• Monetary loss more than doubled to US$4.1 million
  • However, gold production saw an 8% improvement
  • The gross profit for the quarter amounted to US$13.8 million

Harare- Caledonia Mining Corporation, the second-largest gold producer in Zimbabwe, has experienced a significant increase in monetary losses due to the rapid depreciation of the local currency during the January to March period.

The former Zimbabwe currency ZWL has recorded a significant decline from ZWL8 000 in 2023 to ZWL36 000 per dollar in the initial phases of 2024 against the single greenback.

Monetary loss doubled to US$4.1 million compared to US$1.5 million in the same period in 2023.

Despite this, there was an 8% improvement in production, with 17,476 ounces of gold produced compared to 16,141 ounces in the previous year.

The majority of the gold, 17,050 ounces, was produced at the Blanket mine, while the Bilboes oxide mine contributed 426 ounces.

The company's CEO, Mark Learmonth, maintained the production guidance for Blanket at 74,000 to 78,000 ounces of gold for the year.

As a result of 8% increment with high global gold prices amid reduced production costs, the gross profit for the quarter amounted to US$13.8 million, showing significant growth from the first quarter of 2023, which stood at US$5.8 million. This increase was primarily driven by higher gold revenue of US$38.5 million and reduced production costs.

During the period, the EBITDA reached US$9.9 million, compared to US$2.3 million in the first quarter of 2023. Blanket Mine ("Blanket") contributed US$17.5 million to the EBITDA, surpassing the US$11.3 million it contributed in the same period last year.

The on-mine cost per ounce at Blanket remained virtually unchanged at $993 for the quarter, similar to the amount recorded in Q1 2023, which was $991.

However, currency volatility remains a significant challenge for the mining industry in Zimbabwe, impacting the sector's growth and prosperity.

The mining industry contributes significantly to foreign currency reserves, with gold accounting for an average of 30% of annual exports. However, in 2023, the government fell short of its target of 35 tonnes of gold production, achieving only 30 tonnes due to a hostile operating environment.

The largest gold producers in the country are Fredda Rebecca, the gold arm of Kuvimba, followed by Caledonia Mining Corporation, and Padenga Holdings.

Corruption also poses a significant threat to Zimbabwe's gold industry, resulting in the loss of millions in gold revenues while a 25% surrender portion against the rapid devaluation of the local currency, high corporate taxes, and escalating electricity tariffs, further increases production costs.

In an attempt to address price inflation and restore currency confidence, Zimbabwe introduced a new currency called Zimbabwe Gold (ZiG). However, within just one month of its introduction, ZiG has already depreciated by 36%, surpassing the depreciation of the Zimbabwe Dollar and Bond Notes.

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