eBusiness Weekly
Oliver Kazunga
BLANKET Mine produced 7 829 ounces of gold and a “strong” operating cash flow, demonstrating that production challenges experienced in the first half of this year have been addressed.
The Victoria Falls Stock Exchange-listed mining group, Caledonia Mining Corporation, that owns Blanket Mine in Gwanda, Matabeleland South province, revealed this in its production update for the quarter ended June 30,2023.
Total gold production for the half year to June 30, 2023 at Blanket closed at 33 472oz compared to 38 606oz produced in the corresponding period in 2022 as production remained below expectation for the six-month period.
Caledonia has attributed the decline in volume performance for the period under review to mechanical breakdowns that impacted the implementation of the mine in certain mining areas at Blanket.
“Production at Blanket in July of 7,829 ounces of gold and strong operating cash flows therefore demonstrate that production challenges in the first half have been addressed,” said the mining group.
Despite the production challenges experienced in the first half, Caledonia maintains that Blanket will achieve the anticipated production guidance of between 75 000 and 80 000oz and on-mine cost ($770 to $850 per ounce) this year.
The group said it will continue with deep level drilling at Blanket with the objective of further upgrading inferred mineral resources, thereby potentially extending the life of mine.
In this context, the Caledonia feasibility study on the Bilboes sulphide project to determine the best implementation strategy and financing requirements will be completed this year.
The Bilboes gold asset would be returned to care and maintenance with effect from October 1 this year and, pending the completion of the feasibility study for the sulphide project, the remaining oxides will be mined as part of the larger project.
Following the recent acquisition by Caledonia, the Bilboes gold project resumed production ramping up 1 076 ounces of the yellow metal in the second quarter of this year up from 105oz in the first quarter.
The mining group announced the completion of the acquisition of Bilboes in January this year as a critical cornerstone in its aggressive drive to develop a mid-tier, multi-asset Zimbabwe-focused gold production business.
Caledonia chief executive officer Mark Learmonth was quoted as saying, “Mining is never without its difficulties, and the first half of this year has certainly not been without its challenges.
‘‘However, Blanket is now running better than expected and I look forward to achieving production guidance of between 75 000 and 80 000oz of gold for 2023.
“Due to the lack of confidence that the Bilboes oxide mine can operate profitably, it will return to care and maintenance with effect from October 1, 2023.”
In due course, he said the remaining oxide material will be mined and processed alongside the sulphide ore.
Learmonth said this outcome has no bearing on the viability of the much larger sulphide project which was the reason for acquiring Bilboes.
“The results of the feasibility study on the project will be published before year end after which we will be able to establish the best development approach,” he said.
Meanwhile, Caledonia suffered a US$3,6 million in foreign exchange loss in the quarter ended June 30, 2023 due to “significant” devaluation of the local currency to the United States dollar.
The group said this affected its operating profit while earnings per share reflected a 0,6 cents loss compared to 87,7 cents profitability during the corresponding quarter last year.
“The company suffered a foreign exchange loss in the quarter of US$3,6 million (Q2 2022: US$4,2 million gain) due to the significant devaluation of the RTGS dollar to United States dollar in June 2023.
“This affected operating profit and, accordingly, basic International Financial Reporting Standards (IFRS) earnings per share showed a 0,6 cent loss (Q2 2022: 87,7 cent profit),” said Caledonia.
During the period under review, gross revenues were US$37 million compared to US$37,09 million achieved in the second quarter last year.
“Gross profit of US$10,9 million (Q2 2022: US$17,9 million). Whilst Blanket Mine contributed US$13,1 million, the group’s gross profit was affected by the costs of waste-stripping at the Bilboes oxide operation, notwithstanding a small revenue contribution of US$2,2 million in the quarter,” it said.
