Caledonia hits record gold output

HARARE - London-listed resources firm, Caledonia Mining Corporation Plc (Caledonia), has enjoyed a record quarter for gold production from its Blanket mine in Zimbabwe.

Some 13 591 ounces of gold were produced in the last three months, an 18 percent increase on a year ago and one percent up quarter on quarter.

Caledonia chief executive, Steve Cutis, said the rising production meant it was confident of achieving a significant improvement in earnings for 2017.

“As we increase production we expect earnings will continue to benefit from the increased sales volumes and from a lower average cost per ounce as fixed production costs and overheads are spread across higher production.

Over the year, the mine produced 50 351 ounces, up 17,6 percent and a new annual production record as the miner began work below 750 metres

The previous record from underground operations was 45 530 ounces achieved in 2013.

Target gold production for 2017 is approximately 60 000 ounces at an estimated on-mine cost in the range of $600 to $630 per ounce and an All-in Sustaining Cost in the range of $810 to $850 per ounce, with the target still 80 000 ounces annually by 2021.

The sinking of the new central shaft was also going to plan and reach a depth of 534- metre by year end said Curtis.

This comes as the company recently declared a tenth quarterly dividend of $0,01125 on each of the company’s common shares after the concern’s gold production rose in 2015 despite work on a major upgrade to Blanket.

Production for the year was 42 800 ounces, against 41 800 and all largely down to higher output in the fourth quarter of 11,510 oz (10,417).

Grades were lower on average over the year, which pushed up costs, while revenues were also affected by the lower gold price though this has since recovered.

Steve Curtis, Caledonia’s chief executive, said the weak gold price had made it a challenging year but the mine had still generated cash and production was  two percent higher than target.

Revenues in 2015 were $49 million compared to $53,5 million, while profits dropped to $8,5 million from $12,1 million.

Curtis added that investment at the 49 percent owned Blanket had risen to almost $17 million in 2015 as part of the plan to increase annual output to 80 000oz per year by 2021.

“Production from below 750 meters is expected to increase progressively in the remainder of 2016 and 2017 and will contribute to the higher targeted production of approximately 50 000 ounces of gold in 2016 and approximately 65 000 ounces of gold in 2017.

Costs are also expected to fall from the all-in-sustaining level of $1 038 per ounce of gold as production rises.

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