Aim- and TSX-listed Caledonia Mining produced 12 712 oz of gold in the second quarter, ended June 30 – an increase of 6.4% on the first quarter’s production of 11 948 oz.

This took half-year production for the miner to 24 660 oz.

However, owing to operational difficulties relating to grade and unreliable power supply, the gold miner has revised and lowered its production guidance for the full-year to between 50 000 oz and 53 000 oz – down by about 3 000 oz overall.

Earnings guidance remained at between $0.86 and $1.17 a share owing to a higher-than-expected gold price and lower-than-expected costs.

Owing to cost control measures, Caledonia also remained confident in its longer-term all-in sustaining cost guidance target of between $700/oz and $800/oz as the business grows towards its 80 000 oz/y production target by 2022. 

Additionally, Caledonia’s 49%-owned Blanket mine, in Zimbabwe, had signed a new power supply agreement, which the miner said appeared to have reduced the incidence of load-shedding.

Caledonia is also at an advanced stage of evaluating a solar photovoltaic generating facility, which will reduce the mine’s dependence on grid power.

The miner last month announced the completion of the shaft sinking at the Central shaft, which it said on Tuesday had marked a “significant step” towards completing the investment programme at Blanket in the second half of 2020.

Commenting on the milestone, CEO Steve Curtis said the completion of the shaft sinking “marks the successful culmination of five years’ work and about $45-million of capital investment”.

The completion of the shaft sinking substantially de-risked the project, he said, adding that Caledonia had moved on to the equipping phase, which would take about 12 months to complete.

Following the programme’s completion, production at Blanket is expected to increase to the targeted level of 80 000 oz/y from 2022.

Gross profit for the second quarter, meanwhile, reached $7-million owing to lower on-mine costs, while the operating profit was just over $6-million. Net profit for the quarter increased to $23.3-million owing to the devaluation of the newly-introduced Zimbabwe currency, which Caledonia noted resulted in cost savings and a large net foreign currency gain.

Adjusted earnings a share were 19.5% lower at 26.8c, owing to deferred tax adjustments arising from the calculation of Blanket’s taxes in the local currency.

Cash generated from operating activities remained “robust”, with net cash of about $8.4-million generated during the first half of this year.