Gold glitters as Caledonia's profit after tax jumps 872%

Caledonia Mining Corporation Plc, listed on the Victoria Falls Stock Exchange, has reported a remarkable 872% rise in profit after tax to US$16.45 million for the nine months ending September 30, 2024. This substantial increase, compared to the US$1.69 million recorded during the same period in 2023, was driven primarily by robust revenue growth, underscoring the mining giant's continued success in Zimbabwe's gold sector.

However, while the overall performance this year has been strong, the company's third-quarter results showed a decrease. Profit after tax for the quarter declined by 42.44% to US$3.28 million compared to the same period in 2023. The financial report revealed that Caledonia's revenue reached US$46.9 million in the third quarter and US$135.5 million over nine months, outpacing last year's figures of US$41.18 million and US$107.65 million, respectively.

Production at the Blanket Mine, Caledonia's flagship asset, saw a quarterly decline in gold output to 18,992 ounces, down from a record 21,772 ounces produced in the same quarter last year. The company attributed this to lower-grade ore and reduced metallurgical recoveries. Despite this, year-to-date production stands at 56,815 ounces, slightly above the 55,244 ounces recorded during the same period in 2023, positioning Caledonia to meet its annual production target of 74,000 to 78,000 ounces.

Alongside Blanket, Caledonia's Zimbabwean portfolio includes the Bilboes mine and the Motapa and Maligreen mining claims. While these assets are pivotal, rising operational costs have pushed the company's 2024 cost guidance to between US$950 and US$1,050 per ounce, up from the previous estimate of US$870 to US$970 per ounce due to higher labor and electricity expenses. Nevertheless, Caledonia has managed to reduce costs slightly, with third-quarter production costs falling by 3.02% to US$21.08 million, and total nine-month costs down to US$60.5 million, compared to US$61.02 million last year.

In a strategic move, Caledonia announced the conditional sale of its 12.2 MW solar plant for US$22.35 million, realizing a profit on the initial construction cost of US$14.3 million. As part of the deal, Blanket Mine will retain exclusive energy access from the solar facility, supporting its commitment to sustainable energy solutions in Zimbabwe.

CEO Mark Learmonth expressed satisfaction with the company's production trajectory and reiterated Caledonia's annual targets. "We continue to explore ways to reduce on-mine costs at Blanket, particularly electricity and labor costs, where several initiatives are underway," Learmonth said. He also acknowledged the impact of Zimbabwe's currency devaluation on the company's cash reserves, which has posed additional financial challenges.

Looking ahead, Learmonth highlighted that exploration activities at Blanket and Motapa remain key growth drivers, while the company also advances a revised feasibility study for the Bilboes sulphide project. Expected to be completed by early 2025, the study will likely pave the way for further expansion of Caledonia's Zimbabwean operations, affirming the corporation's commitment to the country's mining sector.