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Caledonia Mining is reassessing its medium-term plans for Blanket Mine and also stepping up the search for an acquisition both in and outside of Zimbabwe

Business Reporter
Blanket Mine’s Toronto Stock Exchange listed shareholder Caledonia Mining Corporation has cut profits by 25 percent saying figures in the first quarter were overstated.
Caledonia said the error in the first quarter financial statements arose due to a misallocation of non-cash foreign exchange gain on the translation of certain bank balances allocated to profit and loss instead of equity.

“Caledonia has identified an error in the first quarter financial statements which resulted in the first quarter profit after tax being overstated by $1 054 000 and basic earnings attributable to Caledonia shareholders per share being overstated by $0,02 per share,” Caledonia said.

As a result of the amendment the correct profit after tax is $3 091 000 instead of $4 145 000 and basic earnings per share is $0,046 instead of $0,067. The error affects neither total equity nor total comprehensive income.

Caledonia is a mining, exploration and development company focused on Southern Africa.  Following the implementation of indigenisation in Zimbabwe, Caledonia’s primary asset is a 49 percent interest in an Blanket Mine.

Caledonia’s shares are listed in Canada on the Toronto Stock Exchange, London’s Alternative Investment market and are also traded on the American.
Caledonia said it was debt-free as at March 31, 2014 had cash of $26,7 million held with its bankers in the United Kingdom, Canada and South Africa.

Blanket Mine is a low-cost producer. In the year ended December 31, 2013, Blanket’s on-mine costs were $613 per ounce of gold produced, its all-in sustaining cost was $978 per ounce of gold and its all-in cost (which includes the investment in expansion projects) was US$1,109 per ounce.

Lower grades and weaker gold price took a toll on Caledonia Mining’s Zimbabwe unit Blanket Mine despite another sharp reduction in operating costs.
All-in sustaining costs fell to an impressive US$881 per ounce from US$924 per ounce in the previous quarter, but even with this improved efficiency net profit fell to US$1,8 million in the three months to June 2014.

Stefan Hayden, president and chief executive officer of Caledonia said: “The quarter and first half year of 2014 presented significant challenges as a result of the continued low grades, which adversely affected gold production.

“New production areas have and are being developed to replace those areas where production has been suspended due to the lower grade. I am confident that the 2014 production target of 45 000 ounces will be achieved.”

Mr Hayden added that while grades improved slightly in the second quarter compared to the previous three months, the grade will be lower in future.
As a result and added to a lower gold price, slightly lower than anticipated production and increased taxation burden, the Caledonia Mining is reassessing its medium-term plans for Blanket Mine and also stepping up the search for an acquisition both in and outside of Zimbabwe.