Caledonia Mining predicts 22pc increase in revenue
Victoria Falls Stock Exchange (VFEX) listed mining firm, Caledonia Mining Corporation Plc, is expected to register a 22 percent jump in revenue for the financial year 2022, according to analysts’ projections.
Production efficiencies are seen helping the resources group increase gold output at the miner’s local unit, Blanket Mine, in line with the projected range of 73 000 to 80 000 ounces.
Already, Blanket Mine recorded a 20 percent increase to 20 091 ounces during the second quarter, which was a new production record for any quarter. For the first half of the current financial year, 38 605 ounces of gold were produced representing a 29 percent increase on the same period last year, setting the resources group to meet its annual production targets.
Although the outlook for gold prices is seen slowing on the back of interest rate hikes in the United States, the prices have generally remained firm which should work to gold producers, according to experts.
However, in the medium term, gold prices have been forecasted to a steady state of US$1,650 per ounce by the World Bank and brokerage firm IH Securities says this will have a dilutive effect on the topline growth from FY24 if realized.
“Revenue in our view will come in at $149,15 million to FY22, representing a 22,9 percent increase relative to the previous year end. We project EBITDA for FY22 at US$71,78 million with an EBITDA margin expected to firm from to 42,1 percent to 48,2 percent year on year,” said IH Securities in their earnings update for the resources group.
Caledonia listed on the VFEX in December 2021 leaving it eligible to benefit from the incremental production initiative backdated to 1 July 2021.
“Baseline production target for the mine has been set to 57 000 ounces annually with anything produced beyond that exempt from export surrender requirements,” said IH Securities.
With increased production, IH Securities sees an uptick in variable costs segment as the need for consumables increases but notably Caledonia’s 12 megawatts solar plant is due for commissioning and will be expected to offset up to 27 percent of the electricity bill.
Said IH: “On the back of increasing production, we expect the cost base to be spread over higher output and have therefore forecasted on-mine costs and All-in-sustaining costs to come down to US$716 per ounce (-3,56 percent year on year) and US$949 per ounce (-4,06 percent year on year) respectively.”
In July, Caledonia announced that it had signed an agreement to purchase Bilboes Gold Limited, which is the holding company for a large, high-grade, open-pittable gold resource.
Subject to satisfaction of the conditions to completion, the total consideration for the acquisition will be 5,123,044 Caledonia shares, representing approximately 28,5 percent of Caledonia’s fully diluted equity, and a 1 percent net smelter royalty (“NSR”) on the project’s revenues.
Production is not expected to start in the near term as Caledonia undertakes further evaluations. All things held equal, Bilboes is expected to come online in 2025 with consolidated group production forecasted at 243,000 ounces by 2026.-chroncie.c.zw
