Gold miner Caledonia Mining achieved a “terrific” quarter and six months ended June 30, with second-quarter production of just over 20 000 oz, which set a record for any quarter, CEO Mark Learmonth acclaims in an operating and financial results update.
Caledonia produced 20 091 oz of gold in the quarter, 20% higher than the 16 710 oz produced in the second quarter of 2021.
This took production for the first half of the year to 38 605 oz, 29% higher than the 29 907 oz produced in the first half of 2021.
“The first half of 2022 exceeded our expectations and we have now achieved our quarterly production target. Excellent production, along with a higher gold price and good cost control, has contributed to a 321% increase in earnings a share and a 31% increase in net cash from operating activities over the comparable quarter in 2021,” Learmonth outlines.
Basic earnings a share for the second quarter were $87.7 c.
Net cash from operating activities was $16.7-million and Caledonia had net cash and cash equivalents of $10.9-million as at June 30.
In July, Caledonia announced that it had signed an agreement to buy Bilboes Gold, which is the holding company for a large, high-grade, openpittable gold resource.
“We have followed the progress of the project for several years and believe Bilboes is the premier gold development project in Zimbabwe and indeed one of the best gold development projects in Africa.
“The completion of the transaction is subject to several conditions but, once achieved, we can prepare a feasibility study to identify the most judicious way to commercialise the project with regard to the availability of funding on acceptable terms,” Learmonth says.
He notes that Caledonia also intends to restart the oxides operation at Bilboes under a tribute arrangement before completion of the transaction, with a view to creating a cash-generative operation within about six months.
Learmonth says the company’s immediate strategic focus continues to be on the Blanket mine, in Zimbabwe, which is on track to meet targeted production of between 73 000 oz and 80 000 oz of gold this year.
“We will also continue to reduce our operating costs and increase the flexibility to undertake further development and exploration, thereby safeguarding and enhancing Blanket’s long-term future,” Learmonth says.
He adds that the proposed acquisition of Bilboes also builds on the recent acquisition of the Maligreen claims, where Caledonia continues to evaluate the existing geological information and is focused on increasing the confidence of the resource base.
The company is also pursuing upgrading the National Instrument 43-101-compliant inferred mineral resources at the Maligreen mining claims, which are currently estimated to host about 940 000 oz of gold in 15.6-million tonnes at a grade of 1.88 g/t.
“Caledonia will also consider other investment opportunities in the Zimbabwe gold sector within the constraints of its financing and management capacity,” Learmonth informs.
For the second quarter, Caledonia had gross revenues of $36.99-million, a 23.4% increase on the $29.98-million achieved in the second quarter of 2021.
Gross profit was $17.9-million, a 28.8% increase on the $13.9-million in the second quarter of 2021.
Earnings before interest, taxes, depreciation and amortisation (excluding asset impairments, depreciation and net foreign exchange gains) were $17.8-million, a 23.8% increase on the $14-million of the previous year.
A total dividend paid in the quarter of $0.14 apiece was paid in April; a further dividend at the same rate was paid in July.
Caledonia is also looking to commission a 12 MW solar plant, which is expected to meet 27% of Blanket’s total electricity demand.