BY Staff Reporter
CALEDONIA Mining Corporation reported an increase in after-tax profit to US$9,3 million in the first quarter compared to US$3,1 million last year due to foreign exchange gains and the profit on disposal of a subsidiary, the combined effect of which outweighed a lower gross profit.
Gross profit at US$4,2 million was lower due to a reduction in the number of gold ounces sold and increased on-mine cost per ounce.
All in sustaining costs increased from US$832 to US$943 per ounce due to the higher on-mine cost per ounce, the effect of which was partially offset by lower sustaining capital investment and lower administrative expenses.
Output dropped by 8% to 11 948 ounces from 12 924 ounces in the same quarter last year.
“Lower gold production was mainly due to lower grade, which was in-line with the mine plan. The grade dilution, which was experienced in previous quarters, has largely been addressed. Production was less than planned due mainly to lower than planned tonnage,” the gold mine said in a statement.
In the period under review, gold prices fell 2,1% to $1 284 per ounce.
Commenting on the results, Caledonia’s chief executive Steve Curtis, said notwithstanding the production difficulties experienced as a result of lower than expected production tonnage, unreliable electricity supply and lower mine grade, cash generation for the quarter was solid at US$6.3 million.
He said cash generated was sufficient to support both capital investment in the Central Shaft project of US$5,1 million and Caledonia’s regular quarterly dividend, as well as maintain a healthy balance sheet with net cash of US$9,7 million at the end of March.
“Work on sinking the Central Shaft remains on track. I expect shaft sinking to be completed in the middle of this year after which a further 12 months will be needed to equip the shaft before it is commissioned in mid-2020 and we can begin to increase production to our target of 80 000 ounces per annum by 2022,” Curtis said.
“This production increase will contribute significantly to reducing operating costs through economies of scale and we look forward to further increasing cashflows and earnings as the shaft is commissioned.”
He said the company would maintain its full year production guidance of 53 000 — 56 000 ounces for 2019.
“I look forward to an improved cost performance in the remaining quarters of the year as we anticipate that the beneficial effects of improved production will be felt in the subsequent quarters of 2019,” he said.