Dual-listed Caledonia Mining on Monday declared a further increased quarterly dividend of $0.085 a share.
This is a 13% increase on the previous quarterly dividend of $0.075, which, together with the increase to the dividend in January from $0.069, represents a cumulative 24% increase since October 2019.
"Significant business resilience has been demonstrated through the Covid-19 pandemic, with gold production levels still within the range of 2020 guidance of 53 000 oz to 56 000 oz," the company said in a release on June 29.
Additionally, the company reported that stable production, a high gold price and good cost control have resulted in increased cash generation this year.
"This has given the board confidence that the business can sustain a higher level of dividend distributions."
Further, the Central shaft is on track to be completed in the fourth quarter of this year and Caledonia is targeting production of 80 000 oz/y of gold from 2022.
“The 13% increase in the dividend reflects our continuing confidence in the outlook for our business. As we reported in our first-quarter results, our financial performance has been strong owing to increased production and a higher gold price, which has continued into the second quarter," said CEO Steve Curtis.
“As we approach the end of the five-year investment programme at Blanket mine, we anticipate the rate of capital expenditure will begin to reduce towards the end of 2020, which gives us greater flexibility to consider deploying some of our cash reserves on an increased dividend," he pointed out.
Caledonia expects the Central shaft equipping to be completed in the fourth quarter of this year. Commissioning of the shaft will support further increases in operating cash flow as production is expected to increase by over 30% over two years to about 75 000 oz in 2021, and to the target rate of 80 000 oz/y of gold from 2022, as capital expenditure falls further and we begin to realise the operational efficiencies arising from the new shaft.
“The board will review Caledonia’s future dividend distributions as appropriate while considering the balance between delivering returns to shareholders, pursuing the significant growth opportunities within Zimbabwe and maintaining a prudent approach to financial management,” Curtis noted.