Caledonia dividend up 9pc as gold price surges
AIM-QUOTED miner Caledonia Mining Corporation says it is increasing its dividend by 9,1 percent to 6,875 cents per share on the back of improved financial performance, buoyed by higher production and better gold prices.
Caledonia chief executive Mr Steve Curtis said as the firm completed a five-year investment programme at its Blanket Mine in Gwanda, the rate of capital expenditure was going to be reduced to give flexibility of cash reserves on an increased dividend.
Blanket Mine expects to top an 80 000 ounce production target from the 50 000 ounces to 53 000 ounces of gold as per its 2019 production guidance driven by intensive capital investments.
Its latest investment is a US$44 million central shaft to be commissioned in fourth quarter of 2020.
The central shaft — at a depth of 1 208m at shaft bottom — is the largest investment in a series of investments at the Zimbabwe-based mine in a bid to increase production, improve operating efficiency and extend the life of the 113-year-old mine even further.
“We expect the central shaft to be commissioned in the fourth quarter of 2020; thereafter we look forward to further increases in operating cash flow as production increases to the target rate of 80 000 ounces of gold per annum from 2022, as capital expenditure falls further and we begin to realise the operational efficiencies arising from the new shaft,” Mr Curtis revealed in a quarterly update released on Friday.
The Caledonia boss pointed out that the board was going to continue reviewing future dividends as appropriate, as it seeks to strike a balance between shareholder returns, the pursuit of new growth opportunities and prudent financial management.
The miner has been spending an average of USD$21 million per annum investing heavily in capital goods for efficiency.
Meanwhile, Caledonia — which experienced production disruptions in the second and third quarters — is now in the advanced stages of evaluating a project to install solar photovoltaic generating capacity at Blanket to further reduce dependence on the electricity grid, reduce operating costs and ensure a more environmentally sustainable electricity supply.
“Advanced engineering work is underway and Caledonia is in the process of applying for the relevant regulatory approvals and will shortly embark on a tender process from interested parties to build and operate the project.
“Caledonia expects to fund the project itself but the tender process will also invite proposals from potential funders who may be able to offer a more cost effective funding structure,” Mr Curtis advised.
In the future, Caledonia anticipates that Blanket will have a blended electricity supply from grid, solar and back-up diesel generators which will deliver greater levels of operational reliability, lower operating costs and improved environmental sustainability.
Miners are now accessing uninterrupted power supply priced in US dollars at a cost which is slightly lower than the pricing structure prior to the recent monetary devaluation.
This comes as electricity supply authorities have implemented an uninterrupted power supply agreement for the mining industry in an effort to support the sector and electricity supply has stabilised following these changes.