HARARE – London Stock Exchange-listed resources firm Caledonia Mining Corporation Plc (Caledonia) says it has registered better than expected results in its first quarter due to tight cost control.
In the three months to March 2016, Caledonia’s Blanket mine saw its gold production increasing by eight percent to 10 822 ounces while both cash and all-in-sustaining costs declined.
The Zimbabwe-based miner is undertaking a major expansion of the Blanket gold mine and disruption and costs associated with this meant net profits declined to $543,000 from $1,26 million recorded in the prior comparable period.
The group’s chief executive, Steve Curtis, yesterday said the financial and operating results were better than expected due to the better output, good cost control and gold price.
He added good progress was being made on the development work.
“A huge amount has been achieved at the Central Shaft since work commenced in late 2014. In the first quarter of 2016 the main sinking headgear was assembled. The winders have been commissioned and sinking is expected to re-commence within a few days.
“Completion of the Central Shaft remains on track for mid-2018 and will re-establish Blanket’s position as a low cost operation with excellent prospects to extend the existing mine life,” he said.
Caledonia has been investing heavily in Blanket lately, opening up new levels to the mine and improving the infrastructure underground, both in terms of access and transport.
Curtis noted that the Gwanda-based miner’s production is expected to be around approximately 17 percent higher at 50 000 ounces this year.
“The projected increase in production in 2016 is expected to result in improved cash generation due to higher sales volumes and lower costs per ounce of gold as fixed costs are spread over more gold ounces produced,” he said.
The company’s net cash was $8,8 million at the end of March and should start to rise in the second half of the year as Blanket resumes dividend payments said Curtis.
Blanket has been in operation for many years now, and has managed to ride out the complexities of the Zimbabwean political situation relatively unscathed.
In large part that’s due to the indigenisation deal that Caledonia struck some years ago with local businessmen, with its own workers, and with other community groups. Under the terms of that deal, Caledonia retains operational control of Blanket and ownership of 49 percent of it.