Caledonia Mining Corporation Plc directors yesterday declared a dividend of US$0,075 on each of the company’s common shares, encouraged by the continued operations of the Blanket Mine and re-opening of important supply lines.
The mining group had initially deferred the decision to declare the quarterly dividend in light of the uncertainty surrounding the Covid-19 pandemic.
“In light of the company’s consistently healthy balance sheet, the board feels it appropriate that Caledonia declares the quarterly dividend which had previously been deferred,” board chairman Leigh Wilson said.
A key consideration in the decision to defer the April dividend was uncertainty relating to Blanket’s supply chain from South Africa.
During the initial lock down, said Caledonia, Blanket operated using its inventories of consumables and spare parts.
The company pins hope on the fact that the South African mining industry and its allied supply sector is restarting operations and Blanket has partially resumed the procurement of consumables and equipment despite the lockdown period being extended.
“The continuation of the Caledonia dividend will, as usual, depend on factors including Blanket maintaining a reasonable level of production; receiving payment in full and on-time for all gold sales; being able to make the necessary local and international payments and being able to replenish its supplies of consumables and other items,” Wilson said.
The dividend, to be paid on May 29, is maintained at the increased level of 7.5cents per share following the dividend increase effected in January 2020. Caledonia says it has a strong balance sheet with current cash on hand of US$14.1m as at April 24, 2020 giving the directors sufficient confidence in the solvency of the business and its resilience in the current macro-economic environment. In its previous annual results for the year to December 2019, Caledonia reported a 265% after tax growth to US$50.4m on account of a weakening Zimbabwean dollar which effectively saw operating and utility costs sliding.
Currently, supply chain of Blanket’s consumables and spare parts improved substantially and is close to normal. The mine is now re-establishing full production having operated at approximately 93% of capacity during lockdown.
Blanket Mine has operated throughout the 21-day lockdown in Zimbabwe which came into effect from March 30, 2020 with permission from the government.
During this period, Caledonia said, Blanket has modified its operating procedures to safeguard against the spread of Covid-19, resulting in Blanket operating at approximately 93% of its target production rate. Caledonia also said Blanket continues to support initiatives to combat the spread of Covid-19 in Zimbabwe and has donated ZWL$16m via the Chamber of Mines Zimbabwe to assist in the fight against Covid-19.
The mine has committed to make further weekly donations of ZWL$5m to Covid-19 related projects provided it continues to operate at a reasonable level of production and Blanket has provided practical assistance and supplies to local authorities in its area.