Blanket Mine's gold output down

HARARE - AIM-listed Caledonia Mining Corporation (Caledonia) says gold production at its Zimbabwe-based Blanket Mine (Blanket) declined from 22 060 ounces in the first half of 2013 to 21 464 ounces in the half-year of 2014 due to lower grades and declining gold prices.

Although production increased from 10 241 ounces in the first quarter to 11 223 ounces in the second quarter, overall half-year production declined, “adversely affected by lower head grade and lower tonnage throughput,” the company said.

Subsequently, gross profit declined by 33 percent from $17,7 million to $11,7 million in the first half, compared to the comparable period due to the lower realised gold prices, ameliorated by the sale in the first half of the year of gold work in progress.

Lower grades and a weaker gold price affected Blanket’s operations despite a sharp reduction in operating costs.

Caledonia noted that international gold prices fell approximately $1 700 per ounce to the current level of approximately $1 300 per ounce, and projections for future gold prices have also been significantly reduced.

Blanket’s on-mine cost fell from $651 per ounce in the previous quarter to $624 per ounce while all-in sustaining cost fell from $924 per ounce in the previous quarter to $881 per ounce.

“Cost reductions were achieved as a result of improved cost controls, greater operating efficiency and reduced sustaining capital expenditure,” said the gold miner.

“Despite the lower gold price Blanket continues to generate sufficient cash so that it can continue to invest for future production growth.” Caledonia said.

Gold sales marginally declined from 23 552 ounces to 23 433 ounces in the same period while the average realised gold price declined from $1 488 per ounce in the first half of last year to $1 269, reflecting the declining gold price.

Net profit attributable to shareholders also significantly declined from $7,6 million to $4,3 million in the comparable half-year.

Caledonia’s president and chief executive, Stefan Hayden said the recent quarter and first half year of 2014 presented significant challenges as a result of the continued low grades which adversely affected gold production.

“New production areas have and are being developed to replace those areas where production has been suspended due to the lower grade,” he said.

Comments (3)

Even there is a decline,the results are still impressing. keep it up Mr Mangezi General Manager of Blanket Mine, and the rest of the team

mhakasve - 14 August 2014

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