Caledonia Mining Corporation’s Zimbabwe unit gross profit increased six-fold in the third quarter ending September 30 on the back of increased gold production and firming gold prices.
Blanket Gold Mine, a wholly owned subsidiary of the Canada-based group, recorded a gross profit after depreciation and amortisation but before administrative expenses of $9,364m compared to $1,607m in the comparative quarter.
This is the seventh consecutive quarterly increase in gross profit.
In a trading update, Caledonia said it had submitted a revised indigenisation proposal and continues constructive dialogue with the Indigenisation minister, his officials and advisers.
“Caledonia has had, as forecast, a very strong performance for the third quarter and profits for the third quarter of 2011 exceeded profits for the entire first half of 2011,” said Stefan Hayden, president and chief executive officer of Caledonia.
The increase in profit was attributed to an 18% increase in gold production and 15% increase in average price of gold sold compared to the second quarter of 2011.
Blanket Mine achieved its target annualised production level of 40 000 ounces of gold in the last two months of the third quarter and this level of production was sustained in October.
Caledonia said increase in production was achieved following the completion of work to address the remaining constraints to underground production and included the commissioning of a new ore pass at the end of July, which substantially improved the efficiency of underground operations and reduced ore handling costs.
It said going forward Blanket Mine is expected to continue operating sustainably at this level of production.
Cash costs at the mine fell to $583/ounce from $585/ounce in the preceding quarter.
Blanket Mine recently won several prestigious safety health and environment awards.
“It is hoped that these awards will help to dispel the commonly-held misconception in Zimbabwe that mining companies act with little regard for the well-being of their employees and the environment,” reads part of the update.
During the period under review Blanket made payments of approximately $3,8m to the government in respect of direct and indirect taxation, royalties and licence fees.
Blanket Mine also received taxpayer appreciation awards 2011 from the Zimbabwe Revenue Authority in respect of income tax and Pay As You Earn.
Caledonia said culmination of investment programmes at Blanket Mine over the last 30 months has transformed the group’s financial and operating performance as demonstrated by the third quarter results.
“The implementation of these programmes in a very difficult environment is a testament to the high engineering standards and the hard work, determination and creativity of the management and employees of Caledonia and Blanket Mine,” said Caldeonia.