The production at Blanket Mine and favourable prices on the world markets saw Caledonia’s gross profits soaring by more than 300%.Gold production in the quarter was 141% higher than the 3 408 ounces of gold produced in the second quarter of 2010.Higher gold prices underpinned the performance, with the average price per ounce sold during the quarter coming in at US$1 512 compared to US$1 192 in the second quarter of last year.
Gross profit before depreciation, amortisation and administrative expenses totalled US$6,3 million, over 300% higher than the $1,53 million achieved in the second quarter of 2010.
Net profit before tax total-led US$3,89 million, up from US$418 000 achieved in the year comparable.
Average gold recovery increased to 92,9% from 92,2% in the first quarter reflecting investment in the milling and carbon-in-leach circuits.It said operating costs at Blanket during the quarter were US$585 per ounce of gold produced, compared to US$648 per ounce in the first quarter of 2011 and US$816 per ounce in the second quarter of 2010.
With success has come the inevitable tax bill, with Blanket making payments in the quarter totalling US$3,31 million and more than double the payment in the first quarter.
As well as direct and indirect taxes, the bill includes royalties, licence fees and other payments to the government of Zimbabwe.At the end of June, it had gross cash and cash equivalents of just over US$5,07 million, compared to US$2,25 million at the end of the first quarter in March.
Stefan Hayden, president and chief executive of Caledonia hailed the “very strong” second quarter and first half performance by the company.He said: “The further increase in production coupled with the strength in the gold price and a continued reduction in Blanket’s operating costs has resulted in a substantial improvement in Caledonia’s profitability and cash generation.”
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Hayden told investors the company had made significant progress in addressing the remaining production constraints at Blanket, which, once resolved, would enable it to reach the targeted 10 000 ounces per quarter.
Recent improvements at the mine already led to a “substantial” uplift in the efficiency of the underground operations and reduced ore handling costs, he said.
Caledonia is an African-focused mining and exploration company with an operating gold mine in Zimbabwe, two platinum-nickel exploration projects in South Africa and a cobalt-copper exploration project in Zambia, among its exploration portfolio in South Africa, Zimbabwe and Zambia.
