Caledonia Mining profits grow after record year at Blanket

Caledonia Mining reported gross revenues of $100m (£72.1m) in its full-year results on Monday, improving from $75.8m year-on-year.

The AIM-traded firm said its gross profit for 2020 was up to $46.6m from $31.1m, at a gross margin of 47%, rising from 41% in the prior year.

EBITDA totalled $43.3m for the year, up from $29.9m, at a margin of 43%, compared to 39% in 2019.

Its on-mine cost came in at $744 per ounce, rising from $651 per ounce a year earlier, while its normalised all-in sustaining cost, excluding the effect of the export credit incentive and its successor scheme, was $946 per ounce, up from $820 per ounce year-on-year.

Adjusted earnings per share improved to 204 US cents, from 145 cents, while the company’s net cash from operating activities was $30.9m, compared to $18.1m a year earlier.

Net cash and cash equivalents totalled $19.1m as at 31 December, rising from $8.9m, with the company’s cash position improving on the back of its $13m gross equity issue in the third quarter.

The board said total dividends for the year came in at 33.5 cents per share, a 21.8% increase from 2019.

On the operational front, the company produced 57,899 ounces of gold in the year, up from 55,182 ounces in 2019, with record annual production recorded at Blanket Mine.

Gold recoveries improved following the upgrade to its oxygen plant in 2020, with recovery coming in at 93.8% for the year, up from 93.4%.

The equipping of Central Shaft was completed in November, with commissioning expected in the first quarter of 2021, while an “increased awareness” in safety procedures had led to a 60% reduction in total accidents from 2017 to 2020.

Caledonia said it had entered into option agreements on two properties, being Glen Hume and Connemara North, in the Gweru mining district in the Zimbabwe Midlands for the right to explore each property for periods of 15 and 18 months, respectively.

“Operationally, the last 12 months have been transformational for the business,” said chief executive officer Steve Curtis.

“Central Shaft has been a five-year project costing approximately $67m, all funded through internal cash flow and I am delighted that equipping was completed in the period and commissioning is on track to be completed in the first quarter of 2021.

“Despite our operational success, 2020 has been a complicated year globally with the Covid-19 pandemic wreaking havoc throughout the world and disrupting many people's lives and livelihoods.”

Curtis noted that the Blanket Mine had continued to operate throughout the period, with “strict restrictions” of movement put in place in and out of the mine and the local community.

“Caledonia's immediate strategic focus is to complete the Central Shaft project, which is expected to increase production, reduce operating costs and increase the flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket's long-term future.

“We will also conduct exploration activities at Glen Hume and Connemara North while evaluating further investment opportunities in the gold and precious metals sector in Zimbabwe and in other jurisdictions, with our long-term vision of becoming a mid-tier, multi-asset gold producer.”

At 0833 GMT, shares in Caledonia Mining Corporation were up 4.49% at 1,180.75p.