Caledonia Mining Corporation Plc has given DirectorsTalk an update on its operating and financial performance for the current financial year ended 31 December 2016.
Production at the Blanket mine continues as expected and at the current gold price the Company expects to meet market expectations for revenue. The average grade achieved in October was below management expectations, but this appears to be a temporary deterioration and production guidance of 50,000 ounces of gold for 2016 is expected to be achieved. Operating costs at Blanket mine are also close to expectations and accordingly, the underlying performance of the company remains in line with market expectations.
The Company has been affected by several factors which will have an adverse effect on the reported profitability in the current financial year which now seems likely to be below market expectations. In particular:
· The strengthening of the South African Rand against the US dollar has increased the US dollar cost of rand-denominated expenses;
· The increase in the Company’s share price from $0.59 at the start of 2016 to $1.77 at the end of the third quarter has resulted in an increase in the share based expenses; and
· The Company has incurred non-recurring costs in the evaluation of a number of investment opportunities.
Accordingly, whilst Caledonia’s underlying performance is expected to be in-line with expectations and the Company’s operations remain robustly cash generative, reported earnings per share for the year to 31 December 2016 are anticipated to be lower than expectations, although still significantly higher than reported earnings for 2015.
The investment programme at Blanket Mine continues to be implemented as planned and is funded from internal resources. Blanket remains on track to increase production from 42,800 ounces of gold in 2015 to approximately 80,000 ounces of gold in 2021.
Caledonia expects to release its results for the Quarter to September 30, 2016 on Monday 14 November 2016.
Steve Curtis, Caledonia’s Chief Executive Officer said: “Barring unforeseen circumstances for the remainder of 2016, the Blanket mine continues to deliver good results and the investment plan to increase production to 80,000 ounces of gold in 2021 is still on schedule, having met all its key milestones for the year.”
