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Record-breaking rains disrupt gold mining

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CALEDONIA Mining Corporation says gold production at its unit in Zimbabwe fell by 7% to 13 197 ounces in the first quarter of this year due to the underground flooding which resulted in five lost production days.

DUMISANI NYONI
Caledonia operates Blanket Mine in Gwanda, Matabeleland South province.

In the corresponding period last year, the mining concern produced 14 233 ounces of gold.

However, despite the low gold production, gross revenue increased to US$25.7 million from US$23.6 million recorded in the same period last year, on the back of high gold prices.  

Revenue includes the sale proceeds of 1 584 ounces of gold in work-in-progress brought forward from 2020.

Earnings before interest, taxes, depreciation, and amortisation, excluding net foreign exchange gains and the export incentive credit, amounted to US$9.5 million.

Caledonia chief executive officer Steve Curtis said that during the first quarter the mine experienced underground flooding, resulting in the loss of five production days.

“The first quarter of 2021 raised several challenges which I am pleased to say have now rectified. The fall-of-ground at AR South has been resolved and this high-grade area is back in full production,” he said.

“The underground flooding which resulted in five lost production days was caused by exceptionally heavy rains; rainfall in the first quarter was more than two-and-a-half times higher than the average for the same period in previous years.

“In response, we increased our pumping capacity so that we can manage any repetition of this event in future. On the positive side, the heavy rain means that water supply, which has sometimes been a cause for concern, is assured for the foreseeable future,” Curtis said.

Curtis said gold production in April showed a marked improvement, registering 5 470 ounces in April, which is better than planned.

“The strong recovery in performance has continued into May and we are confident that we will achieve our full-year guidance of between 61 000 and 67 000 ounces,” he said.

Curtis said operating costs were well controlled with the increase in the on-mine cost per ounce predominantly due to lower grades and recoveries, which has now been addressed.

He said the cost per tonne mined increased by only 4% in the quarter compared to the first quarter of 2020 and this was due largely to increased usage of diesel generators because of continued grid supply problems.

Given the high fixed cost base, he expected that costs per ounce will decline as production increases.

In December, the company announced it had entered into option agreements on two properties, Glen Hume and Connemara North, in Gweru mining district in the Midlands. These options give the company the right to explore each property for periods of 15 and 18 months respectively.

“If our exploration is successful, these properties will add further impetus to our growth. We have made good progress on the drilling campaign at Glen Hume and we are evaluating the results of the first phase. At Connemara, where we have the benefit of evaluating historical drill data, we are preparing a geological model before we commence drilling this summer,” Curtis said.

The Caledonia boss said their immediate strategic focus is to convert the commissioning of the Central Shaft project into higher production, lower costs and increased cash generation.

Curtis said the firm will also finalise exploration activities at Glen Hume and Connemara North while “evaluating further investment opportunities in the gold and precious metals sector in Zimbabwe and in other jurisdictions, with our long-term vision of becoming a mid-tier, multi-asset gold producer.”

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