HARARE – Gwanda-based gold producer Blanket Mine recorded a 1 percent production gain to 12 924 ounces for the first quarter of 2018, although the parent company maintains the mine is still in line to meet the full year target.
The Blanket Gold Mine is 49 percent owned by Toronto Stock Exchange-listed Caledonia Mining Corporation, although the latter has since intimated plans to increase its stake in the mine after the review of the Zimbabwe Indigenisation policy.
Performance-wide, adjusted earnings per share of 40, 1 cents were 51 percent higher than the corresponding figure in 2017, largely due to a higher realised gold price, and the increased export credit incentive.
Operating cash flows for the quarter were $7 million and the company’s balance sheet remains strong with net cash of $13, 4 million as at the close of the quarter.
As a result of an 8, 2 percent increase in the gold price since last year, the Blanket profited despite production remaining basically flat.
On the back of higher gross profit, which increased 10 percent since last year, the net profit attributable to shareholder increased to $3, 1 billion (£2, 3 billion) from $2, 3 billion (£1, 7 billion) in the first quarter of last year.
“Gold production was marginally higher in the Quarter compared to the first quarter of 2017 and was in-line with our expectations. We expect that production will deliver the usual increase in the second half of the year as we see the benefit of the increased level of mine development in the first half of the year, which will improve our access to higher grade areas.
“Profits in the Quarter benefitted from an 8 percent increase in the average realised gold price and a 3 percent reduction in all-in sustaining costs to $832 per ounce which contributed to a 10 percent increase in gross profit and a 35 percent increase in net attributable profit.
“On mine costs were marginally higher at $687 per ounce due to various operational factors which we expect to be addressed as the Central Shaft project is commissioned in 2020. Profit and cash flow were also boosted by the Government of Zimbabwe increasing the Export Credit Incentive (ECI) from 2, 5 percent to 10 percent of revenue with effect from 1 February 2018,” said Caledonia CEO Steve Curtis.
Earnings per share also increased by 51 percent from 26, 5 cents per share last year to 40, 1 cents.
Added Mr Curtis:
“The Central Shaft remains a key enabler of long term value of the business and I am pleased to report that the project is progressing on schedule and within budget and importantly, remains fully funded by operating cash flow.
“For our technical team to deliver production and a transformational project for the business is a significant achievement.
“Following the decision to extend the shaft sinking project in November of 2017 the shaft has now reached 30 Level (990 metres) and work has commenced on establishing the station on this level.”
Management expects the Blanket Gold Mine is expected to produce between 55 000 and 59 000 ounces of gold for the full year, while earnings are forecast between 165 to 190 cents per share.