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Acting Business Editor
VICTORIA Falls Stock Exchange (VFEX)-listed company, Caledonia Mining Corporation says despite facing a challenging first six months of the year, it underlines its focus of achieving the set gold production target of 75 000 to 80 000 ounces at Blanket Mine by year-end.
In the period under review, the mining entity produced 17 436 ounces of gold compared to 20 091 ounces produced in the corresponding period last year.
Last year, it produced a record 80,775 ounces against a set target of 80 000 ounces.
Financially, in the first six months of the year, it posted a slight drop in gross revenues of $37,0 million compared to $37,09 million achieved in the corresponding period last year.
Gross profit was $10.9 million down from $17.9 million achieved in the corresponding quarter.
In its operating and financial results for the quarter and the six months ended June 30, the firm said while its flagship project – Blanket Mine contributed $13.1 million, the group’s gross profit was affected by the costs of waste-stripping at the Bilboes oxide operation despite the new acquisition adding $2.2 million in the quarter.
In 2022, the resource group expanded its footprint by purchasing Motapa Mining Company UK Limited and signed a US$53,2 million agreement to buy Bilboes Gold Limited as part of its expansion drive.
Bilboes Gold is a gold mining entity that owns three major gold mines in Matabeleland North and was once ranked among the country’s 10 biggest gold producers.
However, Bilboes will be returned to care and maintenance with effect from October. The decision is expected to stem cash outflows and losses for the remainder of the year.
Chief Executive Officer Mark Learmonth acknowledged that the period under review was challenging.
“Mining is never without its difficulties, and the first half of this year has certainly not been without its challenges. However, Blanket is now running better than expected and I look forward to achieving production guidance of between 75,000 and 80,000 ounces of gold for 2023,” he noted.
Commenting on Bilboes’ return to care and maintenance “due to the lack of confidence that the Bilboes oxide mine can operate profitably”, he indicated that the remaining oxide material will be mined and processed alongside the sulphide ore.
“This outcome has no bearing on the viability of the much larger sulphide project which was the reason for acquiring Bilboes. The results of the feasibility study on the project will be published before year end after which we will be able to establish the best development approach,” said Mr Learmonth.
On a positive note, in the period under review, the mining house commenced the direct sale of gold to an end refiner outside Zimbabwe.
“This arrangement is a big milestone for Caledonia and further demonstrates the pragmatic approach of the Zimbabwe authorities to resolve commercial issues facing gold producers. The arrangement applies not only to Blanket but to all Caledonia’s gold assets which should make it easier for Caledonia to arrange debt facilities to support the construction of new mines,” said Mr Learmonth.
In the period under review, 17,436 ounces of gold were produced from Blanket down from 20,091 ounces produced in Q2 2022. A total of 1,076 ounces of gold were produced from the Bilboes oxide operation in the Quarter.
The firm said its immediate strategic focus is to achieve production of between 75,000 to 80,000 ounces, continue deep level drilling at Blanket Mine with the objective of further upgrading inferred mineral resources, thereby potentially extending the life of mine.
It notes that approximately 5,600 meters of drilling were completed between January and the end of May.
Initial results indicate that the grades and widths of the existing Eroica ore body are generally better than expected. To that end, the firm intends to announce the results from drilling at the Blanket ore bodies in due course.
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