Caledonia ups dividend as optimism on business outlook continues

  • Dividend increased by 13%
  • Raise represents a cumulative 24% increase since October 2019
  • Rate of capital expenditure is expected to reduce towards the end of 2020
  • Central Shaft completion on track

Harare- Gold mining company, Caledonia Mining Plc has further increased its quarterly dividend by 13%, a reflection of the Company’s continuing confidence in the outlook for its business.

Caledonia is the parent company of Gwanda-based gold mine, Blanket Mine in which it has a 64% shareholding.

The Company’s Board of Directors has declared a further increased quarterly dividend of eight and a half US cents (US$0.085) on each of the Company’s common shares, a 13% increase from the previous quarterly dividend of 7.5 cents which coupled with the increase in January 2020 from 6.875 cents, represents a cumulative 24% increase since October 2019.

 The increase in the dividend paid follows the strong financial performance in 2020 due to stable gold production at Blanket Mine, a high gold price and good cost control which have all resulted in increased cash generation, giving the board confidence that the business can sustain a higher level of dividend distributions.

Commenting on the increase, Caledonia’s Chief Executive Officer, Steve Curtis said, “As we approach the end of the five-year investment programme at Blanket Mine, we anticipate the rate of capital expenditure will begin to reduce towards the end of 2020, which gives us greater flexibility to consider deploying some of our cash reserves on an increased dividend”.

In addition, the Company expects the Central Shaft equipping to the completed in the fourth quarter of 2020 followed by the commissioning of the shaft.

 Furthermore, increases in operating cash flow are also expected as production is projected to grow by over 30% in the coming 24 months to around 75 000 ounces in 2021 and 80 000 ounces per annum from 2022 as capital expenditure falls further and the Company begins to realize the operational efficiencies arising from the new shaft.

Caledonia previously stated that the continuation of its dividend will as usual depend on factors that include 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.

Mr Curtis also stated that the Board will review Caledonia’s future dividend distributions as appropriate while considering the balance between delivering returns to shareholders, pursuing the significant growth opportunities within Zimbabwe and maintaining a prudent approach to financial management.

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