The strong gold price, which increased by 40% to average $3 434/oz, combined with higher production, resulted in a 52% increase in revenue and a significant uplift in free cash flow for Zimbabwe-focused gold miner Caledonia Mining Corporation for the third quarter, CEO Mark Learmonth says.

Caledonia produced 19 106 oz of gold for the third quarter, while sales from the Blanket mine were 20 355 oz.

A further 437 oz of gold were produced and sold from the Bilboes oxide mine in the quarter.

Revenue was up 52% to $71.4-million year on year, driven by higher gold prices and increased sales.

Gross profit increased to $36.9-million, compared to $19.3-million.

Earnings before interest, taxes, depreciation and amortisation were $33.5-million, a 162% increase from $12.8-million.

Profit after tax was $18.7-million, a 467% increase from $3.3-million.

Consolidated on-mine cost was $1 228/oz sold, and all-in sustaining cost (AISC) $1 937/oz, based on 20 792 oz sold. 

Free cash flow increased to $5.9-million, compared to a negative $2.4-million. 

Total liquidity was $44.3-million, supporting ongoing capital projects.

The Bilboes feasibility study is expected to be released imminently.

Caledonia has approved a dividend of 14c apiece, to be paid on December 5.

OUTLOOK

Gold production guidance range for the full-year to December 31 is maintained at 75 500 oz to 79 500 oz.

AISC guidance of $1 690/oz to $1 790/oz has been revised to $1 850/oz to $1 950/oz, owing to the higher on-mine cost guidance, higher administration costs and the impact of higher royalties because of the higher gold price.

The AISC guidance also includes high sustaining capital expenditure (capex) for the year.

The capex investments aim to modernise operations and improve mining efficiency at Blanket.

While there will be short-term cost pressures, the long-term goal is to reduce costs, improve profitability and operational resilience and extend Blanket’s mine life.

Expenditure will be funded from cash generation and cash reserves with no anticipated impact on the regular quarterly dividend.