Caledonia Mining no stranger to disruption

The pandemic meant higher costs and slower progress on its major capital works, but these had a negligible impact on earnings because of the higher gold price. 

The Blanket mine owner generated cash profits of $19.8m (£15.1m) in the first half, an 80 per cent increase on last year. Production was up, although there was a moderate drop between the March and June quarters.

Higher cash flow has already seen two increases in the quarterly dividend and finance chief Mark Learmonth said there was still room for the payouts to grow. “When we finish the central shaft project, we'll see a substantial increase in our available free cash,” he said.

Since Zimbabwe’s grid electricity supply is unreliable, Caledonia has turned to more diesel generators to keep the mine running, adding to the Covid-19-hit to on-mine costs, which climbed a fifth between the first and second quarter to $811 an ounce (oz).

The all-in sustaining cost, which includes capital spending and administrative expenses, was $868/oz in June quarter. 

The company has also firmed up plans to build a solar plant at the mine to cover all daytime energy needs and around a quarter of total daily usage. This will cost $12m, which the company is raising through its New York listing because of its premium to London.

Caledonia dropped its Toronto listing in June, citing New York’s better liquidity. Finding debt finance for the new power plant proved difficult because of bankers’ worries about Zimbabwe, Mr Learmonth said.