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UPDATE - Caledonia Mining on track to produce 42,000 ounces in 2015 - By Giles Gwinnett April 09 2015, 2:09pm
Caledonia Mining (LON:CMCL, TSE:CAL) sold 12.1% more gold in its latest quarter compared to the last three months of 2014.
The operator of Zimbabwe's Blanket mine said targeted gold production for the whole of 2015 remains at 42,000 ounces of the precious metal.
It said 10,770 ounces were sold in the three months to March 31 - 12.1% higher than Q4 - but this was an 11.8% decrease on the ounces sold in the first quarter of 2014.
In terms of production, 9,960 ounces were produced during Q1 2015, which was a 4.4% decrease on the gold produced in the previous quarter and a 2.7% decrease on the gold produced in Q1 2014.
Caledonia's chief executive Steve Curtis said: "Production in Q1 2015 was over 98% of the target for the quarter.
"Target production in Q1 is lower than subsequent quarters due to the greater number of public holidays in the first quarter.
"It is also anticipated that production will increase somewhat in the second half of 2015 after the tramming loop on 22 Level has been completed, which will increase the underground haulage capacity. The tramming loop is on schedule for completion by the end of June 2015.
The no 6 Winze is now 900 meters below surface as at the 8 th of April and is still on track to be completed by the end of July 2015.
The pre-sink at Central Shaft has commenced. "We are confident that the revised investment plan, which was announced on November 3, 2014, will result in progressive increases in production from 2016 onwards when we expect to see the first production from below 750 meters - initially from the No. 6 Winze and subsequently from the Central shaft."
Charles Stanley analysts said the production update contained no surprises, repeating a 'buy' rating and 50p pricetarget.
"...good progress continues to be made on the $70mln investment plan at Blanket.
We believe the efforts to double production, reduce costs at an already low-cost operation, a 9% yield and significant cash resources offer enough reasons for investors to reappraise the Caledonia story, it said.
Broker SP Angel added: "These numbers are in line with new guidance on production.
The cash generation and current cash position are supportive.
"The planned developments at the Blanket mine should secure its long term future but it will need to significantly upgrade its resource estimates for the deeper levels." Caledonia shares are unchanged at 39.50p.