Chronicle Editor
Oliver Kazunga, Senior Business Reporter
CALEDONIA Mining Corporation says its Matabeleland South-based gold operation, Blanket Mine, has slowed down production while the company has also deferred second quarter dividend payment for this year due to the measures being taken to reduce the spread of Covid-19.
In a bid to prevent the spread of Covid-19 in the country in the wake of positive cases of the global pandemic recorded in Zimbabwe in the past two weeks, the Government has also announced a 21-day national lockdown beginning on March 30.
Last week, Caledonia announced having procured adequate consumables to survive without interruption from South Africa’s 21-day Covid-19 induced lockdown.
“Production at Blanket continues, although at a lower rate than targeted due to the introduction of measures to reduce the risk of infections being transmitted amongst its employees.
“Blanket also has consumables and spare parts in its inventory to sustain uninterrupted gold production well past the end of the current lockdowns in Zimbabwe and South Africa,” it said.
Caledonia said due to the uncertain business environment associated with the Covid-19 pandemic, its board of directors has decided to defer approval of the declaration of the second quarterly dividend of 2020.
“The board will keep this decision under constant review as it monitors prevailing market conditions.
“Caledonia has paid a quarterly dividend since 2014 and the payments are an important element of the company’s strategy to create and enhance shareholder value,” it said.
The mining group said provided the measures taken by the Zimbabwe and South Africa do not result in severe and/or prolonged interruptions to operations, the effect of such measures should not impede the company’s ability to resume the payment of quarterly dividends.
As of March 26, 2020, Caledonia’s cash position was $12, 5 million.
At the current quarterly dividend rate of 7,5 cents per share, the dividend payment that was scheduled for payment in April amounts to approximately $860 000, less than seven percent of Caledonia’s currently available cash.
Caledonia chairman Mr Leigh Wilson commented:
“The Covid-19 pandemic has elevated global levels of uncertainty. I have full confidence that our business will emerge from this situation substantially unchanged, but, out of an abundance of caution, we have decided to defer the dividend decision until we have greater clarity on the wider implications of this highly fluid situation.”
He said the resumption of dividends will depend on, inter alia, Blanket maintaining a reasonable level of production; receiving payment in full and on-time for all gold sales; being able to make the necessary local and international payments and being able to replenish its supplies of consumables and other items.
“Our balance sheet remains in an enviable position and the dividend remains comfortably affordable. Today’s announcement is a continuation of the prudent approach to capital allocation that we have followed for several years — a path that we expect to continue,” said Mr Wilson. — @okazunga.
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