CALEDONIA Mining, the UK-listed Zimbabwe gold miner, said operating conditions continued to improve following a difficult first half to its September quarter in which power outages crimped production and development work.
Gold production for the quarter came in at 13,646 ounces, a 7.3% quarter-on-quarter lift which takes year to date production to 38,306 oz with a quarter of the year to go. Caledonia’s production is small compared to most but the company is an interesting proxy for the operating environment of Zimbabwe’s mining sector.
Adjusted quarter share earnings were 16.2 cents compared to 34.2c/share in the September quarter of the previous financial year. However, cash generated by operations totalled $4.9m. The company was net cash of approximately $8m at September 30 notwithstanding spending $5.8m in the period on its Blanket expansion. Once completed, the expansion will see Blanket produce 80,000 oz annually in 2022.
Power supply remains one of the chief threats to Blanket. A revised electricity tariff had been introduced which allows “… the funding of imported electricity which is used exclusively to supply participating mining companies,” Caledonia CEO, Steve Curtis said in a statement earlier this week.
Caledonia had also bought back-up generators to support its existing diesel power and was in the advanced stages of weighing up a solar PV plant project to supply Blanket’s baseload demand during peak sunlight hours.
All-in sustaining costs (AISC) increased to $872/oz (September 2018: $754/oz) owing to higher government royalty payments linked to the higher gold price and cessation of the Reserve Bank of Zimbabwe’s gold export incentive structures which had benefited AISC by about $120/oz in previous quarter.
Said Curtis: “We remain confident in our longer-term cost guidance of $700 to $800/oz as the business grows towards 80,000 oz per year by 2022”.
