Blanket Mine records 146% profit


BLANKET Mine, one of Zimbabwe’s largest mining companies, continued with its strong financial and operating performance, registering a 146% increase in gross profit to US$10,6 million in the first quarter of this year.

Blanket, which is controlled by Caledonia Mining Corporation (Caledonia), also registered a gross revenue of US$23,6 million, an increase of 48% on prior year, after producing 14 233 ounces of gold.

In a statement yesterday, Caledonia chief executive officer Steve Curtis said the management initiatives which were implemented last year have resulted in an almost 20% increase in gold production in the first quarter of this year compared to the same period last year.

“Increased production, combined with lower on-mine costs per ounce and an improved gold price, have resulted in a substantial increase in profit. Gross profit for the quarter more than doubled from US$4,3 million in the first quarter of 2019 to over US$10 million in the quarter,” he said.

Gross profit was after deducting royalties, production costs and depreciation but before administrative expenses, other income, interest and finance charges and taxation, the company said.

“The excellent performance was also reflected in strong cash generation: net cash flow from operating activities (i.e, before interest, taxation payments and capital expenditure) was US$10,9 million in the quarter compared to US$6,6 million in the first quarter of 2019,” Curtis said.

The Caledonia boss said the company ended the quarter with net cash and cash equivalents of US$13,8 million — an increase of US$4,9 million over the course of the quarter.

“The improved performance was achieved with no compromise in safety performance. The total injury frequency rate has been substantially reduced following a concerted effort by management over the last 18 months to improve and enforce safety standards,” Curtis said.

In parallel with the improved financial and operating performance, Curtis said he was pleased with Zimbabwe’s improved operating environment.

“Although the country continues to face challenges, the introduction of the interbank rate early in 2019 allows us to better protect our workers from the effects of high inflation. The interruptions to the supply of electricity from the grid which we experienced last year have largely been addressed following the conclusion of an agreement whereby Blanket (and other gold producers) purchases power which is imported into Zimbabwe,” he said.

He said the coronavirus pandemic had no appreciable effect on the company during the quarter because lockdowns were only implemented by the Zimbabwe and South African governments to manage the virus at the end of the quarter.

During the lockdowns, Blanket achieved approximately 93% of its normal target production by using its stocks of consumables and implementing measures to safeguard employees, he said.

He said Blanket had since resumed full production and expected to continue as planned, provided the company’s workforce remains healthy and its supply chains and access to the market remain open.

“The Central Shaft is the focus of our investing activities: when it is commissioned, Blanket will be able to increase production to the target rate of approximately 80 000 ounces of gold per annum,” Curtis said.

He said work on Central Shaft continued throughout the lockdown. However, completion of the project requires specialised equipment and contractors to travel to Blanket from South Africa, which under the restrictions is not currently possible.
This has, however, not yet resulted in a significant delay to the project and “we are receiving a high level of support from the Zimbabwe government to address these issues with the relevant authorities in South