Caledonia Mining lifts dividend again taking payout gains to 24% since October

Steve Curtis, CEO, Caledonia Mining

CALEDONIA Mining Corp., the Zimbabwe gold miner, said another lift in its quarterly dividend payment reflected its “continuing confidence” in its prospects notwithstanding the COVID-19 pandemic and significant national headwinds.

The company declared an 8.5 US cents per share payout for the second quarter which is 13% higher than the 7.5c/share it paid for the first quarter. It takes the total lift in the dividend payment to 24% since October.

Caledonia Mining is expanding the Blanket Mine to production of 80,000 ounces by 2022 compared to 2020 guidance of between 53,000 and 56,000 oz.

“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,” said Steve Curtis, CEO of Caledonia Mining in a statement.

Equipping of Blanket Mine’s Central Shaft would be completed in the fourth quarter. Once commissioned, further increases in cash flow were anticipated as production would increase by over 30% whilst capital expenditure would fall, the company said.

“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,” said Curtis.

Caledonia Mining operates amid severe business restrictions in Zimbabwe including electricity shortages and a decline in the value of the currency. On Sunday, the country suspended its stock exchange.

There’s also growing disquiet with the increasing involvement of the military in the government of President Emmerson Mnangagwa. Military leaders took the unprecedented step of calling a press conference this month to say they weren’t planning a coup, according to a report by Bloomberg News.

“It could be a preemptive move, it could be the generals saying we are in charge,” Ringisai Chikohomero, an analyst at the Pretoria-based Institute for Security Studies, told the newswire. The military, he said, were “… the guarantors of the regime: They have a clear stake and key interests”.

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