Caledonia's Blanket mine shaft
Gold miner Caledonia Mining says its production and profit were supported by a favourable gold price in the first quarter of the year, which has continued through April and into May.
The company’s Blanket and Bilboes mines, in Zimbabwe, recorded a 6% increase in production to 17 476 oz, compared with 16 141 oz produced in the same quarter of last year.
The Blanket mine contributed 17 050 oz to the quarterly production, at improved grades and recovery rates, while the Bilboes operation contributed 426 oz.
Caledonia’s gross profit of $13.8-million generated in the quarter compares with gross profit of $5.8-million in the same quarter of last year, which the company attributes to higher gold revenue and lower production costs. This was despite an accelerated devaluation of the Zimbabwean currency during the quarter, which resulted in a foreign exchange loss of $4.1-million for the company.
Adjusted earnings a share amounted to $0.26c in the quarter, which is a positive turn from the loss a share of $0.29c apiece posted in the prior comparable quarter.
The company’s all-in sustaining cost (AISC) decreased from $1 412/oz in the prior comparable quarter to $1 296/oz in the quarter under review, owing to lower production costs incurred at the Bilboes operation and the non-recurrence of advisory costs for the Bilboes acquisition in 2023.
AISC also benefited from electricity savings of $51/oz owing to the use of a solar plant.
Caledonia advises, however, that AISC will be higher in the full 2024 financial year compared with previous years, owing to the classification of certain items of ongoing capital expenditure on projects that are now treated as “sustaining” investments rather than expansion investments.
The company’s net cash and cash equivalents balance sits at negative $14.2-million, owing to foreign exchange losses and short-term working capital movements at the end of the quarter.
Caledonia is undertaking an underground exploration programme at the Blanket mine, which is evaluating the continuity of the mineralised zones on the Blanket and Eroica orebodies.
The company drilled 13 280 m last year, the results of which will be reflected in an upcoming revised mineral resource statement.
CEO Mark Learmonth says an incoming technical report summary for the Blanket mine will show a meaningful increase in the life-of-mine, on the back of better-than-expected grades having been identified at the Blanket, Eroica and AR South orebodies.
He adds that additional studies for a large-scale sulphide project at the Bilboes operation are well advanced, with management considering various options for developing Bilboes further.
Once a selected development route is identified, the company will progress with a feasibility study, which will take place in parallel with a process to secure debt financing for the project.
Caledonia maintains its production guidance for the Blanket mine at between 74 000 oz and 78 000 oz for the year, with AISC guidance set at between $1 370/oz and $1 470/oz.