eBusiness Weekly
Enacy Mapakame
Toronto Stock Exchange-listed firm, Caledonia Mining Corporation’s local operation, Blanket Mine’s gold production for the third quarter to September 30, 2019 fell 2,4 percent to 13 646 ounces compared to 13 978 ounces recorded in the same quarter in 2018.
Caledonia attributed the decline in production to lower mine production and lower ore grade.
But quarter-on-quarter, production was 7 percent above the previous quarter taking production for the first nine months of 2019 financial year to 38 306 ounces in line with expectations for the full year production guidance of 50 000 to 53 000 ounces for 2019.
Basic earnings per share (EPS) for the quarter amounted to 61,1 cents and adjusted EPS were 16,2 cents.
Currency devaluations had a positive impact on earnings during the quarter, as was the case with the previous quarter.
Net profit attributed to shareholders surged 215 percent to shareholders to US$7 million on exchange gains arising from the devaluation of the Zimbabwe currency.
Caledonia chief executive Steve Curtis, said this was a commendable financial performance despite a challenging environment, especially the power cuts.
Blanket Mine experienced extended power outages in July and August, which resulted in generator usage in the quarter totalling 1 451 hours, compared to 686 hours in the preceding quarter and 1 486 hours in the whole of 2018.
“The first six weeks of the quarter were seriously affected by power outages and by the continued effects of the unstable economic conditions in Zimbabwe on our employees; both of these factors had an adverse effect on production and financial performance,” he said in a statement accompanying the quarter performance.
“Notwithstanding further interruptions to the electricity supply in October, the excellent performance in the second half of the quarter has continued into October and early November,” he said.
Apart from the power outages, inflationary pressures also had a knock-on effect on employee’s morale as disposable incomes continued to wane.
However, Blanket continued to deliver strong cash generation with after tax operating cash flow for the quarter of US$4,9 million and net cash on hand at the end of the quarter of US$8 million.
“This was after an adverse working capital movement of approximately US$700 000 during the quarter, which was partly due to the erosion of local credit as a result of high inflation.
Capital investment during the quarter was US$5,6 million as we continued to invest for the future at Blanket in order to deliver our growth target to produce 75 000 ounces by 2021 and 80 000 ounces by 2022.
Going forward, Curtis indicated the Company’s strategic focus continues to be the implementation of the investment plan at Blanket, which was announced in November 2014 and revised in November 2017, and is expected to extend the life of mine by providing access to deeper levels for production and further exploration.
