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Higher ore production and improved recovery experienced during the first three months to March 2016 increased Caledonia Mining Corporation’s gold production by 8,7 percent to 10 822 ounces. This was an improvement from the 9 960 ounces of gold produced recorded in the first three months of 2015.Despite an increase in production during the period, the mining company’s net profit for the period, however, was down to $543 000 from $1 256 million after a deferred tax charge of $909 000 at Blanket Mine.
In a quarterly statement yesterday, Caledonia said costs were lower at $950 per ounce compared to $985 per ounce in the comparable period.
Cash from operations for the company grew 31 percent to $1,750 million from $1,33 million the previous year on higher sales volumes and lower operating costs.
Gold prices for the quarter averaged $1 166 per ounce compared to $1 198 per ounce previously.
The mining company had a net cash position of $8,841 million including an overdraft of $4,673 million held by Blanket from $20,640 million last year as the company continues its investment in the mine as per its Revised Investment Plan.
“The financial and operating results for the first quarter were better than expected. Production, as previously reported, was marginally better than target; on-mine operating costs and AISC were lower than in the comparable quarter and reflect continued strict cost control and lower sustaining capital expenditure.
“As expected, Caledonia’s net consolidated cash was lower than at the end of December 2015 due to the continued suspension of dividends from Blanket as a result of investments at Blanket Mine. Net cash during the quarter was better than expected due to combined effects of slightly better than expected production, good cost control and higher gold price,” Caledonia chief executive Steve Curtis.
He said progress on implementing the Revised Investment Plan at Blanket Mine remains on track.
The gold mining company has projected increased production this year and this will result in proved cash generation due to higher sales volumes and lower costs per ounce.
“Towards the end of the quarter, production commenced as planned from the No. 6 Winze and from an additional development which provides access to ore below the 750 metre level.
These developments have substantially improved operational flexibility and are expected to be the reason for the projected increase in production from 42 800 ounces in 2015, to approximately 50 000 ounces in 2016.
“Capital investment is expected to moderate somewhat over the remainder of 2016 as work at the Central Shaft moves into the main sinking phase,” said Mr Curtis.
“I expect 2016 to be a transformational year for Caledonia and Blanket and I look forward to providing further updates to the market as the year progresses.”
Mr Curtis said Caledonia’s strategic focus continues to be the implementation of the Revised Investment Plan at Blanket, which was announced in November 2014.
He said the plan is expected to extend the life of mine by providing access to deeper levels for production and further exploration.
Mr Curtis said the board and management believe that successful implementation of the Revised Investment Plan is in the best interests of all stakeholders as it is expected to result in increased production, reduced operating costs and greater flexibility to undertake further exploration and development.
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