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Blanket Mine

Business Reporter
CALEDONIA Mining says its gold production clocked 13 428 ounces during the third quarter ended September 30, 2016 from 10 927 ounces in the prior period.

This marks a 23 percent increase in production year on year.

The firm has interests across Southern Africa and owns a 49 percent stake at Blanket Mine near Gwanda in Matabeleland South.

“Gold production in the quarter was 13 428 ounces, 23 percent higher year on year and seven per cent higher than the previous quarter due to the increased tonnes mined and milled and despite marginally lower planned grade when compared to the second quarter,” Mr Steve Curtis, Caledonia’s chief executive officer, said.

“We expect that the lower grade is a temporary reduction and that mined grade will continue to trend upwards towards four grammes per tonne as production from higher grade, deeper ore bodies increases.”

Caledonia said it expects to see further reductions in the average cost of production, as output ramps up, with the company targeting an AISC (all-in sustaining costs) of in the range of $810 and $850. Gold was sold at an average price of $1 312 an ounce, compared to $1 106 an ounce in the third quarter of last year.

Profit before tax rose to $4,11 million from $2,24 million the prior year, however, the tax bill shot up to $2,29 million from £703 000.

The strong performance by Blanket Mine has allowed for a string of dividend payments to come through from the company, dating back to before the most recent strength in the gold price.

In July, Caledonia announced that the quarterly payout would rise from one and an eighth US cents per share to one and three-eighth cents.

The firm said the increase has been maintained in the most recent quarterly payouts, which were declared at the market on October 4 and are due to be paid at the end of this month.

Caledonia also says the underlying operating and financial performance of Blanket Mine remains very strong, and is on an upward trajectory.

Increased productivity at Blanket Mine in the third quarter was a result of higher-grade materials mined below 750 metres, accessed through the No. 6 Winze, or connection, and an additional decline development.

It also said the delivery of increased ounces at a lower unit cost, into a stronger gold price, has resulted in adjusted earnings per share for the third quarter that are 59 percent higher than quarter three of 2015.

The mining corporation said it remains on track to meet production guidance for this year of 50 000oz and continues to progress towards its long term target of 80 000oz by 2021.