Caledonia reports weaker gold production in first quarter

24th Apr 2023 13:09

(Sharecast News) - Caledonia Mining reported gold production from the Blanket Mine in Zimbabwe during the March quarter of 16,036 ounces on Monday, down 13% compared to the first quarter of 2022.

The AIM-traded firm put the decrease in production down to several mechanical breakdowns and logistical issues, which had since been resolved.

Its management team reiterated production guidance for the full year of between 75,000 and 80,000 ounces of gold.

Bilboes, Caledonia's oxide project in Zimbabwe, produced 105 ounces of gold during the quarter.

The production was slower than expected due to inconsistent grades, mechanical breakdowns, and poor availability of spare parts and alternative equipment.

Caledonia said the on-mine cost per ounce of Bilboes oxide production was estimated to be between $1,200 and $1,320, making it a relatively low-margin activity, primarily justified by pre-stripping in anticipation of the development of the Bilboes sulphide project.

Given some of the initial challenges in the oxide project and relative to the larger sulphide project, the company said it was reviewing the activity.

Going forward, Caledonia said it would report actual production achieved each quarter at the oxides project as part of the pre-stripping activities, and had withdrawn its guidance on the low-margin oxide production.

"Gold production at Blanket is usually lower in the first quarter of each year and increases in the following quarters," said chief executive officer Mark Learmonth.

"This trend is in evidence this year, albeit production in the first quarter of 2023 was below our target due to a series of issues including equipment failures and logistical issues.

"These issues have been resolved and production to date in April has been higher than expected."

Learmonth said the small-scale low margin oxide operation at Bilboes was effectively a pre-stripping exercise for the larger sulphide project, on which the firm had started work on an updated feasibility study.

"The oxide project was adversely affected by the breakdown of contractor-provided drill-rigs which are used for evaluation drilling and the limited availability in Zimbabwe of spare parts or alternative equipment.

"In light of the foregoing, we reiterate production guidance for 2023 of between 75,000 and 80,000 ounces of gold from Blanket.

"We expect to publish further operating information and the financial results for the quarter on or about 15 May."

At 1004 BST, shares in Caledonia Mining Corporation were down 5.91% at 1,195p.

Reporting by Josh White for Sharecast.com.