Caledonia lauds Govt on gold price

16 May, 2019 - 00:05 0 Views
Caledonia lauds Govt on gold price Caledonia Mine

The Herald

Tawanda Musarurwa
Toronto Stock Exchange-listed and Zimbabwe-focused mining firm, Caledonia Mining Corporation says it is encouraged by efforts being made by the Government in improving the country’s business environment including the recent setting of a new gold support price.

Last week, Fidelity Printers and Refiners (a subsidiary of the Reserve Bank of Zimbabwe) announced that it had raised the price it pays for gold to US$44 000 per kilogram or US$1 368,55 an ounce.

The new price is a premium of approximately $86 per ounce to the spot price in London.

“Notwithstanding the challenges experienced in the quarter, we remain encouraged by the overall direction of policy development which we believe will result in improved operating conditions and a better investment climate in Zimbabwe.

“The most recent positive development in this regard is the introduction of a gold support price of $1 368 per ounce, a premium above the prevailing spot price in order to incentivise domestic gold production.

“On the exploration front, we are also particularly encouraged by Zimbabwe’s geological prospectivity and we continue to evaluate potential investment opportunities,” said Caldeonia CEO Steve Curtis.

Meanwhile, Caledonia’s cornerstone gold producer, Blanket Gold Mine in Gwanda saw production decline 8 percent to 11 948 ounces in the first quarter of the year.

Management attributed the weaker output to lower grade, although they added that they had been anticipating it as part of the mine plan.

“Lower gold production was mainly due to lower grade, which was in line with the mine plan.  The grade dilution which was experienced in previous quarters has largely been addressed. Production was less than planned due mainly to lower than planned tonnage,” said Caledonia.

Operating profit before tax came in at US$12,3 million, 105 percent higher than in the first quarter of last year.

“The increase was, however, as a result of ‘exceptional gains’ of US$3,3 million on foreign exchange, following the devaluation of the local currency, and a profit on the sale of a subsidiary of US$5,4 million.

“The devaluation did, however, have a one-off positive financial impact on our results with a foreign exchange gain of $3,3 million arising on the revaluation of assets and liabilities that are denominated in local currency.

“Looking forward, provided the exchange rate which is used to calculate Blanket’s local currency denominated gold receipts recognises economic fundamentals, management is optimistic that current monetary policy may create a more stable economic environment . . .” said Curtis.

Attributable profit after tax was also substantially higher than the comparable quarter in 2018 at US$9,3 million again due to exceptional items which outweighed lower gross profit.

Operating cash flows for the quarter were improved at US$6,3 million, from the US$7 million in the prior comparable period.

Caledonia’s balance sheet remains strong, with net cash of US$9,7 million as at March 31, 2019.

The group has maintained its full year production guidance of 53 000– 56 000 ounces for the current year.

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