Caledonia confident of further production increases at Blanket mine
By Giles GwinnettMarch 31 2014, 7:06am Caledonia says it will continue to invest in the mine to boost production, which, for 2014, it has forecast as 48,000 ounces, and for 2015, 52,000 ounces of the yellow metalCaledonia says it will continue to invest in the mine to boost production, which, for 2014, it has forecast as 48,000 ounces, and for 2015, 52,000 ounces of the yellow metal
Caledonia Mining (LON:CMCL) continues to expect gold production to increase from its Blanket mine in Zimbabwe in 2014, as it posted what it called a "creditable" set of full year 2013 numbers.
The lower gold price last year meant the average price realised was lower but production from the mine beat the firm's own guidance. Caledonia says it will continue to invest in the mine to boost production, which, for 2014, it has forecast as 48,000 ounces, and for 2015, 52,000 ounces of the yellow metal.
In the 12 months to December 31 last year, gold production came in 45,527 ounces, compared to 45,465 in 2012, with the fourth quarter marginally lower than the same quarter in 2012 due to a three day maintenance shutdown. The average realised gold price for the year was US$1,402 per ounce compared to US$1,666 in 2012. All in sustaining costs for the year were US$973 per ounce (2012: US$852 per ounce). Under rules introduced by the Zimbabwean government, all gold from Blanket must now be sold to state-controlled Fidelity Printers and Refiners. These new sales arrangements with have reduced Blanket’s working capital requirement due to the earlier payment terms.
Blanket has received all payments due from Fidelity in-full and on-time, the company highlighted.
Meanwhile, exploration at Blanket below 750 metres continues and Caledonia has been encouraged by results so far. The mine has surplus plant capacity and is sufficiently cash generative that, if the investment climate is acceptable, it could invest in projects with a view to further increasing production, the company added.
The firm plans to pay a dividend of 6 Canadian cents per share in 2014, split into 4 equal quarterly payments of 1.5 Canadian cents.
Caledonia's chief executive and president Stefan Hayden said: "Gold production in 2013 remained slightly ahead of 2012 and was also ahead of our guidance.
"Blanket’s on-mine cash cost increased in Q4 compared to the previous quarter, however this was largely due to the higher work-in-progress at December 31, 2013. As a measure of Blanket’s continued cost efficiency, the cost per tonne processed in 2013 fell from US$75.90 to US$70.40. "In the early part of 2014, the achieved grade in certain production areas became uneconomic and production in those areas was terminated. Production in the first quarter of 2014 was also adversely affected by the unscheduled requirement to replace the winding ropes on the main production shaft.
"Both of these factors had an adverse effect on gold production in the first quarter of 2014. New production areas have and are being developed and I am confident that the 2014 production target of 48,000 ounces will be achieved, with 52,000 ounces expected in 2015.
"Development and exploration work at our satellite projects, GG and Mascot, has established the existence of multiple mineralized zones with potentially economic gold grades.
Further work is being done to define the extent and viability of these mineralized zones."
Mark Learmonth, Caledonia's corporate development director, said the firm believed its all in sustaining costs for 2013 still "justifies and consolidates our position as a very low cost producer so we're not uncessarily concerned about the quarter-on- quarter movements in our cash costs and our all in costs.
"We think that will, over the period of a few quarters, average itself out," he told Proactive.
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