Mr. Stefan Hayden reports
CALEDONIA MINING REPORTS SECOND QUARTER 2012 OPERATING AND FINANCIAL RESULTS AND NOTIFICATION OF MANAGEMENT CONFERENCE CALL
Caledonia Mining Corp. has released its operating and financial results for the second quarter of 2012.
- Gold produced at the Blanket mine in Zimbabwe in the second quarter was 11,560 ounces,
26 per cent higher than the 9,164 ounces produced in the quarter ended March 31,
2012, and 41 per cent higher than the 8,226 ounces
produced in second quarter of 2011.
- The increase in gold production in the second quarter was due to the completion of
scheduled maintenance on the winding portion of both compartments of the No.
4 shaft which was completed in early May and progressively allowed an
increase in the daily available hoisting time.
- Average gold recovery during the quarter increased to 93.9 per cent, compared with
93.2 per cent in the preceding quarter.
- Blanket's cash operating costs in the quarter decreased to $547 (U.S.) per
ounce of gold produced from $648 (U.S.) in the preceding quarter and $585
(U.S.) in the comparable quarter. The decrease in cash costs was due to the
higher gold production during the quarter and the non-recurrence of
certain costs which temporarily increased the average cost per ounce in
the preceding quarter.
- Gold production in July, 2012, was 4,708 ounces.
Gold sales during the quarter were 11,560 ounces at an average sales
price of $1,599 (U.S.) per ounce, compared with 10,368 ounces at an average
sales price of $1,688 (U.S.) in the preceding quarter and 8,226 ounces at an
average sales price of $1,512 (U.S.) in the comparable quarter.
- Gross profit for the quarter (for instance, after depreciation and amortization
but before administrative expenses) was $10,067,000, compared with
$8,996,000 in the preceding quarter and $5.59-million in the comparable
Net profit after tax for the quarter was $5,497,000, compared with
$7,111,000 in the preceding quarter and $2,874,000 in the comparable
quarter. Net profit in the quarter was reduced by the payment of a $1-million (U.S.) donation to the Gwanda Community Share Ownership Trust in terms
of the indigenization agreements signed by Blanket mine, and by the
increase in second quarter tax payments to the Zimbabwean Revenue
- Basic earnings per share for the quarter were 1.1 cents per share,
compared with 1.4 cents in the preceding quarter and 0.6 cent in the
comparable quarter. Basic earnings per share for the first half of the
year were 2.5 cents, compared with 0.9 cent in the six months to June 30,
- At June 30, 2012, the corporation had cash and cash equivalents of
$18,323,000, compared with $16,288,000 at March 31, 2012, and $2,612,000 at
June 30, 2011.
Cash flow from operations in the six months to June 30, 2012, before
capital investment was $11,195,000, compared with $7,346,000 in the six
months to June 30, 2011.
- During the quarter Blanket made payments in respect of direct and
indirect taxes, royalties, licence fees, levies, and other payments to
the government of Zimbabwe totalling $7,893,000 (U.S.), compared with
$3,282,000 (U.S.) in the preceding quarter and $3,307,000 (U.S.) in the comparable
quarter. Payments in the quarter include a donation of $1-million (U.S.) to
the Gwanda Community Share Ownership Trust and a payment of $1.8-million (U.S.) which was made to the National Indigenisation Economic
Empowerment Fund (NIEEF) in anticipation of an advance dividend
arrangement against its right to receive dividends declared by Blanket
on its proposed shareholding in Blanket. Both the community donation
and the payment to NIEEF were made in terms of the implementation of
indigenization at Blanket mine.
Nama base metals project, Zambia
A news release issued on Aug. 9, 2012, sets out a summary of the drilling program that has been completed which confirms the existence of the mineralized zone that was identified in 2011 and describes the further drilling work which has already commenced.
Caledonia and Blanket have made considerable progress in implementing the memorandum of understanding (MoU) which was signed with the government of Zimbabwe in February, 2012, pursuant to which indigenous Zimbabweans will acquire an effective 51-per-cent ownership of the Blanket mine for a paid transactional value of $30.09-million (U.S.). The various transaction documents have been signed and Blanket has now received its certificate of compliance from the government of Zimbabwe. Completion of the agreements is subject to a pending condition precedent being the approval of the Reserve Bank of Zimbabwe for the transactions contemplated in the MoU, underlying agreements and related transactions to give effect to the indigenization program.
Commenting on Caledonia's performance, Stefan Hayden, president and chief executive officer, said: "The second quarter of 2012 showed a substantial improvement in gold production at the Blanket mine in Zimbabwe. Gold production in the quarter was 11,560 ounces -- 26 per cent higher than the preceding quarter and 41 per cent higher than the second quarter of 2011. Increased gold production, further improvements in gold recoveries and continued close attention to costs contributed to a reduction in average operating costs from $648 (U.S.) per ounce of gold produced in the preceding quarter to $547 (U.S.) per ounce of gold produced. Higher production and lower costs contributed to the increase in gross profits. Gross profit for the quarter was $10,067,000 compared to $8,996,000 in the preceding quarter, notwithstanding a 5-per-cent fall in the average realized price per ounce of gold sold.
"The strong operating performance is a testament to the hard work of the management and employees at Blanket and shows the benefits of Caledonia's recent investments in the Blanket mine.
"Caledonia and Blanket have made good progress on implementing indigenization at Blanket mine. All of the transaction documents have been signed; we await only the final approval from the Reserve Bank of Zimbabwe so that all of the transactions can become unconditional. Once indigenization has been fully implemented, Blanket, as a profitable and cash-generative gold producer, will be well positioned to take advantage of opportunities that exist for further growth.
"Work at the Nama base metals project in Zambia has continued and our ongoing drilling program has identified a substantial new copper-bearing mineralized zone. Further work has already commenced to identify the scale of this body. Caledonia has sufficient cash resources on hand to continue this work as quickly as possible."
Caledonia management will host a conference call starting at 10 a.m. (Eastern Standard Time), 3 p.m. (Greenwich Mean Time plus one hour) on Aug. 15, 2012. Please call in 10 minutes beforehand and quote Caledonia as the conference call password.
Canadian toll-free number: 1-800-608-0547
U.S. toll-free number: 1-866-966-5335
United Kingdom toll-free number: 44-0-808-109-0700
International access number: 44-0-20-3003-2666
Further information regarding Caledonia's exploration activities and operations along with its latest financials and management discussion and analysis may be found at its website.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In thousands of dollars except per share amounts)
For the three months For the six months
ended June 30, ended June 30,
2012 2011 2012 2011
Revenue $18,612 $11,990 $36,115 $23,216
Royalty (loss) (1,303) (593) (2,530) (1,048)
Production (costs) (6,318) (5,171) (12,762) (10,121)
Amortization (loss) (924) (633) (1,760) (1,206)
Gross profit 10,067 5,593 19,063 10,841
(expenses) (1,174) (723) (1,974) (1,457)
Share-based payment (loss) - - (1,102)
community (loss) (1,006) - (1,006) -
(loss)/gain 379 - 361 -
activities 8,266 4,870 16,444 8,282
Finance (expense) (35) (24) (81) (179)
Profit before income
tax 8,231 4,846 16,363 8,103
Income tax (expense) (2,734) (1,972) (3,755) (3,334)
Profit for the
period 5,497 2,874 12,608 4,769
translation 619 (361) (196) (1,075)
income for the
period 6,116 2,513 12,412 3,694
Earnings per share
Basic 1.1 0.57 2.5 0.95
Diluted 1.1 0.56 2.5 0.93
We seek Safe Harbor.