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Caledonia in record gold production

Record production ... Blanket gold mine's Gwanda base
14/11/2012 00:00:00
by Business Reporter
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CANADA-BASED Caledonia Mining on Wednesday reported record gold production at its Zimbabwe operation, the 106-year old Blanket mine.

Shares in the AIM-listed company rose shares rose more than 12 per cent on the news with analysts saying the record operational results and strong cash growth positioned the firm well for the next stage of its growth.

The mine produced 12 918 oz in the third quarter, which is one third more than the 9 743 oz it produced in the same period a year earlier and a12% increase on the 11 560 oz produced in the June quarter.

Said CEO Stefan Hayden:This was the highest quarterly gold production ever achieved by Blanket Mine since its first recorded production in 1906.

“Increased gold production, further improvements in gold recoveries and continued close attention to costs contributed to a reduction in average operating costs from US$547 per ounce of gold produced in the preceding quarter to US$508 per ounce of gold produced.

“Blanket is now one of the lowest cost gold producers in both Africa and the world.”

The company’s gross profit for the quarter, after depreciation and amortisation, but before administrative expenses and  indigenisation related expenses was also at a new record of $12.6-million.

Gross profit was 25% higher than the $10-milion achieved in the preceding quarter and 35% higher than the $9.36-million achieved in the comparable quarter.

Further, Caledonia reported that the mine’s cash operating costs in the quarter decreased to $508/oz from $547/oz in the June quarter and $583/oz in the comparable quarter.

The company sold its gold at an average price of $1 673/oz.

Cash flow from continuing operations, before capital investment, increased to $12.3-million from $8.6-million in the preceding three months.

Caledonia has cash of $24.6-million on hand, which along with the conclusion of its indigenisation programme stood the company in good stead to invest in its existing projects and also in potential new opportunities.

“Caledonia’s financial position continues to improve. With almost $25 million of cash on hand Caledonia has sufficient cash resources to invest in its existing projects and also in potential new opportunities,” said Hayden.

“(In addition, after) the implementation of indigenisation, Blanket, as a highly profitable and cash generative gold producer and with Caledonia’s financial, technical and administrative support, is well-positioned to implement its growth strategy.”


Caledonia now owns 49 percent of the mine in line with the country’s economic empowerment legislation which requires foreign firms to transfer majority ownership and control of their Zimbabwe operations to locals.

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