Gold producer, Caledonia Mining Corporation says it has taken some knocks from Zimbabwe’s monetary policy adjustments but expects significant improvements in the operating environment going forward.
The AIM-listed company owns 49% of the Gwanda-based Blanket Gold Mine.
Last month, the Reserve Bank of Zimbabwe moved to liberalize foreign currency trading, simultaneously dumping a largely discredited 1:1 peg between the United States dollar and a fiat local currency.
Said chief executive Steve Curtis on the development:
“The monetary environment in Zimbabwe became more challenging following changes in policy although the general direction of policy development appears to be positive.
“Policy changes disrupted the commercial banking system in October 2018 and February 2019 which adversely affected procurement.
“Delays in procuring critical items meant that capital equipment suffered from a lack of maintenance which increased the frequency of breakdowns.
“We are optimistic that the introduction of a market exchange rate in February 2019 will, in time, allow a return to normal operating conditions.”
Meanwhile, the group’s linchpin subsidiary, the Blanket Gold Mine produced 54,511 ounces of gold in the 12 months to December 2018.
This was down slightly on the 56,133 ounces produced in 2017, as grades were somewhat weaker.
Mine costs rose from US$633 per ounce to US$690 during the period under review.
However, all-in sustaining costs were improved at US$802 per ounce against US$847 in 2017 as the benefits of the now-discontinued Export Credit Incentive kicked in.
Gross profits declined to US$21.5 million from US$26 million in 2017.
Net cash at year end was just over US$11mln, as spending continued on a mine expansion programme designed to take yearly production over the 80,000 ounces mark.
“We made good progress on the Central Shaft, which I expect to be operational in approximately 15 months and we continued our track record of growing the resource base at Blanket.
“Production for the Year was lower than in 2017 primarily due to an unplanned lower recovered grade as a result of added dilution due to the adoption of long-hole stoping in certain areas for safety reasons,” said Curtis.