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Caledonia Mining Corp (2)
Symbol C : CAL
Shares Issued 52,117,908
Close 2013-11-12 C$ 0.76
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Caledonia Mining earns $4.58-million in Q3 2013

2013-11-13 06:51 ET - News Release

Mr. Stefan Hayden reports

CALEDONIA MINING CORPORATION: Q3 2013 RESULTS

Caledonia Mining Corp. has released its operating and financial results for the third quarter of 2013 and the nine months to Sept. 30, 2013. Caledonia owns 49 per cent of the Blanket mine in Zimbabwe. Operational and financial information set out below is on a 100-per-cent basis unless indicated otherwise.

Operating review -- Blanket mine, Zimbabwe:

  • Gold produced in the third quarter was 12,042 ounces (the second quarter 2013, 11,588 ounces; the third quarter 2012, 12,918 ounces) and was ahead of the planned target of 11,000 ounces.
  • Gold production in the quarter increased from the previous quarter due to the higher realized grade of 4.03 grams per tonne compared with 3.82 grams per tonne in the preceding quarter and improved gold recovery of 93.6 per cent compared with 93.2 per cent in the preceding quarter.
  • Gold produced in the nine months to Sept. 30, 2013, was 34,102 ounces compared with 33,642 ounces in the nine months to Sept. 30, 2012.
  • Management believes that Blanket is on course to produce approximately 44,000 ounces in 2013.
  • Blanket's on-mine cash cost, all-in sustaining cost and all-in cost per ounce of gold produced for the quarter, the preceding quarter and 2012 are shown in the Blanket mine table.
  • Movements in costs per ounce are largely due to variations in gold production as Blanket's fixed costs are spread over a higher or lower number of ounces of gold. The lower average gold price received in the third quarter 2013 also resulted in a reduction in the royalty component of all-in sustaining and all-in cost per ounce. Blanket's all-in cost includes investments in projects to increase production and for which there is currently no production.
  • Regrettably there was an accident at Blanket in the quarter as a result of which two employees were injured and one employee was fatally injured.
  • Deep level exploration and development at the Blanket mine and exploration and development at the GG, Mascot and Sabiwa satellite projects continued.

                                                                       
                    BLANKET MINE: COSTS PER OUNCE (U.S.$/OZ)(1) 

                  On-mine cash cost    All-in sustaining cost    All-in cost

Q3 2013                         554                       873            999
Q2 2013                         584                       956          1,211
2012                            571                       955          1,027
                                                                            
(1) References herein to operating cost, all-in sustaining cost and     
all-in cost are performance measures that are not prepared in accordance 
with international financial reporting standards. Non-IFRS performance 
measures have no standardized method for calculating and accordingly are not 
a reliable way to compare the company to other companies. Management 
believes these non-IFRS measures assist investors and other stakeholders in 
understanding the economics of gold mining over the life cycle of a mine. 
Non-IFRS measures should be used along with other performance measures 
prepared in accordance with IFRS. 

Financial highlights:

  • Gold sales during the quarter were 12,042 ounces at an average sales price of $1,330 per ounce of gold.
  • Gross profit for the quarter (that is, after depreciation and amortization but before administrative expenses) was $7.7-million (the second quarter 2013, $8.6-million; the third quarter 2012, $12.6-million).
  • Net profit after tax for the quarter attributable to Caledonia shareholders was $3.7-million (the second quarter 2013, $3.0-million; the third quarter 2012, loss $7.2-million after a non-cash, non-recurring expense of $12.1-million arising on the implementation of indigenization at Blanket).
  • Basic earnings per share attributable to Caledonia shareholders for the quarter were 7.2 cents per share (the second quarter 2013, 5.8 cents; the third quarter 2012, loss 14.3 cents after the non-cash non-recurring expense arising on the implementation of indigenization at Blanket). The earnings per share numbers for the quarter and all preceding quarters reflect the one-for-10 share consolidation which took place during the preceding quarter.
  • At Sept. 30, 2013, Caledonia had cash and cash equivalents of $25.1-million (June 30, 2013, $22.5-million; Dec. 31, 2012, $27.9-million).

Commenting on the the third-quarter results, Stefan Hayden, Caledonia president and chief executive officer, said: "The third quarter of 2013 presented continued challenges due to the prevailing lower gold price. In response to the lower gold price, Caledonia, working with Blanket management, has introduced measures to increase mine production from approximately 1,030 tonnes per day in Q1 2013, to approximately 1,075 tpd in the second quarter and to 1,110 tpd in the third quarter.

"Gold production in the third quarter also benefited from an improvement in the realized grade. The average realized grade in the third quarter was 4.03 grams per tonne, higher than the 3.82 g/t achieved in the previous quarter but lower than the 4.16 g/t achieved in 2012. Gold recovery also improved in the quarter, metallurgical recoveries in the quarter increased to 93.6 per cent from 93.2 per cent in the preceding quarter and were virtually unchanged from the 93.7 per cent achieved in 2012. Blanket's metallurgical plant has considerable surplus capacity and is one of the most efficient in the industry, which reflects our recent investments and the skills of Blanket's management and employees.

"The adverse effect of the lower gold price on profitability was also mitigated somewhat by lower costs. Blanket's on-mine cost per ounce, all-in sustaining cost per ounce and all-in cost per ounce were all lower in the third quarter 2013 than in the preceding quarter and in 2012. Blanket retains its position as one of the lowest-cost gold producers in Africa.

"Supported by the company's strong cash position and continued cash generation at the operational level, development and exploration activity at Blanket has accelerated. We continue to move towards achieving our targeted increase in production. In light of the increased rate of production, in August, 2013, we increased our production guidance for 2013 from 40,000 ounces to 44,000 ounces. As previously advised, production is expected to increase to 48,000 ounces in 2014 and 52,000 ounces in 2015.

"Exploration at Blanket below 750 m and at Blanket's satellite projects continues and we continue to be encouraged by the results evaluated so far. Development and exploration work at GG and Mascot continues to identify mineralization.

"Regrettably an accident occurred at Blanket in the quarter as a result of which one Blanket employee was fatally injured and two employees were injured. Following this accident, Blanket management has increased its measures to ensure that the prescribed safe-working practices are strictly adhered to. The directors and management of Caledonia express their sincere condolences to the family and colleagues of the deceased employee.

"As a low-cost producer with a robust balance sheet, Caledonia is well positioned to continue to implement its growth strategy, notwithstanding the current volatility in the gold price."

         CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
           (in thousands of dollars except per share amounts)                 
                                                                            
                                 For the three months   For the nine months 
                                       ended Sept. 30,       ended Sept. 30,
                                      2013       2012       2013       2012 

Revenue                           $ 16,591   $ 21,494   $ 52,999   $ 57,609 
Royalty                             (1,165)    (1,504)    (3,651)    (4,034)
Production costs                    (6,872)    (6,389)   (21,493)   (19,151)
Depreciation                          (835)      (999)    (2,458)    (2,759)
                                  ---------  ---------  ---------  ---------
Gross profit                         7,719     12,602     25,397     31,665 
Administrative expenses             (1,153)      (973)    (5,853)    (2,947)
Share-based payment expenses             -    (14,569)         -    (14,569)
Indigenization expenses                  -       (269)         -     (1,275)
Foreign exchange (loss) gain             -       (934)         -       (574)
                                  ---------  ---------  ---------  ---------
Results from operating                                                      
activities                           6,566      4,143     19,544     12,300 
Net finance expense                    (12)       (25)       (62)      (106)
                                  ---------  ---------  ---------  ---------
Profit (loss) before income tax      6,554     (4,168)    19,482     12,194 
Income tax expense                  (1,965)    (5,031)    (5,618)    (8,786)
                                  ---------  ---------  ---------  ---------
Net profit (loss) for the period  $  4,589   $ (9,199)  $ 13,864   $  3,408 
                                  =========  =========  =========  =========
Profit (loss) on foreign                                                    
currency translation                  (331)    (1,763)     2,216     (1,959)
                                  ---------  ---------  ---------  ---------
Total comprehensive                                                         
income (loss) for the period         4,258    (10,962)    16,080      1,449 
Profit (loss) attributable to                                               
Owners of the company                3,733     (7,240)    11,381      5,367 
Non-controlling interests              856     (1,959)     2,483     (1,959)
                                  ---------  ---------  ---------  ---------
                                     4,589     (9,199)    13,864      3,408 
Total comprehensive                                                         
income (loss) attributable to                                              
Owners of the company                3,052     (8,984)    13,619      3,427 
Non-controlling interests            1,206     (1,978)     2,461     (1,978)
                                  ---------  ---------  ---------  ---------
                                     4,258    (10,962)    16,080      1,449  
Earnings (loss) per share                                                   
(cents)                                                                    
Basic                                  7.2      (14.3)      21.9       10.6 
Diluted                                7.2      (14.1)      21.9       10.5 

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