Caledonia Mining Corporation remains on track to achieve the annual production target of 80,000 ounces of gold by 2021 at its Zimbabwean subsidiary, Blanket Mine.
During the September quarter, the Blanket operation produced 13,978 ounces, 2.9 per cent below the same quarter of 2017 while production for the nine months to September 30, 2018, was 39,558 ounces, 0.4 per cent down on the corresponding period of 2017.
Adjusted earnings per share for the quarter of 33.1 cents were 17 per cent lower than the comparable quarter, due to a slightly weaker realised gold price and increased production costs but 24.4 per cent higher for the nine months to September 30, 2018, compared to the same period of 2017 due to the increased export credit incentive and a higher average realised gold price for the nine months.
Net cash from operating activities remained robust at $6.8 million although this was lower than the comparable quarter which was an unusually strong quarter. Net cash at the end of the quarter was $5.9 million.
Caledonian's chief executive officer Steve Curtis said: “The third quarter of 2018 was an improvement on the second quarter of the year. We addressed some of the operating challenges which the business experienced in previous quarters; cost control remained good; and Caledonia stabilised its cash position and working capital movements.
“Production was marginally below our expectations and we took the decision to tighten and slightly reduce our 2018 full year production guidance from our original guidance range of 55,000 to 59,000 ounces to a range of 54,000 to 56,000 ounces.
“Grade for the quarter remained below expectations at 3.12g/t as we continued to experience some mining dilution due to the introduction of long-hole stopping in the narrower reef width areas due to safety considerations.
"Corrective measures have been taken to improve the accuracy of drilling which are expected to result in improved mined grades in the remainder of the last quarter of 2018 and thereafter.
"We remain confident that the underlying geological model for Blanket and the grade of the resource remains sound.
"I am pleased that the mine was to some extent able to compensate for lower grades through increased plant throughput, an effort that has contributed substantially to the quarter’s performance. Tonnes milled during the quarter were significantly higher at 151,000 tonnes, 14 per cent higher than the second quarter of 2018 and 11 per cent higher than the comparable quarter.”
Caledonia’s strategic focus is the Central Shaft project which is expected to extend the life of mine by providing access to deeper levels for production and further exploration.
The company believes successful completion of the Central Shaft is in the best interests of all stakeholders because it is expected to result in increased production, reduced operating costs and increased flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket’s long-term future.
Steve Curtis said: “The Central Shaft has now reached a depth of 1,148 metres and continues to progress well. We expect capex to decline as we progress towards the commissioning of the Central Shaft in 2020. The Central Shaft project is the key enabler of longer-term value for our shareholders as we progress towards our production and cost targets by 2021.”