Aim-listed Caledonia Mining recorded gross revenues of $25.7-million for the quarter ended March 31, with higher revenues year-on-year reflecting a higher realised gold price, offset by lower sales as a result of lower production.

Revenues include the sales proceeds of 1 584 oz of gold in work-in-progress brought forward from 2020. 

Earnings before interest, taxes, depreciation and amortisation, excluding net foreign exchange gains and the export incentive credit, were $9.5-million.

On-mine cost was $836/oz and higher year-on-year, mainly owing to a lower grade and lower recoveries.

Caledonia reported normalised all-in sustaining costs of $1 077/oz and adjusted earnings a share of $0.51.

Caledonia reported net cash from operating activities of $2-million for the quarter. Cash from operations was adversely affected by increased working capital, in particular higher amounts due for gold sales – these were settled in full after the end of the quarter.            

The responsibility for making payments for gold deliveries from the Blanket gold mine, in Zimbabwe, has moved from the Reserve Bank of Zimbabwe (RBZ) to its gold refining subsidiary Fidelity Printers and Refiners.

Caledonia believes this move will simplify and improve the mechanism for receiving payments for the gold it produces and says this new system is operating well.

Caledonia paid dividends in the quarter of $0.11 apiece, a 46.7% increase year-on-year.

The quarterly dividend increased by 9% to $0.12 apiece in April.  

OPERATING PERFORMANCE

Caledonia produced 13 197 oz of gold in the quarter. Production was adversely affected by underground flooding and lower grades.

Grade was low owing to a fall-of-ground problem in a high-grade area.

"The first quarter of 2021 raised several challenges which I am pleased to say have now been rectified.

“The fall-of-ground at AR South has been resolved and this high-grade area is back in full production,” CEO Steve Curtis says.

He notes that the underground flooding, which resulted in five lost production days, was caused by exceptionally heavy rains. Rainfall in the first quarter was more than two-and-a-half times higher than the average for the same period in previous years.

“In response, we increased our pumping capacity so that we can manage any repetition of this event in future. On the positive side, the heavy rain means that water supply, which has sometimes been a cause for concern, is assured for the foreseeable future,” he adds.

The Central shaft was commissioned at the end of the quarter and is now operational.

Caledonia produced 5 470 oz in April, which is above plan and 24% higher than the average monthly production in the March quarter.

Caledonia’s 2021 gold production guidance is between 61 000 oz and 67 000 oz.

Curtis says the marked improvement in production at Blanket in April has continued into May and that the company will achieve its full-year guidance.

In December, Caledonia announced that it had entered into option agreements on two properties, Glen Hume and Connemara North, in the Gweru mining district, in the Zimbabwe Midlands.

These options give us the right to explore each property for periods of 15 and 18 months, respectively.

“If our exploration is successful, these properties will add further impetus to our growth,” Curtis informs.

He notes good progress on the drilling campaign at Glen Hume, with the company evaluating the results of the first phase.

“At Connemara, where we have the benefit of evaluating historical drill data, we are preparing a geological model before we commence drilling this summer.” 

Caledonia's immediate strategic focus is to convert the commissioning of the Central shaft project into higher production, lower costs and increased cash generation.

“We will also finalise the exploration activities at Glen Hume and Connemara North while evaluating further investment opportunities in the gold and precious metals sector in Zimbabwe and in other jurisdictions, with our long-term vision of becoming a midtier, multi-asset gold producer,” Curtis says.