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Caledonia cash machine

It's been a great year for gold bugs and the 24 per cent year-to-date rise in the metal's price to just over $1,300 (£978) an ounce has resulted in heavy demand for gold stocks, particularly those with profitable, long-term mines. This has left shares in many companies trading at valuations that leave little room for error. However, one miner that looks extremely cheap in the current climate is Aim minnow Caledonia Mining (CMCL), whose Blanket mine in Zimbabwe is expanding both production and margins. Given the political and economic unrest in the country, not to mention the volatility of small gold miners' shares, it's understandable that institutional investors have largely steered clear of Caledonia. But if the company delivers on its aims - as it has done in recent years - then its high-yielding shares look hugely undervalued on just six times 2016s forecast earnings dropping to three times 2017 expectations.

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By Alex Newman,
08 September 2016

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