Caledonia eyes Namibia, Zambia

HARARE - Toronto Stock Exchange-listed gold producer Caledonia Mining Corporation (Caledonia) is considering expanding its operations from Zimbabwe into the region.

Mark Learmonth, the miner’s vice president of corporate development and investor relations, said they were targeting English-speaking countries in sub-Saharan Africa such as Namibia and Zambia.

“We have got $26 million cash, which is quite significant in the context of our market capitalisation and we can’t just sit on the cash, doing nothing with it,” he said, adding that “we have indicated that we will continue to evaluate opportunities in Zimbabwe and outside.”

Learmonth said the economic and political situation in Zimbabwe has improved significantly, as indicated by a hinted change on the implementation of the Indigenisation policy — compelling foreigners to cede 51 percent shareholding to locals.

According to reports, Zimbabwe plans to shift from a one-size-fits-all indigenisation approach to a sector-specific one.
Caledonia implemented its indigenisation plan in 2012.

“The situation is quite dynamic and quite fluid as the messaging that is coming out of Zimbabwe over the last few months has been cautiously more optimistic,” he said.

Zimbabwe passed the empowerment law in 2008 but began enforcing it only three years later.

Mining companies were mainly targeted, with Impala Platinum Holdings, Anglo Platinum and Aquarius Platinum having complied.

Caledonia’s primary Zimbabwean asset is a 49 percent interest in gold producer Blanket Mine (Blanket).

Recently, the miner said plans were on course to ramp up Blanket’s production to over 52 000 ounces (oz) in 2015. About 48 000 oz are expected this year.

“New production areas have and are being developed,” said Stefan Hayden, Caledonia’s president and chief executive.

Further increases in production are expected following completion of its Winze Project, intended to provide access to deeper resources below 750 metres.

Meanwhile, lower tax payments enabled the group to generate stronger cash flows in the first quarter to March 2014.

During the period under review, its tax expense stood at $1,3 million compared to $2,3 million in prior comparable period.
Cash from operating activities increased to $6,2 million from $2,2 million.

However, revenues dipped from $19,2 million to $17 million while pre-tax profits went down from $7,8 million to $5,5 million.

Gold sales were 12 210 ounces, up from 12 000 ounces, but profits declined as the average price per ounce fell to $1 288 from $1 600.

The all-in sustaining cost was steady at $923 per ounce.
Blanket produced 10 200 ounces in the first quarter of 2012, marginally lower than 2013’s output.

Exploration work continues and is expected to boost production, with the average mined grade anticipated to be between 3,6 grammes per tonne (g/t) and 3,7 g/t, compared with initial expectations of 3,83 g/t for the next two quarters.

The company closed March with $26,7 million in cash, up from $25,2 million the year before.

Hayden noted that underlying costs at Blanket remain stable.

“There have been no significant increases in electricity or consumable costs and the 2014 labour negotiations have recently been finalised at an across-the-board increase of approximately five percent.

It is expected that Blanket’s on-mine cash costs will decrease as production increases,” he said.

He added that Blanket has received all payments due from Fidelity Printers and Refiners — to which all Zimbabwean miners must sell theirgold — in-full and on-time. — Business Live

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