TSX-, NYSE- and Aim-listed Caledonia Mining says its earnings for the third quarter were positively impacted on by significant currency devaluations, which realised foreign exchange gains, during the quarter ended September.

The company achieved basic earnings per share (EPS) of 61.1c, compared with basic EPS of 34.6c reported for the third quarter of 2018.

Adjusted EPS for the nine months to September 30 of 69.4c apiece, compared with 103c apiece in the prior comparable period, excluded unrealised foreign exchange gains of $31.1-million, but included realised foreign exchange losses of $3-million – equivalent to 28c a share.

Caledonia’s Blanket mine, in Zimbabwe, produced 13 646 oz of gold in the third quarter, a 7.3% increase quarter on quarter.

Production was slightly lower year-on-year.

The company achieved a higher average milled grade in the quarter under review at 3.19 g/t gold, compared with a grade of 3.11 g/t achieved in the second quarter.

“We continue to focus our attention on improving grade through minimising mining dilution and while there is still work to be done in this area it is pleasing to see an improvement in the average grade which, when combined with higher plant tonnage, delivered favourable production and cost performance,” said CEO Steve Curtis.

The company had already achieved production of 5 596 oz in October, grading 3.55 g/t.

The company’s production for the first nine months of this year added up to 38 306 oz.

Curtis commented in a release on Wednesday that the third quarter had been characterised by two distinct phases.

The first six weeks of the quarter were seriously affected by power outages and by the continued effects of unstable economic conditions in Zimbabwe on the company’s employees. Both of these factors had an adverse effect on production and financial performance.

Thereafter, the last six weeks of the quarter showed a substantial improvement as the electricity supply improved; and measures taken in previous quarters to improve mining controls began to bear fruit. 

Notwithstanding further interruptions to the electricity supply in October, the excellent performance in the second half of the quarter had continued into October and early November.

Curtis noted that the company’s performance in the third quarter was supported by a firmer gold price and increased production, in line with expectations for the full year.

The company remained on track to produce between 50 000 oz and 53 000 oz for the year.

Further, Curtis explained that the continued devaluation of the domestic currency resulted in higher local inflation, which presented challenges for workers’ morale.

Despite these challenging conditions, Blanket continued to deliver strong cash generation with after-tax operating cash flow for the quarter of $4.9-million and net cash on hand at the end of the quarter of $8-million.

This was after an adverse working capital movement of about $700 000 during the quarter which was partly owing to the erosion of local credit as a result of high inflation.

This strong cash generation continued to support the capital investment on the new Central Shaft, which has now entered the equipping phase following the completion of shaft sinking in the second quarter.

Capital investment during the quarter was $5.6-million as the company continued to invest for the future at Blanket to deliver on its growth target of 75 000 oz/y by 2021 and 80 000 oz/y by 2022.