Caledonia Mining (CMCL) had a tough first half of 2019, hit by power outages and grade issues at the Blanket gold mine in Zimbabwe. But the company’s earnings held up because of devaluation and reorganisation of Zimbabwean money in February, with foreign exchange gains of $22.8m (£18.8m) pushing net profits up from $5.8m in the first half of 2018 to $32.6m.
Production was down 3.6 per cent year-on-year in the first half, to 24,660 ounces (oz). The pile-up of operational challenges led to a cut in full year guidance from 53,000 - 56,000oz to 50,000-53,000oz, and chief executive Steve Curtis told us power troubles had extended into July and August. This will possibly be solved with a new government supply agreement with South Africa and Mozambique, with Mr Curtis saying they’d be happy to pay more for reliable electricity.
The grade trouble has fewer clear solutions but the company said the deeper ounces currently with inferred status were higher grade in general, meaning plans to get Blanket to 80,000oz a year in 2022 are not at risk from the current setbacks. This output increase strategy hit a milestone last month when the central shaft sinking was finished.
Prior to these figures Caledonia’s nominated advisor WH Ireland forecasts this year's EPS at 75.3¢, and 93¢ in 2020.
| CALEDONIA MINING (CMCL) | ||||
| ORD PRICE: | 463p | MARKET VALUE: | £ 49.5m | |
| TOUCH: | 455-470p | 12-MONTH HIGH: | 640p | LOW: 330p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 2 | |
| NET ASSET VALUE: | 938¢ | NET CASH: | $7.9m | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 34.3 | 11 | 53.4 | 13.75* |
| 2019 | 32 | 40 | 299.4 | 13.75* |
| % change | -5 | +264 | +461 | - |
| Ex-div: | na | |||
| Payment: | October, TBC | |||
| £1=$1.21 *Split into two quarterly dividends | ||||
