BLANKET Mine in Gwanda has reported an 11 percent decline in revenue to US$16 million for the first quarter to March due to a slight decline in gold production, but remains on track to meet its year-end target of 48,000 ounces.
The Gwanda-based mine, 49 percent owned by Canadian junior miner Caledonia Mining, said gold sales were two percent higher year on year at 12,210 ounces but prices were 20 percent lower at $1,288 per ounce.
Production for the quarter was two percent lower at 10, 241oz from 10,472oz, an adjustment from a previously announced figure of 10,607oz.
“Gold production in Q1 was adversely affected by lower head grade and lower tonnage throughput,” Caledonia said in a trading update.
Capital expenditure attributable to expansion projects rose by 61 percent to C$1.84 million from C$1.14 million in the prior year.
Blanket is in the process of completing the No 6 Winze project, intended to improve access to deep resources below 750 metres.
The project is part of the mine’s expansion project aimed at increasing production to 53,000oz by 2015.
Caledonia will consider additional acquisition opportunities in Zimbabwe, “subject to an ongoing evaluation of the investment climate.”
Commenting on the results President and Chief Executive Officer, Stefan Hayden said:“New production areas have and are being developed and I am confident that the 2014 production target of 48,000 ounces will be achieved, with 52,000 ounces expected in 2015.
“Cash generation in the quarter was strong: net cash generated from operating activities in Q1 of 2014 was $6.2m compared to $4.8m in the previous quarter and $2.2 million in the first quarter of 2013.
“Since the beginning of 2014 Blanket has sold its gold production to Fidelity Printers and Refiners.
“The new sales arrangements with Fidelity have reduced Blanket’s working capital requirement due to the earlier payment terms. Blanket has received all payments due from Fidelity in-full and on-time.
“Blanket’s on-mine cash cost decreased in the Quarter from the previous quarter due to the reversal of the adverse effect of high work-in-progress at December 31, 2013.
“Work-in-progress was brought forward at a carrying value of $411 per ounce, which reduced the average cost per ounce of the gold sold in the quarter.Advertisement
“Underlying costs at Blanket remain stable: there have been no significant increases in electricity or consumable costs and the 2014 labour negotiations have recently been finalised at an across-the-board increase of approximately 5 per cent.
“It is expected that Blanket’s on-mine cash costs will decrease as production increases.”