JOHANNESBURG (miningweekly.com) – Caledonia Mining produced 12 924 oz of gold in the first quarter of this year, marginally higher than that produced in the first quarter of 2017 and in line with expectations.
“We expect that production will deliver the usual increase in the second half of the year as we see the benefit of the increased level of mine development in the first half of the year, which will improve our access to higher grade areas,” CEO Steve Curtis commented on Monday.
Caledonia has maintained its full-year guidance at 55 000 oz to 59 000 oz of gold.
Meanwhile, adjusted earnings a share of 40.1c were 51% higher than in the corresponding period in 2017, largely owing to a higher realised gold price, and the increased export credit incentive.
Operating cash flows for the quarter ended March 31, were $7-million and the company's balance sheet remains strong with net cash of $13.4-million.
Curtis said the first quarter was one of very strong cash generation at its Blanket gold mine, in Zimbabwe.
“As we continue to grow production to our target of 80 000 oz by 2021, maintain cost control and benefit from economies of scale, we look forward to further increasing cash flows and earnings,” he noted.
Caledonia’s profits in the quarter benefitted from an 8% increase in the average realised gold price and a 3% reduction in all-in sustaining costs to $832/oz, which contributed to a 10% increase in gross profit and a 35% increase in net attributable profit.
Mine costs were marginally higher at $687/oz owing to various operational factors which the company expects to be addressed as the Central Shaft project is commissioned in 2020.
Profit and cash flow were also boosted by the government of Zimbabwe increasing the Export Credit Incentive (ECI) from 2.5% to 10% of revenue with effect from February 1.
“The operating and investment climate in Zimbabwe continues to improve with government showing very pleasing levels of support of the mining industry, including the increase in the ECI for gold producers,” Curtis noted.
He added that the Zimbabwe gold sector offers exciting opportunities but is in need of significant capital investment.
In March, the government enacted legislation which completely removed the requirement for gold producers to implement indigenisation which has created the opportunity for Caledonia to potentially increase its stake in the Blanket mine subject to agreement with local partners.
“We have been encouraged by the level of support that the new leadership has shown for the mining sector and the Zimbabwean economy in general and look forward to the opportunities that the improving macroeconomic environment in Zimbabwe is likely to present.”