Caledonia Mining has lowered its gold production guidance for 2017 from 60koz to 52-57koz. The company cites lack of capacity underground to transport material while capital development to achieve the long-term goal of 80koz of gold production is underway. Management has concluded that, in the long term interests of the business, the 2017 production tonnage target should be reduced so that the required development can be done, thereby safeguarding future production.
The revised production guidance reflects an increase of between 4% and 14% on the 50.4 koz of gold produced in 2016. The revised earnings guidance of US24c to US31c per share compares to adjusted earnings per share of US21.4c, which was achieved in 2016.
The Central shaft has now reached the 750 level and is on schedule to be completed by Q4 2018.
Caledonia does not expect that the revised production guidance will have any effect on its dividend, which is currently US1.375c per quarter (US5.5c/y), nor Blanket’s ability to generate sufficient funds to finance the completion of the Central shaft project.
About Caledonia Mining
Caledonia is a gold mining company with an operating mine in the southern region of Zimbabwe. The company’s shares trade on the Toronto Stock Exchange (TSX) with the symbol CAL and on London’s AIM with the symbol CMCL.
The company is registered in Jersey, having moved its domicile from Canada in Q1 16 to simplify the group structure and to reduce travel and compliance costs. One benefit for non-Canadian shareholders is that they will no longer have to pay withholding tax on dividends.
The company acquired the Blanket mine from Kinross Gold in 2006. In 2012, it sold a 51% interest in the mine to various local parties to comply with indigenisation law (designed to increase the participation of Black Zimbabweans in the local economy). Caledonia is able to participate in Blanket mine’s cash flow at a higher level of 77%, because of the way the indigenisation deal was facilitated.
Caledonia lowers Blanket production guidance for 2017: CMCL