15 May 2018

Zimbabwe: Caledonia Targets 80 000 Ounces By 2021

Caledonia Mining Corporations says it is on course to achieve gold production output of 80 000 troy ounces (about 2,4 tonnes) by 2021 at its Blanket Mine, although production during the quarter to March 2018 remained flat.

Caledonia is also targeting to meet Blanket Mine's production guidance of 55 000 ounces to 59 000 ounces for the full year and earnings guidance of between $1,65 and $1,90 per share. Total gold production in the quarter amounted to 12 924 ounces compared to 12 794 ounces achieved in the same quarter in the prior year.

Business at Blanket Mine had a strong cash generation on the back of Government's export credit incentive which was increased from 2,5 percent to 10 percent of revenue with effect from the first of February this year.

"Caledonia remains on track to achieve the production target of 80 000 ounces by 2021 at its Zimbabwean subsidiary, Blanket Mine.

"The business generated operating cash flows after tax of $7 million which supported capital investment in the mine of $5,2 million and an increase in our cash balance at the end of the quarter to $13,4 million," said, Caledonia chief executive officer Steve Curtis.

Profits in the quarter under review also benefited from an 8 percent increase in the average realised gold price and a 3 percent reduction in all-in sustaining costs to $832 per ounce. This contributed to a 10 increase in gross profit and a 35 percent increase in net attributable profit.

Adjusted basic earnings per share rose 51 percent to 40, 1 cents from 26, 5 cents on higher attributable profit and higher adjusting items, the most important of which is the reversal of deferred taxation.

Mr Curtis said the group's strategic focus continued to be the implementation of its investment plan at Blanket Mine. This plan was announced in November 2014 and is expected to extend the life of mine by providing access to deeper levels for production and further exploration.

On completion, it is also expected to boost the firm's cash position, while the mining firm further continues scouting for new opportunities.

Management has indicated optimism in the Zimbabwe gold sector on the back of favourable operating environment and export incentives.

"The Zimbabwe gold sector offers exciting opportunities but is in need of significant capital investment.

"We have been encouraged by the level of support that the new leadership has shown for the mining sector and the Zimbabwean economy in general and look forward to the opportunities that the improving macroeconomic environment in Zimbabwe is likely to present," said Mr Curtis.

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