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Business Reporter
Toronto Stock Exchange-listed Caledonia Mining Corporation has said its 49 percent owned Blanket gold mine continues to operate profitably despite prevailing weak gold prices. In recent months the price of gold has fallen from over $1 200 per ounce to below $1 100 per ounce. In a statement accompanying the gold producer’s results for both the second quarter and first half of this year, Caledonia CEO Mr Steve Curtis however, cautioned investors to revise their expectations if the prevailing gold price trend continues, insofar as it could reduce Blanket’s cash generation.
“Subsequent to the end of the second quarter of 2015, the price of gold fell significantly. Blanket continues to operate profitably at the lower gold price and production and costs remain as planned.
“If the current gold price is sustained, however, investors should revise their expectations for Caledonia’s future financial performance to reflect the prevailing environment. As production begins to increase from the first quarter of 2016, I expect that average costs per ounce will start to fall. I look forward to updating the market of our progress in due course,” he said.
In terms of production, Blanket Mine’s gold output in both the second quarter and half-year was “slightly ahead of target,” reported the company.
In the second quarter the mine produced 10 401 ounces, which was however lower than the 11 223 ounces produced in the prior comparable period.
For the first half of 2015, Blanket produced 20 361 ounces, again lower than the 21 464 ounces produced during the first half of 2014.
Gross profit for the second quarter amounted to $5,6 million, while that of the first half reached $8,6 million.
“Lower gross profit due to fewer ounces sold, lower gold price and higher on-mine costs,” said Caledonia.
Mr Curtis said the implementation of the mine’s expansion programme should boost its operations going forward.
“We are currently sinking, deepening or equipping four shafts at the Blanket mine in Zimbabwe and I expect this activity will translate into increased production from the first quarter of 2016.
“Caledonia’s board and management believe that the implementation of the Revised Investment Plan remains in the best interests of shareholders: the successful implementation of the plan will result in a significant increase in Blanket’s production and operating efficiency; the lower gold price increases the importance of delivering the Revised Investment Plan as scheduled.
“I am pleased to report that we have met all of our key milestones and we remain on target for achieving all of the future milestones,” he said.
Caledonia has also said it will continue with its dividend policy of paying a quarterly dividend of 1,5 Canadian cents per share per quarter, which amounts to a total dividend of 6 Canadian cents per annum.
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