Caledonia Mining Corporation Plc (LON:CMCL) has today announced that following the 2018 Monetary Policy Statement by the governor of the Reserve Bank of Zimbabwe in February 2018 relating to an increase in the Export Credit Incentive (“ECI”) paid to all gold miners from 2.5% to 10%, the Blanket Gold Mine (“Blanket”) has received funds commensurate with the increased level of ECI for gold produced in February 2018.
The increase in the ECI from 2.5% to 10% is expected to amount to additional income of approximately $5.1 million for the year to December 31, 2018 assuming that the ECI remains in place for 2018 and assuming a gold price of $1,260 per ounce. The incremental revenue is likely to have a material positive impact on Caledonia’s forecast EPS for the year. Recent EPS guidance issued in Caledonia’s 2017 Management Discussion and Analysis (“MD&A”) of the FY 2017 Results on March 21, 2018 of between 130 and 150 cents per share was based on an ECI of 2.5%. Revised EPS guidance assuming the increased ECI is expected to be between 165 and 190 cents per share.
Commenting on the developments, Steve Curtis, Caledonia’s Chief Executive Officer, said:
“The increase in the ECI from 2.5% to 10% is a further significant step by the Zimbabwean Government to boost investment and production in the gold mining sector. It is very pleasing to see the government delivering on previous policy statements to promote investment in the sector. As a substantial investor and producer of gold in Zimbabwe, Caledonia and our fellow shareholders in Blanket are a beneficiary of this and other recent policy changes as we invest to grow production at Blanket to 80,000 ounces by 2021. Furthermore, as we have previously announced in our 2017 MD&A Blanket will be investing an additional $4m in exploration and metallurgical test work on its satellite properties. As the business environment in Zimbabwe continues to improve we look forward to evaluating further opportunities to grow production.”