Caledonia Mining says production at Blanket Mine rose over 7% in its latest quarter, despite power outages and rising costs.

newZWire

In the three months to September, gold output dipped 2,4% year-on-year to 13 646 ounces, held back by lower mining rates. However, gold production was up 7,3% quarter-on-quarter.

Tonnes milled improved on the two quarters and the average milled grade for the quarter was 3,19g/t, an increase on the previous quarter’s grade of 3,11g/t. Low grades
In terms of costs, all-in sustaining costs — a key metric used by mines to determine all costs and efficiency — were 16% higher.

However, the average realised gold price was 23% higher, offsetting the year-on-year drop in production to help Caledonia double profits to US$10,4 million.

“The third quarter of 2019 can be characterised by two distinct phases. The first six weeks of the quarter were seriously affected by power outages and by the continued effects of the unstable economic conditions in Zimbabwe on our employees; both of these factors had an adverse effect on production and financial performance,” says chief executive Steve Curtis.

“The last six weeks of the quarter showed a substantial improvement as the electricity supply improved; and measures taken in previous quarters to improve mining controls began to bear fruit.

Notwithstanding further interruptions to the electricity supply in October, the excellent performance in the second half of the quarter has continued into October and early November,” Curtis added.

The company has increased its focus on minimising mining dilution, after lower grades forced it to cut production guidance for 2019 to between 50 000 and 53 000 ounces, down from previous forecasts of 53 000 to 56 000 ounces.

Caledonia is still confident of meeting those targets, before lifting output to 80 000 ounces in 2020.

According to Curtis, while there is still work to be done on the grade front, Blanket has begun delivering improved grades, combined with higher tonnage and efficiencies.

“I am pleased to report that production in October has continued this positive trend with production of 5 596 ounces in October at a grade of 3,55g/t. I look forward to updating the market on the full year and we reiterate our full year production guidance of 50 000 to 53 000 ounces for 2019,” said Curtis.

The company has recently floated a tender for a solar plant to feed Blanket Mine, a way of solving the power crisis. According to Caledonia, the recent power tariff hike could stabilise supply.

“Although the electricity supply situation has improved, this problem has not been permanently resolved. As we have previously announced, the situation has improved following the introduction of a revised electricity tariff during the quarter which allows the funding of imported electricity which is used exclusively to supply participating mining companies.”