Caledonia cost per ounce drops 16 %

Victoria Falls Stock-Exchange-listed Caledonia Mining Corporation Plc has managed to keep its operational costs in check with on-mine cost per ounce having dropped by 16 per cent in the first quarter of 2022.

Caledonia Chief Executive Officer, Steve Curtis,  said the reduction was spurred by higher production, improved grades and reduced use of diesel generators.

This means fixed costs are spread over more production ounces.

The company said the all-in sustaining costs per ounce were also 7 per cent lower than the first quarter of 2021.

“The first quarter of 2022 was an excellent start to 2022. Gold production in the Quarter represents a new production record for any first quarter. Production in April showed a further improvement: production of almost 6,800 ounces in the month reflects an annualised production rate that is marginally above the top end of our guidance range for 2022 of 73,000 to 80,000 ounces of gold. The higher production reflects increased tonnes milled, better grade and improved recovery. Production in the Quarter excludes approximately 1,500 ounces of recoverable gold contained in an ore stockpile which accumulated during the Quarter as we await the commissioning of an additional mill later in the year,” said Mr Curtis in the Q1 results released today.

“Operating costs were well controlled. The on-mine cost per ounce fell by 16 per cent compared to the first quarter of 2021. The reduction was because of higher production, which means that fixed costs are spread over more production ounces; costs were also helped by reduced diesel consumption following the installation of equipment in late 2021 which allows us to manage the poor-quality grid power.”

Caledonia reported higher earnings for the first quarter of the year, as gold production reached a new record for the first three months of the year.

Mr Curtis said following Caledonia, which controls Gwanda-based gold producer, Blanket Mine’s successful secondary listing on the Victoria Falls Stock Exchange in late 2021, the proportion of revenues received in USD dollars has increased.

“This, in conjunction with other arrangements, means that we are not accumulating excessive local currency balances. We have a strong, long-term working relationship with the Reserve Bank of Zimbabwe and Fidelity Printers and Refiners (the Zimbabwe government-owned gold refiner) and we are delighted that the payment process for gold deliveries and the regulations that manage the flow of funds from Zimbabwe continue to operate smoothly,” said Mr Curtis.

He noted that the 12 MWac solar project is now in the final phase of construction and is expected to be operational within the next few months.