Caledonia Mining Corporation (CMCL)

[NYBob]

Caledonia Mining History of Stock Buybacks over the past 10 years

CAL.TO/CALVF has some past good history of delivering increased value for
shareholders in the form of stock buybacks.
These have helped improve financial metrics and increase each
shareholders' relative ownership stake in the company,
due to fewer shares outstanding and
holding the same number of shares.



CALVF to share buybacks is the best investment
in the gold producing industy -
well, plenty of cash from the low cost
CALVF gold production is on hand -

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79873600



Caledonia Mining (CALVF); A High Risk Potential High Return Gold Mining Company
Jul 8, 2012 12:19 PM | about stocks: CALVF.OB
Caledonia Mining (CALVF) was my stock of the year pick for 2011. Unfortunately the stock did not meet the goal of appreciating 100% in a twelve month period. In fact the stock has dropped approximately 50% since I recommended it. Interestingly the company fundamentals have, in my view, continued to improve as the stock price has declined.

From the company website; "Caledonia is an African focused mining and exploration company with an operating gold mine in Zimbabwe, a copper-cobalt exploration project in Zambia and two platinum-nickel exploration projects in South Africa." The company's primary asset is the Blanket gold mine located in Zimbabwe. The mine should produce 40,000 oz. of gold in 2012 at a cash cost slightly above $600 per ounce. This is one of the lowest cash costs in Africa.

The company produced slightly less than 40k ounces last year and that production yielded a gross profit of $29.1 million and cashflow of $17.4 million. The current market cap of the company is around $33 million so the company is trading at 2x cashflow and has a current P/E ratio of around 2.5. This is a profitable gold mining company.

So why has the price dropped if the mine performance and financials are performing well. Several reasons:

General weakness in gold equities, especially gold juniors and companies with single mines and production lower than 100k ounces per year.
The company's main asset is located in Zimbabwe which is not viewed positively by foreign investors.
Political uncertainty around elections, and Black Indigenisation policy.
However there are mitigating circumstances to each of the above in my view. Changes in any of the above could lead to revaluation:

The world economic situation which is one of slow growth and over indebted countries, especially in the west, may lead to governments pursuing monetary policies that are conducive to a higher gold price i.e. continued currency debasement. We are seeing continuing signs of this with the ECB cutting rates last week, the Bank of England engaging in another round of QE (money printing, the Peoples Bank of China cutting rates, and the central bank in Denmark adopting a negative rate policy due to Euro deposits pouring into the country seeking a safe haven. I expect these type of policy responses to continue which should be long term bullish for the gold price.
The political situation in Zimbabwe is more complicated than what is generally reported outside the country. Robert Mugabe is 88 years old and is currently in Singapore, it is speculated to receive treatment for prostate cancer. His party Zanu-PF has in the last few years come under considerable pressure from competing parties in Zimbabwe and from pressure by outside entities like its neighbor South Africa and the UK to sit down with the opposition and write a new constitution and to hold elections. In fact there have been many reports of inter-party fracturing inside Zanu-PF and even party members splitting from Mugabe as politicians position for a post Mugabe Zimbabwe. The trend is clear in that we and I am sure Zanu-PF have seen the Arab Spring revolutions in North Africa and the movement in Africa away from autocratic rule to more participatory types of government. Suffice to say that when old Bob sheds this mortal coil there could be a signifcant revaluation of Zimbabwe and company's that have operations there.
As stated above the country is moving towards elections although Zanu-PF has done much to delay them in order to give itself time to position itself for an outcome that does not significantly diminish its power and control of cronyism that has benefited its members. Nevertheless the pressure is on and it is my view that if free and fair elections are held that the MDC (Movement for Democratic Change) would have a greatly increased role in government. It is important to remember that Zanu-PF and MDC have a tenuous power sharing agreement currently in place. The prime minister of Zimbabwe is Morgan Tsvangirai and that several cabinet members and the central bank president are MDC officials. This is the prime reason that inflation was quashed in the last few years and the economy is growing at 6-8%. I suspect if elections were held today MDC would be the majority.

Disclosure: I am long CALVF.OB.
Themes: Zimbabwe Stocks: CALVF.OB
by John Polomny

Currents| Investing Ideas| Dividends & Income| ETFs| Macro View| ALERTSSign in /
John Polomny's Instablog

John Polomny
John Polomny writes the Actionable Intelligence Alert. The Actionable Intelligence Alert provides unique, overlooked, and well researched opportunities and speculations from all over the world.

My blog:
The Actionable Intelligence Alert
Profile

NuclearDickieComments
By the way, I own a mere 50,000 shares. Thinking of boosting that to 500,000.