eBusiness Weekly
Business Writer
Caledonia Corporation says its new central shaft at Blanket Mine, will result in a 37 percent increase in production by 2022 while at the same time extending mine life to 2034.
The miner is currently producing 58 000 ounces and is banking on the central shaft, which was put up in January this year to help increase production to 80 000 ounces by 2022.
In a corporate presentation released by the miner this week, CFO, Mark Learmonth, said 2021 might see production grow to between 61 000 and 67 000 ounces.
“Whether we achieve the bottom or the top of that range will depend on the timing of the commissioning of the central shaft,” he said.
Caledonia has so far invested US$63 million, fully funded from internal cash flows, into the development of the new mine known as central shaft.
The central shaft, which will secure mine life to 2034, is expected to result in improved efficiencies, which will in turn reduce the all in costs.
Learmonth said the plan for the miner is to create real returns for shareholders through cash distributions.
Caledonia has an aggressive dividend
paying policy, which saw it increasing its dividend pay outs in the last four quarters of the year.
The miner has been paying dividends since 2012 and is currently on an annualised yield of 3,2 percent.
Since October 2019, dividend per share has increased by 60 percent from approximately US$0,06 to US$0,11.
The miner is highly cash generative and was sitting on US$21,5 million in cash as at September 30, 2020.
Learmonth said the company is banking on near term low risk growth of approximately 37 percent.
Over the last couple of years Caledonia has been injecting significant amounts of cash generated back into the business, but once the central shaft is finished capex will be reduced, freeing up more cash for distribution to shareholders.
Caledonia counts South Africa’s Allan Grey as one of its major shareholders with a 16 percent shareholding. Fremiro Investments Private Limited, a Zimbabwean firm, owns 6 percent of the miner.
Commenting on energy supplies, Learmonth said by end of 2021 its solar plant which cost US$12 million to put up will provide approximately 27 percent of Blanket Mine’s daily electricity demand.
He spoke of new opportunities in Zimbabwe, calling the country the “last frontier” for gold resources.
Exploration drilling at Glen Hume has already commenced and the company expect to release results on an ongoing basis.
There is potential for another gold mine at Connemara North where the miner has acquired rights to explore and to subsequently acquire the mining claims over the property.
