Gold miner Caledonia Mining Corporation, which owns and operates the Blanket mine, in Zimbabwe, increased its gross revenue by 31% year-on-year to $30-million for the second quarter of the year.

The miner thus made a gross profit of $13.9-million – a 51% increase in comparison to the second quarter of 2020.

As such, Caledonia’s earnings before interest, taxes, depreciation and amortisation (Ebitda) for the quarter were $14-million – a 103% increase on the $6.9-million of the comparative period in 2020. Caledonia’s Ebitda excludes asset impairments, net foreign exchange gains and losses and export incentives.

The miner’s on-mine cost of production was $715/oz during the period, down from the $811/oz of the corresponding period in 2020; while its all-inclusive sustaining costs, or AISC (excluding export incentives), were $933/oz, down from the $1 075/oz of the same period in 2020.

Caledonia’s basic International Finance Reporting Standards earnings per share (EPS) for the period under review were $0.21, down from the $0.43 in the corresponding period in 2020; while adjusted EPS were $0.62, up from the $0.36 of the same period in 2020.

The miner’s net cash from operating activities also increased from $4-million in the second quarter of 2020, to $12.7-million for the quarter under review; while net cash and cash equivalents increased from $11.6-million to $16.7-million during the period under review.

Caledonia’s financial performance led to it paying a total dividend paid in the quarter of $0.12 apiece in April, while a further dividend at the increased rate of $0.13 apiece was paid in July.

CEO Steve Curtis says higher production, lower costs and a higher gold price resulted in a significant increase in the underlying profitability of the Caledonia business.

“Excellent production was achieved without compromising on safety. During the quarter, Blanket passed the milestone of achieving two-million fatality-free shifts,” he says.

OPERATIONS & OUTLOOK
During the second quarter, Caledonia produced 24% more gold year-on-year, at 16 710 oz, thereby setting a new second-quarter production record.

Over 165 000 t of ore were mined and milled in the second quarter, which is a new production record for any quarter and reflects the contribution of Caledonia’s Central shaft, which was commissioned at the end of March and the build-up towards the target of 80 000 oz/y from 2022 onwards.

In terms of production in the first half of the year, Caledonia produced 8% more gold in comparison to the first half of 2020 .

Going forward, the miner states that production in July was 5 995 oz, thereby showing a steady increase in average monthly production and demonstrating that the Blanket mine is on track to achieve its production guidance of between 61 000 oz and 67 000 oz for the full-year.

The mine’s cost guidance for this year is in the range of $740/oz to $815/oz, with guidance for AISC being between $985/oz and $1 080/oz.

Meanwhile, Caledonia has decided not to proceed with the acquisition of the Glen Hume property, in Zimbabwe, owing to disappointing exploration results.

Curtis notes that the company’s net profit was adversely affected by the impairment of the Glen Hume exploration asset following the board’s decision not to proceed further with this project.

Nonetheless, Caledonia reports that it will conduct exploration at Connemara North, the other optioned property in Zimbabwe and will also consider further investment opportunities in Zimbabwe and elsewhere.

As for the solar photovoltaic project being undertaken by Caledonia at the Blanket mine, the company reports that this is now in the procurement phase, with project completion expected in April 2022.

This project is expected to provide about 27% of Blanket’s average daily electricity use.