New York Stock Exchange-listed Caledonia Mining Corporation will next year spend about US$27m in its Zimbabwe operations, Business Times can report.
The company operates Blanket Mine in Matabeleland South Province.
The development was revealed by Caledonia CEO Steve Curtis.
“Due to, inter alia, historic delays in the completion of the Central Shaft arising from Covid-19, the need to remediate the poor electricity supply from ZESA, and an upgrade to the workers’ village to accommodate a larger workforce, capital expenditure at Blanket in is now expected to be US$27m,” Steve Curtis said.
Giving a trading update for the quarter to September 30,2021, Curtis said the company produced about
19,000 ounces of gold which signifies the contribution that Central Shaft is already making.
The commissioning and subsequent ramp-up of activity at Central Shaft met the group’s best expectations and they have therefore been able to narrow production guidance to the top end of our previous range.
He noted that the company remains on track to hit the 80,000 ounce target from 2022 onwards.
Revenue for the company was US$33.5m which is a 31.9% increase from the US$25.4m achieved in the third quarter of 2020.
Caledonia also reported a gross profit of US$15.7m, a 25.6% increase on the US$12.5m in Q3 2020, due to higher production and lower cost per ounce offset in the quarter by a lower gold price.
EBITDA was at US$15.1m, a 30% increase on the US$11.7m in the third quarter of 2021 at a margin of 45%.
Net cash generated by operations in the quarter was US$7.1m, compared to US$5.3m in the same period last year.
“The increase was due to higher gross profit , offset by increased working capital,” Curtis said.
He noted that the completion of Central Shaft and the resultant increase in production means that Caledonia can execute other areas of its growth strategy, such as the agreement to acquire Maligreen which was announced during the quarter, which has an estimated inferred resource of 940,000 ounces of gold in 15.6 million tonnes at a grade of 1.88 grammes per tonne. This transaction was completed after the end of the quarter.
In October 2021, the company declared and paid an increased dividend of 14 cents per share and this is a 7% increase in the quarterly dividend since October 2019 and an increase of 104% from 6.875 cents in October 2019.
Curtis further highlighted that Caledonia’s immediate strategic focus following the commissioning of the Central Shaft project earlier this year is to increase production, reduce operating costs and increase the flexibility to undertake further development and exploration, thereby safeguarding and enhancing Blanket’s long-term future.