Caledonia Mining Corporation has given DirectorsTalk its operating and financial results for the first half of 2015 and the second quarter of 2015 (“Q2” or the “Quarter”). All results are reported in Canadian dollars unless otherwise indicated. Following the implementation of indigenisation in September 2012, Caledonia owns 49% of the Blanket Mine in Zimbabwe. Caledonia continues to consolidate Blanket and the operational and the financial information set out below is on a 100% basis unless otherwise indicated.
Operating and Financial Review
Q2 Q2 H1 H1 Comment
2014 2015 2014 2015
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Gold production in
the Quarter and half-year
Gold produced was slightly ahead
(oz.) 11,223 10,401 21,464 20,361 of target
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Higher on mine cost
per ounce due to lower
On Mine cash grade and increased
cost (US$/oz.) 611 729 622 699 electricity consumption
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Higher all-in sustaining
All-in sustaining costs due to higher
cost (US$/oz.)(1) 878 1,030 890 984 on-mine cash costs
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Sales in Q1 2015 include
work in progress brought
forward from 2014 of
813 ounces compared
Gold Sales to 1,969 ounces in
(oz.) 11,223 10,401 23,433 21,174 Q1 of 2014
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Average realised Lower realised gold
gold price price reflects the
(US$/oz.)(1) 1,265 1,174 1,267 1,187 lower gold price
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Lower gross profit
due to fewer ounces
sold, lower gold price
Gross profit and higher on-mine
($'m) 5.6 4.0 11.7 8.6 costs
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Net profit Net profit in Q2 of
attributable 2015 is after losses
to shareholders on discontinued operations
($'m) 1.8 0.3 4.3 1.9 in Zambia
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Adjusted eps excludes
foreign exchange profits
and losses, deferred
Adjusted tax and the expenses
basic earnings of the Zambian office
per share which has now been
(cents) 3.7 2.3 7.8 5.2 closed
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Q2 Q2 H1 H1 Comment
2014 2015 2014 2015
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Cash position remains
robust despite increased
Cash and capital investment
cash equivalents as part of the plan
($'m) 25.8 23.7 25.8 23.7 to increase production.
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Robust cash generation
Cash from despite lower sales
operating and realised gold price
activities due to reduced administrative
($'m) 1.7 2.6 7.9 5.9 expenses and tax payments
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Lower payments due
to the reduced royalty
Payments rate and the lower
to the community income tax payable
and Zimbabwe on reduced profits
government and increased capital
($'m) 3.6 1.8 6.6 3.6 investment.
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Commenting on these results, Steve Curtis, Caledonia’s President and Chief Executive Officer said: “2015 is a very important year for Caledonia as we continue to implement the Revised Investment Plan, which we presented to investors in November last year. We are currently sinking, deepening or equipping four shafts at the Blanket mine in Zimbabwe and I expect this activity will translate into increased production from the first quarter of 2016.
“Caledonia’s board and management believe that the implementation of the Revised Investment Plan remains in the best interests of shareholders: the successful implementation of the plan will result in a significant increase in Blanket’s production and operating efficiency; the lower gold price increases the importance of delivering the Revised Investment Plan as scheduled. I am pleased to report that we have met all of our key milestones and we remain on target for achieving all of the future milestones.
“We have sharpened our focus on our core operation and we are streamlining our corporate structure by terminating dormant companies and non-core assets. Operationally, the management team is focused on implementing the Revised Investment Plan; accordingly, we have strengthened the technical team in Johannesburg, to ensure that we have the capacity to deliver all aspects of the Revised Investment Plan. The increased costs of the enlarged technical team have been met by cost reductions in other areas.
“On-mine cost control remains good but the average cost per ounce continues to be adversely affected by the lower achieved grades at the current production level. The achieved grade and tonnage production in the Quarter and in the Half Year were as planned.
“Subsequent to the end of the second quarter of 2015, the price of gold fell significantly. Blanket continues to operate profitably at the lower gold price and production and costs remain as planned. If the current gold price is sustained, however, investors should revise their expectations for Caledonia’s future financial performance to reflect the prevailing environment. As production begins to increase from the first quarter of 2016, I expect that average costs per ounce will start to fall. I look forward to updating the market of our progress in due course.”
