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Business Reporter
Gwanda-based Blanket Mine increased its gold output by 15,6 percent to 23 332 ounces during the first half of 2016 from 20 360 ounces in the prior comparative period. Blanket Mine is a gold mining producer which is 49 percent owned by the Toronto Stock Exchange Listed Caledonia Mining Corporation.Commenting on the results yesterday, Caledonia’s president and chief executive Steve Curtis said the results represent a substantial improvement on previous periods as the gold mining company begins to see the benefits of continued investment at Blanket and improved gold price.
The company’s net profit for the period was $4,1 million which was an increase from $1,5 million and this was due to increased gross profit and the profit arising from the sale of treasury bills.
Net cash for the period was $10,5 million which was down from $19,1 million of the comparative period last year. Net cash increased, but was lower than June 30, 2015 due to high levels of capital investment.
“Caledonia remains confident of meeting market expectations for the remainder of 2016. A new production record was largely the result of improved underground logistics and increased mine flexibility as a result of the implementation of the Revised Investment Plan at Blanket Mine.
“The higher grade experienced during the period was as planned and reflects the commencement of production from the AR South and Blanket ore bodies below 750 meters. In future quarters I expect the grade will improve towards four grammes per tonne as production from higher grade, deeper ore bodies increases. Costs at Blanket and Caledonia remain well-controlled and I expect to see further reductions in the average cost per ounce as production increases in terms of the production plan. Improved profitability was also reflected in Caledonia’s improved cash position,” said Mr Curtis.
At June 30, 2016 Caledonia had cash of $10,6 million and no debt, compared to net cash of $8,8 million at March 31, 2016.
In early August 2016, Blanket re-commenced dividend payments after approximately 18 months during which dividends were suspended so that it could re-invest its operating cash flows in terms of the Revised Investment Plan.
Mr Curtis said the resumption of dividend payments by Blanket will further enhance Caledonia’s cash position and also means Blanket’s indigenous shareholders will participate in Blanket’s improved financial performance.
“We have increased our focus on exploration and resource development which has resulted in regular resource updates. I am confident that the life of mine will be further supplemented by resource additions and upgrades,” he said.
“A huge amount has been achieved at the Central Shaft since work commenced in late 2014: the sinking head gear has been installed and commissioned and the main sinking phase has commenced. 2016 has been a transformational year for Caledonia and Blanket to date and I look forward to providing further updates to the market as the year progresses.”
Mr Curtis said completion of the Central Shaft remains on track for 2018 with the shaft depth currently standing at 170 metres. The completed shaft down to a level of 1,080 metres will establish Blanket as a large, low cost operation with excellent prospects to extend the existing mine life.
Caledonia’s strategic focus continues to be the implementation of the Revised Investment Plan at Blanket, which was announced in November 2014 and is expected to extend the life of mine by providing access to deeper levels for production and further exploration. Implementation of the Revised Investment Plan remains on target in terms of timing and cost.
Mr Curtis added that the company believes the successful implementation of the Revised Investment Plan is in the best interests of all stakeholders because it is expected to result in increased production, reduced operating costs and greater flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket’s long term future.
Caledonia’s cash position is expected to improve as a result of the implementation of the Revised Investment.
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