February 18, 2022

For Caledonia, The Future Can Only Be Golden

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Kuda Chideme

Steve Curtis, the man who has been at the helm of Caledonia Mining Corporation, will be stepping down from his position this June.

Since 2014, Curtis has transformed Caledonia from a little known outfit trying out its luck in ‘Africa’s last gold frontier’ to a profitable world-class operation attracting immense investor interest.

Caledonia is cash-rich and keeps on churning out dividends at US14 cents a share. The dividend has been increased seven times which is a 104 percent increase from US6.875 cents announced in October 2019.

When it was listed on the US dollar-denominated Victoria Falls Stock Exchange last November, the placement was oversubscribed and the company had to issue additional shares.

Caledonia’s revolution can be traced back to 2015 when the company announced plans to sink a new central shaft that would give it access to previously unmined swathes of resources.

Some seven years and US$70 million later the shaft has pushed production at its Blanket mine from 1,2 tonnes in 2015 to a record 1,9 tonnes last year.

For good measure, Riozim which operates three mines- Cam &Motor, Renco and Dalny only produced 1.2 tonnes in 2021.

With the shaft now in place at Blanket, Caledonia is now looking at an ambitious target of 2,2 tonnes annually, placing it in a class of its own.

But Caledonia’s ambitions go beyond just ramping up output at Blanket.

According to the incoming chief executive Mark Learmonth, the company has plans to become a Zimbabwe focused multi-asset producer.

Without getting into the exact details Learmonth told journalists this week that the company had looked at close to 30 assets around the country.

Already, Caledonia has purchased the mining claims at Maligreen in Gweru, from Pan African Mining, a privately-owned Zimbabwean company, for a total cash consideration of US$4 million.

The property is estimated to contain an inferred mineral resource of almost one million ounces at a grade of 1.88g/t, which makes it suitable for a low-open-pit operation.

One of the reasons that the Blanket operation has been very profitable is the cost structure.

Caledonia has successfully managed to keep costs in check with all-in sustaining costs coming to $946 as of last year.

The company also has exclusive rights to explore and subsequently, if exploration is successful, to acquire the mining claims over an area known as Connemara North.

The asset which is also in Gweru, has historically produced significant quantities of gold.

To counter the impact of incessant power cuts Caledonia is setting up a 12MW solar plant that will provide Blanket with about 30 percent of its power requirements in the first phase.

In addition to reducing reliance on an unreliable grid and costly diesel-powered generators, the plant will also reduce Blanket mine’s environmental footprint. Environmental management is one of the company’s five ESG pillars.

With commodity prices forecast to firm up and the company riding on improved efficiencies coming from the completion of the shaft and acquisition of new assets, Caledonia’s future can only be golden.

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