By Almot Maqolo.
HARARE – Caledonia Mining Corporation Plc (Caledonia) expects a decline in rate of capital expenditure by year end, which will give the gold miner flexibility to consider deploying some of its cash reserves on an increased dividend.
This comes as Caledonia, which operates the Blanket gold mine in Gwanda, declared a further increased quarterly dividend of US$0.085 on each of the firm’s common shares.
It represents a 13 percent rise from the previous quarterly dividend of 7.5 cents, which, together with the increase to the dividend in January 2020 from 6.875 cents, shows a cumulative 24 percent surge since October 2019.
“We are pleased to announce a 13 percent increase in the dividend which reflects our continuing confidence in the outlook for our business. As we reported in our Q1 2020 results, our financial performance has been strong due to increased production and a higher gold price which has continued into Q22020.
“As we approach the end of the five-year investment Programme at Blanket Mine, we anticipate the rate of capital expenditure will begin to reduce towards the end of 2020, which gives us greater flexibility to consider deploying some of our cash reserves on an increased dividend,” chief executive officer Steve Curtis said.
Central Shaft remains on track and is poised to be completed in Q42020.
“We expect the Central Shaft equipping to be completed in the fourth quarter of 2020; thereafter we look forward to the commissioning of the shaft and further increases in operating cashflow as production is expected to increase by over 30 percent over the coming 24 months to approximately 75,000 ounces in 2021 and to the target rate of 80,000 ounces of gold per annum from 2022,as capital expenditure falls further and begin to realise the operational efficiencies arising from the new shaft,” he said.
Curtis added that: “The Board will review Caledonia future dividend distributions as appropriate while considering the balance between delivering returns to shareholders, pursuing the significant growth opportunities within Zimbabwe and maintaining a prudent approach to financial management.”
The business has reported significant resilience through the Covid-19 pandemic with gold production levels still within the range of 2020 guidance of 53,000–56,000 ounces.
Stable production, a high gold price and good cost control have resulted in increased cash generation in 2020. Resultantly, this has given the Board confidence that the business can sustain a higher level of dividend distributions.
The miner has projected a production of 80,000 ounces of gold per annum from 2022.
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