Q3 2014 Results

RNS Number : 8674W
Caledonia Mining Corporation
13 November 2014
 



 

 

 

 

 

 

Caledonia Mining Corporation

(TSX: CAL, OTCQX: CALVF, AIM: CMCL)

Results for the Third Quarter of 2014

 

November 13, 2014: Caledonia Mining Corporation ("Caledonia" or the "Company") announces its operating and financial results for the third quarter ("Q3" or the "Quarter") and first nine months ("Nine Months") of 2014.  All results are reported in Canadian dollars unless otherwise indicated.  Following the implementation of indigenisation in September 2012, Caledonia owns 49% of the Blanket Mine in Zimbabwe.  Caledonia continues to consolidate Blanket and the operational and financial information set out below is on a 100% basis unless indicated otherwise.

 

Operating and Financial Review


Quarter 3

Nine months to September 30


2013

2014

2013

2014

Gold produced (oz)

12,042

9,890

34,102

31,354

On Mine cash cost (US$/oz)

558

698

599

656

All-in sustaining cost ("AISC") (US$/oz)1

867

1,021

972

938

Gold Sales (oz)

12,042

9,890

35,594

33,323

Average realised gold price (US$/oz)1

1,330

1,256

1,435

1,266

Gross profit ($'m)2

7.7

4.3

25.4

16.0

Net profit attributable to  shareholders ($'m)

3.7

1.1

11.4

5.4

Adjusted basic earnings per share1 (cents)

7.2

1.0

25.1

8.8

Cash and cash equivalents ($'m)

23.9

26.9

23.9

26.9

Cash from operating activities ($'m)

5.3

3.6

9.9

11.5

Payments to the community and Zimbabwe government ($'m)

3.6

3.1

15.9

9.7

 

[1]        Measures such as “on-mine cash cost per ounce” “all-in sustaining cost per ounce” “average realised gold

            price” and “adjusted earnings per share” are non-IFRS measures and are discussed in Section 10 of the MD&A.

          [2]        Gross profit is after deducting royalties, production costs and depreciation but before administrative expenses.

 

 

 

As previously advised, gold production at the Blanket Mine in the Quarter and Nine Months to September 30, 2014 was below expectations due to the lower than anticipated tonnage and head grade.  Logistical constraints on 22 Level (750m below surface) restrict Blanket's ability to increase mined throughput to counterbalance the lower grade without restricting the development that is necessary to access resources below 750m.  The revised investment plan that was announced on November 3, 2014, and which is summarised below, is expected to address this issue.

Blanket remains on track to achieve its target production of approximately 40,000 ounces of gold for 2014. 

Lower production had an adverse effect on Caledonia's financial performance due to the high fixed cost component of Blanket's on-mine costs which means that at lower production levels, the fixed costs are spread over fewer production ounces with a resultant increase in the average unit cost of production.  On-mine costs at Blanket remain low and are better than was expected, notwithstanding the lower head grade, primarily due to the improved metallurgical recovery and reduced cyanide consumption as a result of the re-introduction of oxygen sparging into the CIL circuit.

Caledonia's financial performance in Q3 was also adversely affected by the further decline in the gold price during this period and changes to the Zimbabwean taxation regime.  The average achieved price per ounce of gold in the Quarter was US$1,256 compared to US$1,330 in Q3 of 2013.  A revision to Zimbabwean tax regulations means that the gold royalty payable to the Zimbabwean government is no longer allowable for the purposes of calculating Zimbabwean income tax.  However, from October 1 the effect of this change has been neutralized to an extent by a reduction in the gold royalty rate from 7% to 5%.  

Notwithstanding Blanket's lower than anticipated production, Caledonia remained cash generative in the Quarter.  Cash from operating activities in the Quarter was $3.6 million and Caledonia's cash and cash equivalents increased from C$25.8 million to C$26.9 million at the end of the Quarter. 

 

Revised Investment Plan and Future Production Guidance

On November 3, 2014, Caledonia announced its revised investment plan ("Revised Plan") and production projections for the Blanket Mine.

Caledonia's Board and Management have completed a review of alternative expansion and diversification plans for Caledonia.  Both the Board and Management have also addressed the revised production projections for the Blanket Mine and the possible benefits of diversifying Caledonia's production base.

Caledonia has concluded that the best returns on investment remain at the Blanket Mine in Zimbabwe, which continues to be cash generative in the current adverse market conditions and also offers significant investment returns that exceed alternative investment opportunities.

The objectives of the Revised Plan are to improve the underground infrastructure and logistics, which will allow an efficient and sustainable production build-up.  The infrastructure improvements will include the development of a "Tramming Loop" on 22 Level (750m below shaft collar elevation) and the sinking of a new 6-meter diameter Central Shaft from surface to 1,080m. 

The increased investment pursuant to the Revised Plan is expected to give rise to production from inferred resources amounting to approximately 70-75,000 ounces in 2021, this being in addition to projected production in 2021 from proven and probable mineral reserves of approximately 6,000 ounces.  The Revised Plan is also expected to improve Blanket's long term operational efficiency, flexibility and sustainability. 

A preliminary economic assessment (the "PEA") has been prepared in respect of the inferred resources which is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be classified as mineral reserves.  There is no certainty that the PEA will be realised.  The PEA and a revised supporting NI43-101 Technical Report will be posted on SEDAR before December 17, 2014.

 

 

Caledonia's Dividend Policy

On November 25, 2013 Caledonia announced its revised dividend policy in terms of which it intends to pay a dividend of 6 Canadian cents per share in 2014, split into 4 equal quarterly payments of 1.5 Canadian cents per share.  The first quarterly dividend was paid on January 31, 2014 and subsequent quarterly dividends were paid at the end of April, July and October 2014.  It is currently envisaged that the existing dividend policy of 6 cents per annum, paid in equal quarterly instalments, will be maintained in 2015.  Thereafter Caledonia will review its dividend policy for 2016, in terms of its operational performance and the prevailing market conditions.  Caledonia will continue to maintain its strong financial position so that it can implement its stated growth strategy without the need to raise third party finance. 

 

Commenting on these results, Stefan Hayden, Caledonia's President and Chief Executive Officer said:

"The revised Investment Plan for Blanket Mine, which was announced on November 3, 2014, addresses the logistical constraints on 22 Level which restrict the ability to increase production at the same time as increasing the necessary amount of development work. 

"The new Central Shaft, which is expected to be completed in mid-2017, will allow Blanket to increase production in the medium term and will further enhance Blanket's operational efficiency.  In the longer term, the Central Shaft will allow Blanket to undertake further exploration and development at deeper levels, which, if successful, will allow Blanket to continue operations into the middle of the 21st Century."  

The full Report & Accounts, including the Management Discussion and Analysis for the quarter ended September 30, 2014 are available from the Company's website www.caledoniamining.com and from SEDAR.

 

Caledonia Mining Corporation

Mark Learmonth

Tel: +27 11 447 2499

marklearmonth@caledoniamining.com

Numis

JohnPrior/Paul Gillam/ James Black

Tel: +44 20 7260 1000



Blytheweigh

Tim Blythe/Halimah Hussain/Camilla Horsfall/George Yeomans

Tel: +44 20 7138 3204

WH Ireland

Adrian Hadden/James Bavister

Tel: +44 20 7220 1751



 

 


 



 

 

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (unaudited)

(In thousands of Canadian dollars except per share amounts)


For the 3 months ended September 30

For the 9 months ended September 30



2013

2014

2013

2014



$

$

$

$

Revenue


16,591

13,492

52,999

46,110

Royalty


(1,165)

(945)

(3,651)

(3,230)

Production costs


(6,872)

(7,174)

(21,493)

(23,730)

Depreciation


(835)

(1,029)

(2,458)

(3,112)

Gross profit


7,719

4,344

25,397

16,038

Administrative expenses


(1,153)

(1,754)

(5,853)

(5,361)

Foreign exchange gain.


-

389

-

517

Gain on sale of property, plant and equipment


-

52


57

Results from operating activities


6,566

3,031

19,544

11,251

Net finance expense


(12)

(16)

(62)

(86)

Profit before income tax


6,554

3,015

19,482

11,165

Income tax expense


(1,965)

(1,747)

(5,618)

(4,284)

Net profit for the period


4,589

1,268

13,864

6,881

(Loss)/profit on foreign currency translation


(331)

2,562

2,216

2,408

Total comprehensive income for the period


4,258

3,830

16,080

9,289







Profit attributable to:






Owners of the Company


3,733

1,112

11,381

5,377

Non-controlling interests


856

156

2,483

1,504



4,589

1,268

13,864

6,881

Total comprehensive income attributable to:






Owners of the Company


3,052

3,637

13,619

7,769

Non-controlling interests


1,206

193

2,461

1,520



4,258

3,830

16,080

9,289

Earnings per share (cents)






Basic


7.2

2.2

21.9

10.5

Diluted


7.2

2.2

21.9

10.5







Adjusted earnings per share (cents)(i)






Basic


7.2

1.0

25.1

8.8

Diluted


7.2

1.0

25.1

8.8

 

(i)      Adjusted earnings per share ("EPS") is a non-IFRS measure which aims to reflect Caledonia's ordinary trading performance.  Refer to Section 10 of the Management Discussion and Analysis for a discussion of non-IFRS measures

 

 

 

 

 

 

 

Consolidated Statement of Cash Flows (unaudited)

(In thousands of Canadian dollars)


For 3 months ended September 30

For 9 months ended September 30


2013

2014

2013

2014


$

$

$

$

Cash flows from operating activities





Cash flows generated from continuing operations

7,067

5,057

18,138

15,453

Advance dividend paid

-

-

(1,987)


Tax paid

(1,785)

(1,410)

(6,198)

(3,851)

Interest paid

(12)

(16)

(62)

(86)

Net cash from operating activities

5,270

3,631

9,891

11,516






Cash flows from investing activities





Property, plant and equipment additions

(3,362)

(1,379)

(8,470)

(4,961)

Proceeds from sale of property, plant and equipment

-

72

-

72

Net cash used in investing activities

(3,362)

(1,307)

(8,470)

(4,889)






Cash flows from financing activities





Dividends paid

(488)

(1,312)

(5,938)

(3,199)

Proceeds from shares issued

-

-

470

-

Net cash from (used in) financing activities

(488)

(1,312)

(5,468)

(3,199)






Net increase/(decrease) in cash and cash equivalents

1,420

1,012

(4,047)

3,428

Cash and cash equivalents at beginning of period

22,475

25,842

27,942

23,426

Cash and cash equivalents at end of period

23,895

26,854

23,895

26,854

 

Condensed Consolidated statements of Financial Position (unaudited)

(In thousands of Canadian dollars)   

As at

September 30,



2014



$

Total non-current assets


37,374

Inventories


6,877

Prepayments


261

Trade and other receivables


3,063

Cash and cash equivalents


27,852

Total current assets


38,053

Total assets


75,427




Total non-current liabilities


10,458

Trade and other payables


4,052

Bank overdraft


998

Income taxes payable


1,855

Total liabilities


17,366

Capital and reserves


58,064

Total equity and liabilities


75,427

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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