Dual-listed Southern Africa-focused gold producer Caledonia saw increased gold production in the fourth quarter, owing to higher tonnages milled, which was offset by a lower grade for the year ended December 31, 2015.

Caledonia CEO Steve Curtis noted that, while 2015 was “another challenging year” as a result of the lower gold price, the company’s Zimbabwe-based Blanket mine remained cash generative at operating level.

Curtis reported that the mine’s 2015 produc-tion was 2.5% higher than in 2014, as well as 2% higher than its 42 806 oz target.

He added that investment at Blanket mine increased from $6-million in 2014 to almost $17-million in 2015, owing to the imple-mentation of the revised investment plan, which was announced in November 2014.

All-in sustaining costs increased in 2015, compared with 2014, owing to the increased sustaining capital investment.

“Blanket achieved a creditable all-in sustaining cost (AISC) of $1 038 per ounce of gold, the increase being largely due to a higher sustaining capital investment in 2015, compared with 2014. “[However], it is expected that the AISC per ounce will fall in 2016 as fixed costs are spread over higher production ounces and the cost reduction measures implemented in 2015 take effect,” he said.

He noted that the focus on resource devel-opment at Blanket increased in 2015 and that there were two resource upgrades in the year. Therefore, the total resource base remained broadly unchanged, notwithstanding record production in 2015 in terms of tonnes mined.

In the middle of March 2016, production from below 750 m got under way at Blanket, which was expected to increase progressively in the remainder of 2016 and 2017. This would contribute to the higher targeted production of about 50 000 oz of gold in 2016 and about 65 000 oz of gold in 2017.

On-mine costs increased in the year, owing to the lower average grade, which outweighed the overall reduction in cost per tonne milled.

A lower realised gold price in the quarter and year reflected the prevailing lower gold price, while the effect of lower revenues was outweighed by a foreign exchange gain arising from the devaluation of the South Africa rand against the US dollar, as well as lower taxation.

Nevertheless, Caledonia remained cash generative at operating level, despite the lower gold price payments to the community.

“In February, Caledonia's shareholders approved the proposal that Caledonia migrate its tax and legal domicile from Canada to Jersey, Channel Islands,” added Curtis.

He noted that this migration would reduce the tax burden on Caledonia and its shareholders. It would also reduce the costs of tax com-pliance.

“I expect that 2016 will be a transformational year for Caledonia as the benefits of restructuring and investment become apparent. “I look forward to updating the market accordingly,” he said.