WH Ireland Analyst Paul Smith said this morning about Caledonia Mining “Caledonia today released its first half results for this pivotal year. No surprises in the release, with production and costs in line with previous guidance; the Blanket mine in Zimbabwe produced 20.4koz gold at a cash cost of $699/oz and an AISC of $984/oz over H1 2015.
Revenues were down slightly on reduced output (20.4koz gold compared with 23.4koz) and a reduced gold price received of $1187/oz compared with $1267/oz over the same period last year. Higher than anticipated costs to close the Zambian operations fed through to PBT, but these one-off payments and the closure of contracts with the former CEO will mean that going forward there is a reduced administration cost with Caledonia’s focus (at the moment) solely on its Blanket mine developments.
We use a gold price of US$1150/oz over 2015 as a whole. After averaging US$1206/oz in H1 2015 this would mean an average of US$1100/oz over H2 – a level which it is already exceeding. Given the volatility in the gold price at the moment we think this is a conservative price and one where Caledonia can continue to generate cash.”