Abbie WestfallBusiness Reporter
Research and stockbroking firm IH Securities has projected Caledonia Mining Corporation’s revenue to close the year at US$176 million at an average gold price of US$2 357 per ounce (oz).
The research firm added that it expects margins to continue to improve in the year relative to FY23, with the group maintaining profitability to year-end.
Caledonia is a Zimbabwean-focused exploration, development, and mining corporation that owns a 64 percent stake in the gold-producing Blanket Mine, 100 percent stakes in the Bilboes mine, and the Motapa and Maligreen gold mining claims, all situated in Zimbabwe.
“Development of secondary asset Bilboes is expected to progress amidst sustained global economic turmoil. Gold prices have continued to rally, having breached the US$2 500/oz mark earlier in August,” IH said.
Bloomberg consensus estimates have put prices at US$2 768/oz by 2027, giving resilience to topline growth for gold producers.
According to IH, Blanket Mine annual production is forecast between 74 000 and 78 000 ounces. On-mine cost and all-in sustaining costs (AISC) are foreseen at an upper range of US$970/oz and US$1 470/oz, respectively.
“AISC is expected to trend higher in 2H24 due to heavy sustaining capital expenditure in the second half,” IH said.
The group anticipates the capital expenditure bill in the current financial year to come to US$31,6 million, with underground development at levels 30 and 34 costing US$8 million.
However, IH said electricity costs are notably expected to remain high in the short term, then decrease as older, less efficient infrastructure gets decommissioned.
“Other initiatives such as installing power factor correction equipment at Blanket will reduce the maximum demand charges, which have contributed to the higher electricity cost and alleviate low voltage,” reads the IH report.
It added that while the Bilboes Oxides project went under care and maintenance in September 2023, work on the much larger Bilboes Sulphides project is still ongoing in the background, with the Preliminary Economic Assessment (PEA) having been released.
The Bilboes gold project is expected to yield about 1,5 million ounces of gold-based on measured and indicated mineral resources over a 10-year life of mine.
The PEA has recommended a single-phase approach to development with a corresponding feasibility study due for publishing in the first quarter of 2025 (1Q25).
During the first half of 2024, gold production at Blanket mine maintained a positive trajectory relative to last year with output growing 19 percent year-on-year in 2Q24 to 20 773 ounces, owing to higher tonnage and grade offsetting the lower gold recovery
rate.
Average grade achieved in the quarter was 3.31g/t ahead of averages of 3,25g/t and 3,23g/t in FY23 and 1Q24, respectively.
For the six months, Bilboes oxide mine productions produced 4 01oz of gold from leaching of the heap leach pads, despite the mine being under care and maintenance since September 2023.
Bongani Ndlovu