Half-year numbers for Caledonia Mining (CMCL) landed on the same day as fellow African gold digger Randgold Resources. But while the latter expects to produce 23 times more ounces than Caledonia in 2018, the companies’ interims shared more than their fair share of parallels.
The first was a worrying bump in second quarter on-mine costs, as Caledonia’s Blanket mine saw the price of labour, explosives and equipment all edge up. And while a better average sales price for the yellow metal helped to boost Blanket’s gross profit 4.7 per cent to $11.4m, the big promise to investors – production growth – has been checked by lower-than-planned tonnes and head grade.
Consequently, Caledonia has some catching up to do if first-half output of 25,582 ounces of gold is to swell to the full-year guidance range of 55,000-59,000oz. And while management expects a boost in recoveries in the fourth quarter, investors will rightly ask questions of the group’s hopes to hit 80,000 ounces a year by 2021.
Like Randgold, these growth aspirations have been backed by cash, although a second-quarter drop in pre-tax operating cash flows has conspired with working capital commitments to reduce net cash by 58 per cent in half a year. The human cost also remains alarmingly high, with another two fatalities at the mine so far in 2018.
WH Ireland forecasts adjusted pre-tax profit of $33.2m and EPS of $1.72 this year, softening to $30.5m and $1.67 in 2019.
| CALEDONIA MINING (CMCL) | ||||
| ORD PRICE: | 645p | MARKET VALUE: | £ 68.4m | |
| TOUCH: | 640-650p | 12-MONTH HIGH: | 703p | LOW: 415p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 633¢ | NET CASH: | $5.3m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 31.9 | 7.6 | 27.6 | 13.75 |
| 2018 | 34.3 | 11.0 | 53.4 | 13.75 |
| % change | +7 | +45 | +93 | - |
| Ex-div: | * | |||
| Payment: | * | |||
| £1=$1.29. *Quarterly dividends paid 27 Apr and 27 Jul | ||||
