Caledonia Stays on Track for Growth Despite Rising Costs & Currency Pressures

Caledonia Mining Corporation's Blanket Mine

Caledonia Mining has delivered solid results for the third quarter of 2024, reporting revenues of $46.9 million for the quarter and $135.5 million for the first nine months of the year. Gross profit rose to $19.3 million, a significant increase from $14.1 million in the same period last year, driven by higher gold prices and improved performance from the Bilboes oxide mine. However, rising costs at the flagship Blanket Mine and challenges associated with Zimbabwean currency devaluation have impacted overall costs.

By Ryan Chigoche

Cost Pressures at Blanket Mine

During Q3 2024, the cost to produce an ounce of gold at Blanket Mine increased to $1,056, up from $928 in Q3 2023. This increase is attributed to lower ounces sold and higher production costs.

The company’s all-in-sustaining cost (AISC) also rose to $1,501 per ounce, compared to $1,268 last year. Factors contributing to the higher AISC include increased labour and electricity costs and higher share-based payment expenses due to the company’s rising share price.

Sustained Production Targets

Despite these challenges, Caledonia Mining remains on track to meet its 2024 full-year production target of 74,000–78,000 ounces of gold and aims for a similar target in 2025.

“We’re pleased with how the business is performing overall,” said Mark Learmonth, CEO of Caledonia Mining. “Higher gold prices and the solid contribution from Bilboes have helped offset some of the pressures on costs, particularly electricity and labour. We’re working hard to keep costs under control and are focused on long-term growth.”

Dividend Declaration

The company declared a dividend of 14 cents per share, payable to shareholders on December 6, 2024, reaffirming its commitment to delivering value. “We remain focused on maintaining a solid production profile and creating sustainable value for our investors,” Learmonth added.

Cash Flow and Investments

Net cash from operating activities for the quarter was $4.6 million, a decrease from $14.5 million in Q3 2023. This reduction reflects lower operating profits, the impact of Zimbabwean currency devaluation, and higher tax payments due to timing.

Additionally, the company accelerated its investment in inventory to support preventative maintenance at Blanket Mine, increasing working capital needs. However, operating cash flow before changes in working capital remained steady at $16.2 million, similar to last year’s $16.3 million.

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Strategic Growth Initiatives

Caledonia continues to focus on its growth strategy, with ongoing exploration at both Blanket and Motapa mines. Progress on the Bilboes sulphide project is advancing, with a feasibility study scheduled for completion in Q1 2025. The company is also working to secure a funding structure for Bilboes that minimizes equity dilution while maximizing shareholder value.

One strategic move this quarter was the conditional sale of its 12.2 MWac solar plant for $22.35 million. The plant, which supplies renewable energy to Blanket Mine, will continue to meet approximately 20% of the mine’s daily electricity needs post-sale. “Selling the solar plant is an important step for us,” said Learmonth. “It gives us capital to reinvest in the business while ensuring Blanket continues to benefit from renewable energy.”

Optimistic Outlook

Despite the quarter’s challenges, Caledonia Mining remains confident about its future.

“We’re confident in our long-term strategy,” Learmonth emphasized. “We’re making smart investments now that will pay off as we grow the business. Blanket remains a strong foundation, and we’re excited about the opportunities at Motapa and Bilboes. Our focus remains on creating lasting value for our shareholders in the years ahead.”

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