Caledonia remains strong despite challenges

LISTED gold mining entity, Caledonia Mining Corporation Plc, says increased operating costs, and non-operating costs encountered in the final quarter of 2023, will have a bearing on the financials as it expects to announce an adjusted profit before tax for the year ended December 31, 2023 materially below market expectations.

On December 31, 2023, the company had cash on hand of US$6,7 million and overdrafts and term loans of US$17,7 million.

The entity expects to announce operating and financial results for the quarter ended December 31, 2023 on or before March 28, 2024.
In a trading update for the year ended December 31, 2023, the firm notes that Blanket Mine continued to perform well since the end of the quarter ended September 30, 2023, with full-year production for 2023 of 75,416 ounces.

However, the entity said it encountered higher financing costs, including hedging, interest, and foreign exchange losses and a one-off impairment charge in relation to a VAT refund claim at the Blanket Mine solar project.

The challenges will have a bearing on its financials.

“However, increased operating costs for 2023 and several significant one-off, non-operating costs in the final quarter of the year, have resulted in reduced profit for the full year. The increase in operating costs comprises higher than expected overtime payments and power costs at Blanket Mine.

“In relation to non-operating costs, general and administrative costs rose with global inflation and these also included higher than expected staff termination costs. The company also encountered higher financing costs, including hedging, interest, and foreign exchange losses and a one-off impairment charge in relation to a VAT refund claim at the Blanket Mine solar project,” reads part of the update.

“As a result, the mining entity now expects to report an adjusted profit before tax for the year ended December 31, 2023 materially below market expectations.”

Chief Executive Officer, Mr Mark Learmonth, said despite the challenges faced, the company remains strong.

“It is regrettable that, at a group level, we have been adversely affected by a series of higher-than-expected costs in the second half of 2023, which have had a negative effect on the full year profitability.

“The performance of Blanket Mine remains strong and notwithstanding some unforeseen overtime and power cost issues in the second half, has met guidance and produced a robust performance for the second half of 2023.”

In 2023, the firm produced 75,416 gold ounces and has set a group capital expenditure of US$34,4 million this year, as the entity is focused on unlocking value and delivering a multi-asset growth pipeline in Zimbabwe.

A year before, the firm produced a record 80 775 ounces against a target of 80 000 ounces.

Mr Learmonth said a number of the other cost items are not anticipated to be recurring, but others have arisen from decisions to invest in the business, most notably around personnel and advancing the Bilboes sulphide project.

“I am confident that many of these will not recur in 2024, which has started positively and I look forward to the future with optimism, as we pursue our goal of becoming a multi-asset production company,” he said.

Costs associated with Bilboes are now reduced to care and maintenance only and the project was cash neutral in the fourth quarter of 2023, the firm said.

Mr Mark Learmonth

Production and costs at Blanket in 2024 to-date are also within expectations of full year guidance and the company is introducing measures aimed at reducing electricity costs over the medium term.

The mining house has it on record that it is eyeing consolidating its strategy of becoming a multi-asset gold producer by acquiring several lucrative mining assets.

Over the years, the firm has been creating a solid base at becoming a multi-asset gold producer, by making significant investments in operations.

For instance, in 2022, the resource group expanded its footprint, by purchasing Motapa Mining Company UK Limited and signed a US$53,2 million agreement to buy Bilboes Gold Limited as part of its expansion drive.

Bilboes Gold is a gold mining entity that owns three major gold mines in Matabeleland North and was once ranked among the country’s 10 biggest gold producers.

However, it is presently under care and maintenance with effect from October.-chroncleoc.zw