Caledonia Mine reduces production targets

AIM-LISTED Caledonia Mining Corporation has revised downwards production targets at its Blanket Mine in Matabeleland South for this year from 60 000 ounces of gold to between 52 000oz and 57 000oz.

The mining group said the reduction in gold output was despite the mining improvements at the Gwanda-based mine.

“Caledonia has reduced production guidance for 2017 from approximately 60 000oz of gold to a range of between 52 000oz and 57 000oz of gold. As a result of the reduced production guidance, earnings guidance for 2017 is also reduced from approximately 34 cents to between 24 and 31 cents per share, assuming a gold price of $1 275 per ounce for the remainder of 2017,” said Caledonia.

The revised production guidance reflects an increase of between four percent and 14 percent on the 50 351oz of gold produced last year.

The revised earnings guidance of 24 to 31 cents per share, the mining concern said, compares to adjusted earnings per share of 21,4 cents which was achieved in 2016.

Caledonia also said revised production targets have no effect on Blanket’s longer term production guidance of an estimated 80 000oz by 2021 as well as the mine’s ability to generate sufficient funds to finance the completion of the Central Shaft project.

“Notwithstanding the improvements in underground tramming capacity that were completed in June 2016 and the two extra silos and the extra loop around four shafts, which have been operational since the end of first quarter of 2017, Blanket has not been able to transport the volume of material that is necessary to achieve the target of 60 000oz of gold in 2017 whilst maintaining the rate of capital development that is necessary to achieve future production goals of 80 000oz per year by 2021,” it said.

The group concluded that this year’s production should be reduced so that the required development could be done thereby safeguarding future production.