Caledonia Mining Corporation: Q1 2014 Results
May 14 2014 - 2:00AM
Marketwired
Caledonia Mining Corporation: Q1 2014 Results
TORONTO, ONTARIO--(Marketwired - May 14, 2014) - Caledonia
Mining Corporation (TSX:CAL)(OTCQX:CALVF)(AIM:CMCL) ("Caledonia" or
the "Company") announces its operating and financial results for
the first quarter of 2014 ("Q1" or the "Quarter"). All results are
reported in Canadian dollars unless otherwise indicated. Following
the implementation of indigenisation in September 2012, Caledonia
owns 49% of the Blanket Mine in Zimbabwe. Caledonia continues to
consolidate Blanket and the operational and financial information
set out below is on a 100% basis unless indicated otherwise.
Operating and Financial Review
|
Q1 2013 |
Q1 2014 |
|
Comment |
Gold produced (oz) |
10,472 |
10,241 |
|
Gold production in Q1 2014 was adversely affected by lower head
grade and lower tonnage throughput |
On Mine cash cost (US$/oz)(1) |
652 |
651 |
|
On-mine costs for gold sold in Q1 2014 benefitted from work in
progress brought forward from the preceding quarter with a carrying
value of $411 per ounce |
All-in sustaining cost (US$/oz)1 |
924 |
923 |
|
All-in Sustaining costs remain stable |
Gold Sales (oz) |
11,964 |
12,210 |
|
Gold sales in Q1 2014 includes work in progress brought forward
from the preceding quarter of 1,969 per ounce |
Average realised gold price (US$/oz)1 |
1,600 |
1,288 |
|
The lower realised gold price was primarily due to the lower gold
price |
Gross profit ($'m)2 |
9.0 |
6.0 |
|
Lower gross profit was mainly due to the lower realised gold
prices, ameliorated by the sale of gold work in progress brought
forward |
Net profit attributable to shareholders ($'m) |
4.6 |
3.5 |
|
Lower gross profit was ameliorated by increased foreign exchange
gain, reduced effective tax rate and the sale of work in progress
brought forward from the preceding quarter |
Adjusted basic earnings per share1 (cents) |
11.9 |
4.1 |
|
Adjusted basic earnings per share excludes foreign exchange
profits. |
Cash and cash equivalents ($'m) |
25.2 |
26.7 |
|
Caledonia's cash is held in Canadian, UK and South African
banks. |
Cash from operating activities ($'m) |
2.2 |
6.2 |
|
Strong cash generation in Q1 due to stable working capital and
lower taxation payments. |
1
Measures such as "on-mine cash cost per ounce" "all-in sustaining
cost per ounce", "average realised gold price" and "adjusted
earnings per share" are Non-IFRS measures. Refer to Section 10 of
the MD&A for a discussion of non-IFRS measures. |
2
Gross profit is after deducting royalties, production costs and
depreciation but before administrative expenses. |
Growth at the Blanket mine
Blanket continues to implement its growth strategy which will
result in production increasing to approximately 48,000 ounces of
gold in 2014 and 52,000 ounces of gold in 2015. Further increases
in production are expected following the completion of the No. 6
Winze Project, which is intended to provide access to deeper
resources below 750 meters.
Blanket: low-cost, highly cash generative
Blanket's results for the Quarter confirm its position as a
low-cost producer, despite the planned increased capital
investment. These investments to increase production at Blanket are
expected to result in continued strong cash generation,
notwithstanding any further decreases in the gold price, as
Blanket's fixed cost base is spread across more production
ounces.
Following the implementation of Indigenisation at Blanket in
September 2012, Caledonia receives 49% of Blanket's dividend
distributions in addition to receiving the repayments of the
facilitation loans of US$30 million.
Caledonia's Dividend Policy
On November 25, 2013 Caledonia announced a revised dividend
policy. Caledonia intends to pay a dividend of six Canadian cents
per share in 2014, split into four equal quarterly payments of 1.5
Canadian cents per share. The first quarterly dividend was paid on
January 31, 2014; the second quarterly dividend was paid on April
30. 2014. The next quarterly dividend is expected to be paid on
July 31, 2014.
Caledonia's total 2014 dividend of six cents per share is over
eight times covered by Caledonia's cash resources at March 31, 2014
and 2.7 times covered by adjusted earnings attributable to
Caledonia shareholders in the Quarter.
Caledonia will continue to maintain its strong financial
position so that it can implement its stated growth strategy and
retain the flexibility to take advantage of any opportunities that
may arise without the need to raise third party finance.
Caledonia's Strategy
Caledonia's primary strategy is to continue the existing
investment programme at Blanket with the objective of increasing
production. Caledonia's Board believes the continuation of this
strategy is in the best interests of shareholders because it is
expected to increase cash flows and accelerate the repayment of the
outstanding facilitation loans. Subject to an ongoing evaluation of
the investment climate in Zimbabwe, Blanket and Caledonia will also
consider additional acquisition opportunities in Zimbabwe on the
basis of, inter alia, their fit with the existing operations and
their capacity to enhance value for both Blanket's indigenous
shareholders and Caledonia.
Caledonia will also use its financial and managerial resources
which are outside Zimbabwe to consider any new opportunities in
sub-Saharan Africa.
Outlook
Despite the lower and volatile gold price from April 2013,
development and exploration activity at Blanket has continued
unabated. Production is expected to increase to 48,000 ounces in
2014 and 52,000 ounces in 2015.
Exploration at Blanket below 750 meters continues and we are
encouraged by the results evaluated so far. Work is in progress to
add this resource body to the mine's mineral resource
inventory.
Blanket has surplus metallurgical plant capacity and is
sufficiently cash generative so that, provided the investment
climate is acceptable, Caledonia could invest in projects with a
view to further increasing production, thereby helping to maintain
downward pressure on the cost per ounce of gold produced.
An increase in unavoidable internal dilution due to low grade
lenses within the ore zone is expected to put downward pressure on
the mined grade for the coming months. Accordingly, the average
mined grade is expected to be between 3.6 grams per tonne ('g/t')
and 3.7 g/t of gold as opposed to our targeted grade of 3.83 g/t
for the next two quarters. Blanket management continues to pay
close attention to minimising grade dilution. The lower average
mined grade is expected to be reflected in a lower average feed
grade of material into the metallurgical plant.
Commenting on these results, Stefan Hayden, Caledonia's
President and Chief Executive Officer said:
"New production areas have and are being developed and I am
confident that the 2014 production target of 48,000 ounces will be
achieved, with 52,000 ounces expected in 2015.
"Cash generation in the quarter was strong: net cash
generated from operating activities in Q1 of 2014 was $6.2m
compared to $4.8m in the previous quarter and $2.2 million in the
first quarter of 2013. Since the beginning of 2014 Blanket has sold
its gold production to Fidelity Printers and Refiners. The new
sales arrangements with Fidelity have reduced Blanket's working
capital requirement due to the earlier payment terms. Blanket has
received all payments due from Fidelity in-full and
on-time.
"Blanket's on-mine cash cost decreased in the Quarter from
the previous quarter due to the reversal of the adverse effect of
high work-in-progress at December 31, 2013. Work-in-progress was
brought forward at a carrying value of $411 per ounce, which
reduced the average cost per ounce of the gold sold in the
quarter.
"Underlying costs at Blanket remain stable: there have been
no significant increases in electricity or consumable costs and the
2014 labour negotiations have recently been finalised at an
across-the-board increase of approximately 5 per cent. It is
expected that Blanket's on-mine cash costs will decrease as
production increases."
The full Report & Accounts, including the Management
Discussion and Analysis for the quarter ended March 31, 2014 are
available from the Company's website www.caledoniamining.com and
from SEDAR.
Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income (unaudited) (in thousands of
Canadian dollars except per share amounts) |
|
Three months ended March 31 |
|
2014 |
2013 |
|
$ |
$ |
Revenue |
17,063 |
|
19,218 |
|
Royalty |
(1,195 |
) |
(1,349 |
) |
Production costs |
(8,788 |
) |
(8,019 |
) |
Depreciation |
(1,058 |
) |
(803 |
) |
Gross profit |
6,022 |
|
9,047 |
|
Administrative expenses |
(1,847 |
) |
(1,175 |
) |
Foreign exchange gain/(loss) |
1,311 |
|
- |
|
Results from operating activities |
5,486 |
|
7,872 |
|
Net finance income/(expense) |
(41 |
) |
(64 |
) |
Profit before tax |
5,445 |
|
7,808 |
|
Tax expense |
(1,300 |
) |
(2,278 |
) |
Profit for the period |
4,145 |
|
5,530 |
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
Items that are or may be reclassified to profit or
loss |
|
|
|
|
Foreign currency translation differences for foreign
operations |
1,080 |
|
827 |
|
Other comprehensive income net of income tax |
1,080 |
|
827 |
|
Total comprehensive income for the period |
5,225 |
|
6,357 |
|
|
|
|
|
|
Profit attributable to: |
|
|
|
|
Shareholders of the Company |
3,479 |
|
4,593 |
|
Non-controlling interests |
666 |
|
937 |
|
Profit for the period |
4,145 |
|
5,530 |
|
|
|
|
|
|
Total comprehensive income attributable to: |
|
|
|
|
Shareholders of the Company |
4,558 |
|
5,530 |
|
Non-controlling interests |
667 |
|
827 |
|
Total comprehensive income for the period |
5,225 |
|
6,357 |
|
|
|
|
|
|
Earnings per share (cents)(iii) |
|
|
|
|
Basic |
6.6 |
|
9.0 |
|
Diluted |
6.6 |
|
9.0 |
|
Adjusted earnings per share (cents) (ii)(iii) |
|
|
|
|
Basic |
4.1 |
|
11.9 |
|
Diluted |
4.1 |
|
11.9 |
|
|
|
|
|
|
Condensed Consolidated Statement of Cash Flows
(unaudited) (in thousands of Canadian dollars) |
|
Three months ended March 31 |
|
2014 |
2013 |
|
$ |
$ |
Cash flows from operating activities |
|
|
|
|
Cash generated by operating activities |
6,868 |
|
5,435 |
|
Net interest paid |
(41 |
) |
(64 |
) |
Tax paid |
(600 |
) |
(3,163 |
) |
Net cash from operating activities |
6,227 |
|
2,208 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Acquisition of Property, plant and equipment |
(2,032 |
) |
(1,340 |
) |
Net cash used in investing activities |
(2,032 |
) |
(1,340 |
) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Advance dividends paid |
- |
|
(969 |
) |
Dividends paid |
(907 |
) |
(2,834 |
) |
Proceeds from the exercise of share options |
- |
|
182 |
|
Net cash from (used in) financing activities |
(907 |
) |
(3,621 |
) |
Net increase/(decrease) in cash and cash equivalents |
3,288 |
|
(2,753 |
) |
Cash and cash equivalents at beginning of the year |
23,426 |
|
27,942 |
|
Cash and cash equivalents at year end |
26,714 |
|
25,189 |
|
|
|
|
|
|
Condensed Consolidated statements of Financial Position
(unaudited) (In thousands of Canadian dollars) |
|
As at |
March 31 |
December 31, |
|
|
2014 |
2013 |
|
|
$ |
$ |
Total non-current assets |
|
36,181 |
33,448 |
Inventories |
|
6,847 |
6,866 |
Prepayments |
|
179 |
177 |
Trade and other receivables |
|
3,854 |
3,889 |
Cash and cash equivalents |
|
26,714 |
25,222 |
Total assets |
|
73,775 |
69,602 |
Non-current liabilities |
|
10,622 |
10,094 |
Trade and other payables |
|
5,027 |
4,600 |
Income taxes payable |
|
1,834 |
1,138 |
Bank overdraft |
|
- |
1,796 |
Total liabilities |
|
17,483 |
17,628 |
Total equity |
|
56,292 |
51,974 |
Total equity and liabilities |
|
73,775 |
69,602 |
Caledonia Mining CorporationMark Learmonth+27 11 447
2499marklearmonth@caledoniamining.comwww.caledoniamining.comNumisJohnPrior
/ Jamie Loughborough / James Black+44 20 7260 1000BlytheweighTim
Blythe / Halimah Hussain / Camilla Horsfall+44 20 7138 3204WH
IrelandAdrian Hadden / Nick Field+44 20 7220 1751
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