BY STAFF REPORTER
CALEDONIA Mining Corporation registered a 4% increase in after tax profits to US$21,42 million in the full year to December 2018 compared to US$20,61 million in 2017, despite a fall in production.
Chief executive officer Steve Curtis said this was mainly due to “an increase in amounts due in respect of gold sales and VAT refunds from the government of Zimbabwe and a reduction in trade and other payables”.
Revenue during the period was down to US$68,4 million from US$69,76 million in the 2017 period on account of a 3% decline in production to 54 511 ounces (1,55 tonnes) from 56 133 ounces (1,59 tonnes).
In a statement accompanying the company’s results, Curtis said production was lower due to an unplanned lower recovered grade as a result of added dilution.
“During the year, we continued to implement the investment plan at Blanket Mine, with the objective of increasing production to 80 000 ounces per annum (2,26 tonnes). Certain operational and economic factors have resulted in less development being achieved than planned, which will result in a slower production ramp-up than originally expected,” he said.
“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.”
Production costs were up 8,7% to US$39,31 million last year compared to the 2017 comparative of US$36,18 million.
“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.”
Caledonia is a Canadian mining firm that operates in Zimbabwe through its 49% legal ownership in the Blanket Mine. However, pursuant to the signing of an agreement announced on November 6, 2018, “Caledonia intends to purchase a further 15% of Blanket from one of Blanket’s indigenous shareholders”.
Earnings per share at 131,5 cents were lower compared to the previous year’s 135,4 cents.