrastructure in favour of the central shaft operations. The aim is to optimise mining for profitability rather than mere volume. He goes on to say that exploration remains a key focus for Caledonia Mining.