Gold production in the Quarter was little changed when compared to Q2 2016; adjusted earnings for the first half of 2017 were 45.7 cents, six per cent. higher than in the first half of 2016.
|
Q2 2016 |
Q2 2017 |
H1 2016 |
H1 2017 |
Comment |
|
|
Gold produced (oz) |
12,510 |
12,521 |
23,332 |
25,315 |
Gold production in the Quarter was affected by underground logistical constraints on materials handling |
|
On-mine cost per ounce ($/oz)[1] |
629 |
696 |
658 |
677 |
On-mine costs per ounce were adversely affected by lower grade |
|
All-in Sustaining Cost ($/oz) (“AISC”) |
930 |
855 |
937 |
856 |
All-in sustaining costs remain under control and within guidance year to date |
|
Average realised gold price ($/oz) |
1,252 |
1,235 |
1,211 |
1,224 |
Gold prices for the Quarter were stable and reflect the market gold prices |
|
Gross profit[2] |
5,936 |
5,035 |
9,824 |
10,861 |
Gross profit in the Quarter was adversely affected by higher production costs |
|
Net profit attributable to shareholders |
3,607 |
694 |
4,150 |
3,032 |
The Quarter was adversely affected by share-based payments and a higher effective tax rate; Q2 2016 benefited from $2.4 million proceeds from sale of treasury bills |
|
Adjusted basic earnings per share (“EPS”)[3] (cents) |
30.5 |
18.9 |
43.0 |
45.7 |
Earnings declined 38 per cent. for the Quarter; six month earnings are 6 per cent. higher than H1 2016 |
|
Net cash and cash equivalents |
10,581 |
10,878 |
10,581 |
10,878 |
Cash balances remain adequate and stable during the Quarter |
|
Cash from operating activities |
7,215 |
4,701 |
8,964 |
6,480 |
Robust cash generation to support continued investment |
Commenting on the results, Steve Curtis, Chief Executive Officer, said:
“Production and financial performance at the Blanket Mine (“Blanket”) was adversely affected in the Quarter by lower grades and some logistical difficulties in underground material handling. Adjusted EPS of 18.9 cents is 38 per cent. lower than in the corresponding period in 2016; adjusted earnings for the first half of the year were 45.7 cents – six per cent. higher than in the first half of 2016. Notwithstanding the challenges during the Quarter, Caledonia continues to deliver earnings in-line with the previous period and we anticipate being in a position to grow from this base as our investment to increase production bears fruit.
“Management have implemented several remedial measures in the Quarter to improve our underground material handling capacity and to address the logistical constraints. The benefit of these actions was evident in July when we saw an improvement in ore tonnages, grade and gold recoveries. I expect that further benefits will be realised in the second half of 2017. We remain confident of achieving our 2017 full year guidance of between 52,000 and 57,000 ounces.
“It is important for investors to note that we expect the underground bottlenecks to be fully alleviated with the completion of the new Central Shaft, which is expected to be in production in the fourth quarter of 2018.
“Sadly, our safety performance suffered a serious setback with Blanket experiencing two fatal accidents in recent months. I join with my colleagues and fellow directors in expressing our sincere condolences to the families and colleagues of the deceased and assure all our stakeholders at Blanket of our continued and unwavering commitment to safe and sustainable operations.
“We experienced a marginally weaker average realised gold price for the Quarter of $1,235.Lower than expected grades contributed to a 10.6 per cent. increase in on-mine costs from $629 per ounce to $696 per ounce.
“All-in sustaining costs remain under control at $855 per ounce for the Quarter, a decrease of eight per cent. on the corresponding period in 2016. We remain confident of achieving our full year AISC guidance of between $810 and $850 per ounce.
“Operating cash flow in the Quarter of $4.7 million contributed to a strong balance sheet and supports the funding of the Central Shaft project. The Company’s gross cash position at the end of the Quarter was $10.9 million, approximately flat on the previous quarter and year. To keep cash balances flat during a quarter in which we invested $4.2 million and paid a quarterly dividend of $0.7 million is testament to the strong cash generation of the mine.
“The Central Shaft project continues to progress well with pleasing progress in shaft sinking during the Quarter. The shaft is currently at a depth of 870m below surface. The Central Shaft is expected to enable the mine to produce 80,000 ounces by 2021. We are now in the third year of the project and are excited by the significant potential that the Central Shaft has to improve the efficiency, and extend the life of operations at Blanket. Once complete, it is expected to enhance the operating efficiency through reduced travel times for employees to get to mining areas, shorter tramming distances and reduced time required to hoist ore to surface. The Central Shaft will also allow us to increase the pace of deep level exploration and development, securing the future of the mine for many years to come.
“We are also pleased to have executed a successful one-for-five share consolidation during the Quarter which was undertaken in support of the migration of the company’s trading from the OTCQX to a listing on the NYSE American. Caledonia hopes that the NYSE American listing will facilitate access to an enlarged pool of potential investors in the United States which it is anticipated will lead to increased liquidity in the Company’s shares. We look forward to engaging actively with existing and potential new shareholders in the US market.”
Strategy and Outlook
Caledonia remains on track to achieve the production target of 80,000 ounces by 2021 at its Zimbabwean subsidiary, Blanket Mine. The Company’s strategic focus continues to be the implementation of the Investment Plan at Blanket, which was announced in November 2014 and is expected to extend the life of mine by providing access to deeper levels for production and further exploration. Implementation of the Investment Plan remains on target in terms of timing and cost. Caledonia’s board and management believe the successful implementation of the fully funded Investment Plan is in the best interests of all stakeholders because it is expected to result in increased production, reduced operating costs and greater flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket’s long term future. Caledonia continues to evaluate further investment opportunities.
Dividend Policy
In July, 2016 Caledonia announced an increase in its quarterly dividend to 1.375 cents per pre consolidation share, or 5.5 cents per annum, an increase of 22 per cent. Following the Company’s one-for-five share consolidation in June 2017 the dividend was increased by an amount commensurate to the consolidation (i.e. fivefold) to 27.5 cents per share post consolidation. The dividend of 27.5 cents per annum, payable quarterly at a rate of 6.875 cents, represents Caledonia’s current dividend policy. It is envisaged that the dividend of 27.5 cents per annum will be maintained.
Following the implementation of indigenisation in September 2012, Caledonia owns 49 per cent. of the Blanket Mine in Zimbabwe. Caledonia continues to consolidate Blanket and the operational and financial information set out below is on a 100 per cent. basis unless otherwise indicated.
For further information please contact:
Shareholder Conference Call
A presentation of the results for the Quarter and the outlook for Caledonia is available on Caledonia’s website (www.caledoniamining.com). Management will host a conference call at 1500 UK Time on the 15thAugust 2017.
Details for the call are as follows:
Date: 15 August 2017
Time: 1500 London, 1600 Johannesburg, 1600 Zurich and Frankfurt, 1000 Toronto and New York
Password: Caledonia
|
UK Toll free |
0808 109 0700 |
|
USA Toll free |
1 866 966 5335 |
|
South Africa Toll free |
0 800 980 512 |
|
Canada Toll free |
1 800 608 0547 |
|
Other (standard International access) |
+44 (0) 20 3003 2666 |
