Caledonia happy with FPR’s gold payment system

Caledonia Mining Corporation, the parent company for Gwanda-based gold producer, Blanket Mine, is pleased with Reserve Bank of Zimbabwe’s move to give Fidelity Printers and Refiners (FPR) the responsibility for payments of gold deliveries and says the new system is operating well.

According to Caledonia, this move will simplify and improve the mechanism for receiving payments for the gold it produces.

“This move has simplified and improved the mechanism for receiving payments for the gold Blanket produces, which in the early months of 2021 had been subject to delays.

“Those issues have been fully resolved with full catch up of delayed payments and Caledonia is pleased to report that the new system is operating well.

“We have a strong, long-term working relationship with the Reserve Bank of Zimbabwe and Fidelity and are delighted that they have improved the payment process.

“As a result of the normalisation of working capital and helped by the higher production in April, our consolidated cash position improved from US$13 million at the end of March to $16,3 million at the end of April,” said group chief executive officer Steve Curtis.

During the quarter, gross revenues of US$25,7 million was achieved compared to US$23,6 million during the same period in the prior year.

According to the group, higher revenues reflect a higher realised gold price offset by lower sales due to lower production. Revenues include the sale proceeds of 1 584 ounces of gold in work-in-progress brought forward from 2020.

EBITDA excluding net foreign exchange gains and the export incentive credit came in at US$9,5 million compared to US$9,8 million recorded during the same quarter last year.

On-mine cost of US$836 per ounce was recorded from US$702 per ounce recorded in the comparable period. Increased cost per ounce was primarily due to a lower grade and lower recoveries.

Adjusted earnings per share went down to 51,6 cents from 57,3 cents. Net cash from operating activities amounted to US$2 million compared to US$10,1 million recorded in the same quarter last year.

According to the group, cash from operations was adversely affected by increased working capital, in particular, higher amounts due for gold sales – these have been settled in full after the end of the Quarter.

The group declared a quarterly dividend of US11 cents per share, a 46,7 percent increase from Q1 2020.

On the production side, 13,197 ounces of gold were produced in the quarter from 14,233 ounces recorded during the same period last year. Production was adversely affected by underground flooding and lower grades.

During the month of April, production recovered with 5,470 ounces were produced which was above plan and 24 percent higher than the average monthly production in the quarter.

“Gold production in April show a marked improvement and Blanket produced 5,470 ounces in April, which is better than planned. The strong recovery in performance has continued into May and we are confident that we will achieve our full year guidance of between 61,000 and 67,000 ounces,” he said.

The group recently commissioned the Central Shaft at the end of the Quarter. The shaft is now hoisting waste material arising from the final development to connect the shaft to the production areas.

Management is confident the commissioning of Central shaft means will see the group achieve production guidance for 2021 of between 61,000 to 67,000 ounces and 80,000 ounces per annum from 2022 onwards.

Said Curtis: “Caledonia’s immediate strategic focus is to convert the commissioning of Central Shaft project into higher production, lower costs and increased cash generation.

“We will also finalise the exploration activities at Glen Hume and Connemara North while evaluating further investment opportunities in the gold and precious metals sector in Zimbabwe and in other jurisdictions, with our long-term vision of becoming a mid-tier, multi-asset gold producer.”-herald.cl.zw