Caledonia Mining looks very underrated, says SP Angel By Giles Gwinnett January 09 2014, 11:55am
With a 10% improvement in gold production expected in 2014 and low ratings, Caledonia Mining (LON:CMCL, CVE:CAL) looks "very underrated," reckons broker SP Angel.
It followed a production update from the miner on Thursday, which showed production from the Blanket mine in Zimbabwe in Q4 of last year was "in line with expecations".
In all, 11,417 ounces of gold were produced during the three months - a 3.4% decrease on gold produced in the final three months of 2012.
Total production of the yellow metal in the year was 45,517 ounces, which was 3.4% more than the production guidance of 44,000 ounces.
The firm is targeting 48,000 ounces in 2014.
The firm's president and chief executive Stefan Hayden, said: "The underground development that is required to achieve the projected increase in gold production to 48,000 ounces in 2014 has been completed and I look forward to Blanket delivering this increased level of production in 2014".
Mining anlalyst John Meyer, of SP Angel, said: "The company declared its first quarterly dividend of US$0.015 this week and also saw an improvement in all in cash costs at US$999/oz.
"Over a nine month period the company has also paid out US$5.94m in dividends as part of its compliance with the Zimbabwean indigenisation policy."
Meyer said that with a 10% improvement expected in gold production next year and low ratings with a price to earnings ratio of three times, Caledonia looked very underrated.
He said the firm was "likely to be reflecting market aversion to Zimbabwean country risk".
Caledonia shares edged up 1.10% to stand at 46 pence each on Thursday.
Caledonia Mining Corp. Declares First Quarterly Dividend -
Further to the November 25, 2013 announcement in respect of Caledonia Mining Corporation's ("Caledonia" or the "Company") dividend policy, Caledonia is pleased to announce that the Board of Directors has declared a dividend of one and one half cents ($0.015) on each of the Corporation's common shares issued and outstanding as of 5:00 p.m. Toronto local time on the Record Date, being January 22, 2014. The ex-dividend date will be January 20, 2014. Dividend cheques will be mailed on January 31, 2014.
Shareholders who are registered in the United States of America and the United Kingdom will be paid in US Dollar and Sterling respectively. The US Dollar and Sterling dividend payments will be calculated using the relevant Bank of Canada exchange rates at noon on the Record Date and will be after deduction of Canadian withholding tax and any other taxes that may apply.
This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada).
Caledonia's Dividend Policy
Caledonia's long term strategy to maximize shareholder value includes a quarterly dividend policy. In 2014, the Company intends to pay an annual aggregate dividend of 6 Canadian cents per common share, payable on a quarterly basis.
About Caledonia Mining
Caledonia is a mining, exploration and development company focused on Southern Africa. Following the implementation of indigenisation in Zimbabwe, Caledonia's primary asset is a 49% interest in an operating gold mine in Zimbabwe ("Blanket").
Caledonia's shares are listed in Canada on the Toronto Stock Exchange as "CAL", on London's AIM as "CMCL" andblue are also traded on the American OTCQX as "CALVF".
Caledonia is debt-free and at September 30, 2013 had gross cash of over $25m blueoutside Zimbabwe. Blanket mine is a low-cost producer: in the quarter ended September 30, 2013, Blanket's on-mine costs were US$554 per ounce of gold produced, its all-in sustaining cost was US$873 per ounce of gold and its all-in cost (which includes the investment in expansion projects) was US$999 per ounce.
Investment continues at Blanket with the objective of increasing production to 48,000 ounces of gold in 2014 and 52,000 ounces of gold in 2015.
Blanket also continues to make substantial investments in its exploration and development projects as a result of which gold production may, in due course, increase above 52,000 ounces per annum.
Cautionary Note Concerning Forward-Looking Information
Information and statements contained in this news release that are not historical facts are "forward-looking information" within any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law. There is no guarantee that Caledonia will maintain the Dividend Policy.
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