(MENAFN- ProactiveInvestors - UK) Caledonia Mining Corporation PLC (LON:CMCL TSX:CAL) posted significantly better second quarter results as a major upgrade to its Blanket gold mine in Zimbabwe began to take effect.
Underlying earnings rose 300% to 6.1c and more than doubled over the half year, with a higher gold price, greater production and lower costs also boosting the numbers. Gold is currently trading close to a three-year high. Production, meanwhile, rose 15.6% as more tonnes were mined and milled and the average grade rose to 3.47 grammes per tonne from 3.25g/t a year ago. Steve Curtis, Caledonia's chief executive, said he expects average grades to rise to 4 g/t as production from deeper ore bodies increases. All-In sustaining costs for the quarter fell by 9.5% to $936 per ounce and should fall further as production increases. Caledonia's plan for 49% -owned Blanket is to double annual production to 80,000 ounces by 2021. The first half of this year saw production of 23,330 oz. The miner has already announced a 22% dividend hike to 1.375c per quarter and said today the new payment was covered four times by earnings and 10 times by cashflow. Cash on the books at the end of the half was US$10.6mln with no debt. Curtis added that completion of the Central Shaft remains on track for mid-2018 with the shaft depth currently standing at 170m. 'The completed shaft down to a level of 1,080m will establish Blanket as a large, low cost operation with excellent prospects to extend the existing mine life.'
Following the news shares added over 8% to stand at 97p each.
Broker Shore Capital highlighted particularly that operational cash generation improved dramatically, to US$7.2mln against US$1.9mln in the second quarter, which in turn meant the cash balance rose to US$10.6mln, with the group remaining debt-free.
Blanket was able to resume dividend payments post-period end, in early August 2016.
The improved cash generation and resumption of dividends should further bolster the balance sheet, which remains strong, it said.
Legal Disclaimer: MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.