Harare – Caledonia Mining Corporation’s gold production from the Blanket Mine in Zimbabwe increased by 6% for the second quarter ended 30 June 2019 to 12 712 ounces from 11 948 ounces in the previous quarter, taking the overall production for the first six months of 2019 to 24 660 ounces.
Chief Executive Steve Curtis said although production was marginally higher than the previous quarter, it was below plan adversely affected by lower than expected grade as problems with mining dilution adversely affected the grade and mine production continued to be disrupted due to the instability of the incoming power supply.
“Grade continues to receive close management attention,” Curtis said.
Caledonia which owns 49% of the Blanket Mine in Zimbabwe said gross profit for the quarter was $7 million, representing an increase of 37% from $5.1 million recorded in the comparable second quarter of 2018 due to lower on-mine costs.
Operating profit for the Quarter, before foreign exchange gains, was just over $6 million, 21 per cent higher than the comparable quarter.
Net profit attributable to shareholders for the Quarter increased by almost 800 per cent to $23.3 million compared to $2.6 million in the second quarter of 2018 due to the substantial devaluation of the newly introduced Zimbabwe currency which resulted in some cost savings and a large net foreign currency gain.
Due to operational difficulties relating to grade and unreliable power, the Company has reduced its production guidance for 2019 from a range of 53 000 ounces to 56 000 ounces to a range of 50 000 to 53 000 ounces.
However, earnings guidance for 2019 remains unchanged in the range of 86 to 117 cents per share due to a higher than expected gold price and lower than expected costs.
Curtis said Blanket Mine recently signed a new power supply agreement which appears to have reduced the incidence of load shedding.
Under the agreement, Blanket is set to receive un-interrupted imported power at a lower cost than it previously paid.
In addition, Caledonia is at an advanced stage of evaluating a solar PV generating facility which would reduce Blanket’s dependence on grid power.
“Although the electricity situation has improved in recent days, we feel it prudent to continue to implement plans to protect Blanket from any recurrence of this problem,” Curtis said.
In July 2019, the Company announced the completion of the shaft sinking at Central Shaft set to be commissioned in the second half of 2020 and is expected increase production to the target level of 80 000 ounces in 2022.
On the outlook, Curtis said Caledonia is on track to achieve the production target of 80 000 ounces per year by 2022 at Blanket Mine.
“The Company’s strategic focus continues to be the implementation of the Investment Plan at Blanket, which was announced in November 2014 and revised in November 2017 and is expected to extend the life of mine by providing access to deeper levels for production and further exploration,” Curtis said.
“Implementation of the Investment Plan remains on target in terms of timing and cost.”
Caledonia Mining Corporation plc is a mining, exploration and development company focused on Southern Africa. Caledonia’s shares are listed on the Toronto Stock Exchange (CAL), New York Stock Exchange (CMCL), and depositary interests in the shares are traded on the London Stock Exchange’s AIM (CMCL).
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Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, email@example.com and firstname.lastname@example.org.