LONDON – Caledonia Mining Corp Wednesday reiterated its intention to hone its focus on the Blanket Mine in Matabeleland South, as it posted a lower pretax profit for its first quarter due to lower gold sales and prices.
Caledonia Mining posted a pretax profit of CAD3.2 million, down from CAD4.4 million a year before, as revenue fell to CAD16.0 million from CAD17.1 million, and it saw higher production costs.
The company attributed the decline in profit to lower sales, a lower realised gold price, and higher Canadian dollar-denominated production costs.
Caledonia Mining produced 9,960 ounces of gold in the quarter to end-March, down from 10,241 ounces in the previous year.
Gold sales were 10,773 ounces, compared to 12,210 ounces a year before, at an average realised gold price of USD1,200 per ounce, down from USD1,288 a year before. This was due to lower prevailing commodity prices, Caledonia said.
Caledonia is looking to narrow its focus on the Blanket Mine, and plans to close and dispose of its non-core operations in Zambia and South Africa, whilst also cutting operating and administrative expenses.
It has put in place a revised investment plan, and the increased investment under the new plan is expected to result in additional production from the Blanket Mine, as well as improving the mine’s long-term operational efficiency, flexibility and sustainability.
The company hopes to continue its dividend policy of six Canadian cents per year paid in equal quarterly instalments in 2015.
It expects to provide guidance for dividend payments in 2016 at or around the time of its second quarter results in August.
“We have sharpened our focus on reducing costs, and we are streamlining our corporate structure by terminating dormant companies and non-core assets,” said chief executive officer Steve Curtis in a statement.
“On-mine cost control remains good and we have initiated measures to reduce the level of general and administrative costs.
As production begins to increase from the first quarter of 2016, I expect that average costs per ounce will start to fall,” Curtis added.
Shares in Caledonia Mining are trading down 1.2% at 41.00 pence Wednesday morning. – Alliance News