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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