Caledonia revenue expected to grow 17 percent FY24

Senior Business Writer

Caledonia Mining Corporation is anticipated to benefit from rising global gold prices, with revenue forecasted to increase by 17 percent to US$171 million in the 2024 fiscal year, brokerage firm IH Securities has noted.

In its analysis, IH Securities highlighted that gold production at Blanket Mine decreased by 7,1 percent year-on-year to 75,416 ounces in the year ending 31 December 2023.

Tonnes milled saw a 2,4 percent increase to 770,440tn, however, this was offset by a lower average grade and gold recovery rate.

The fourth quarter of 2022 saw the commencement of work at Caledonia’s second asset, Bilboes, with operations centred on mining and processing oxides. The oxides project yielded 3,050oz of gold at an average grade of 1.13g/t in the period under review.

However, operations were hindered by an unforeseen need of extensive waste stripping in the relevant areas and inaccurate mineralisation maps resulting in the project not meeting its expected output of between 12,500/oz and 17,000/oz. As a result, Caledonia’s aggregate gold production for FY23 registered at 78,466/oz, down 2, 94 percent from the 80,775/oz in FY22.

“Caledonia saw a revenue of US$146mn, up three percent y/y with US$5,70mn attributable to the Bilboes Oxides project. International gold prices firmed up within the year resulting in an average realised price of US$1,910/oz versus the US$1,772/oz registered in the same period last year.

Production costs however outpaced growth of the topline, increasing 31% y/y to US$82.71mn. Blanket Mine production costs grew 10.5% on account of electricity costs escalating 40% to US$13.50mn.”

IH Securities noted that amid sustained global economic turmoil, gold prices have continued to rally—setting a record high of US$2,350/oz and also representing a 13 percent movement YTD.

Bloomberg consensus estimates have put prices to US$2,645/oz by 2027, giving resilience to topline growth for gold producers.

“While Caledonia experienced significant setbacks in FY23, we foresee alleviation of some key issues in the current year. At an average gold price of US$2,226/oz, we anticipate that Caledonia will register revenue of US$171mn in FY24. Margins are expected to improve in the year with EBITDA margin foreseen to firm up to 43,3%.”