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Caledonia lifts Q1 production, earnings

11th May 2017

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

     

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JOHANNESBURG (miningweekly.com) – Increased tonnes milled, higher grades and improved recoveries have lifted the first-quarter production of Caledonia Mining’s Blanket mine, in Zimbabwe, to 12 794 oz from the 10 822 oz produced in the first quarter of last year.

CEO Steve Curtis highlighted that the increased production also resulted in lower unit costs, as the fixed cost component is spread across more production ounces, with the mine realising 4% lower on-mine costs at $659/oz and 10% lower all-in sustaining costs at $857/oz.

"[This] all contributed to increased adjusted earnings per share of $0.05 for the quarter, an increase of 96% on the corresponding quarter of 2016,” said Curtis.

He added that he was pleased that the company delivered the improved financial and operating performance while simultaneously having continued to implement a significant capital project in the sinking of the new Central shaft, currently at a depth of 750 m.

The shaft remains on track to start production in the second half of 2018 and, once complete, will enhance the operating efficiency at Blanket, as it will transform the existing underground infrastructure, reduce travel times for employees to get to mining areas, shorten the tramming distances and reduce the time required to hoist ore to surface.

“The Central shaft will also enable us to access resources below the 750 m level and give us the flexibility to increase the pace of deep-level exploration and development, securing the future of the mine for many years to come,” said Curtis.

The business continues to be strongly cash generative with operating cash flow during the quarter of $1.8-million contributing to a robust balance sheet and the company's gross cash position at the end of the quarter standing at $11.9-million.

"We have noticed mixed operating conditions in Zimbabwe in 2017. The electricity supply continues to be unstable and we continue to install equipment to protect against any future instability. We also noted an improvement in the availability of foreign exchange towards the end of the quarter, which is required to make payments outside Zimbabwe.

“The export incentive credit introduced in 2016 continues to contribute to the bottom line with the credit received by Blanket increasing from 2.5% to 3.5% of revenues with effect from January, contributing $576 000 in the quarter,” said Curtis.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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