Caledonia Mining Corporation PLC (LON:CALE) told investors that gold output was marginally higher than the first quarter of 2018, in line with expectations.
Nonetheless, it came despite difficult operational circumstances.
The Zimbabwe-focused gold miner said it produced 12,657 ounces – up 1.1% from the 12,521 ounces in the same three months last year – while for the six months, the tally came to 25,582 ounces.
Cost of production was also slightly higher, with the all-sustaining cost at US$856 per ounce in the second quarter, from US$855, while the average realised price for the quarter stood at US$1,278 from US$1,235 in the comparative quarter.
Gross profit amounted to US$5.14mln, up from US$5.03mln, and net profit attributable to shareholders rose by 275% to US$2.6mln from US$694mln. Earnings per share improved substantially too, up 86% to 35.2 cents, from 18.9 cents.
Caledonia ended June with US$5.3mln of net cash and equivalents.
"The second quarter of 2018 was a difficult quarter for the business as production was adversely affected by lower than expected grade and tonnes mined,” said Steve Curtis, Caledonia chief executive.
"Production of 12,657 ounces was marginally higher than the second quarter of 2017 and in line with our expectations for our 2018 guidance range of 55,000 - 59,000 ounces.
"Grade for the quarter was 3.19g/t, this is below target due to difficulties in accessing broken ground at AR South and higher than expected dilution at the Blanket ore body due to the introduction of long-hole stopping on the grounds of safety.
Capex to decline substantially after 2019
He highlighted that corrective measures had been put into place to improve grade, with the benefits anticipated in future quarters as both grade and overall tonnage increase.
Curtis added: “We experienced significant negative working capital movements during the quarter which had an adverse effect on operating cash flow with a net operating cash burn of $1.2 million during the quarter.
“This, combined with capital investment of $5.6 million during the quarter, had a negative impact on the balance sheet with a net cash balance of $5.3 million at the end of the quarter.”
"Capital investment for the quarter was in line with our capex plan for 2018 at $5.6 million, most of which was incurred at Central Shaft, which has now reached a depth of 1,106 meters.
“We expect capex to decline substantially after 2019 after we commission the Central Shaft as planned in 2020. The Central Shaft project is the key enabler of longer term value for our shareholders as we progress towards our production and cost targets by 2021."