Caledonia Mining ups dividend, bucks industry sentiment with bullish 2020 outlook

Blanket Mine Caledonia Zimbabwe
Blanket Mine: new shaft to be commissioned 2020

While sentiment across much of Zimbabwe’s mining industry is down, Caledonia Mining says it has “increased confidence in the outlook of our business”.

To prove it, Caledonia is giving its shareholders a 9.1% increase on quarterly dividends, after two strong quarters at its Blanket Mine, and ahead of the commissioning this year of a new shaft.

The Mining Business Confidence Index (MBCI), which gauges confidence among members of the Chamber of Mines, dropped to 2.2% at the end of 2019 from 8% at the end of 2018.

Shareholders in the company, listed in New York, Toronto and London, will get an increased quarterly dividend of US$0.075 on each common share, Caledonia said in a statement.

“I am pleased to announce a 9.1 per cent increase in the dividend which reflects our increased confidence in the outlook for our business. As we reported in mid-November 2019 when we published the results for the third quarter of 2019, our financial performance has improved due to increased production and the continued higher gold price. This improvement has continued through the final quarter of 2019,” said Steve Curtis, Caledonia CEO.

Gold output from Blanket Mine in the quarter to September last year went up 7.3% 13,646 ounces.  Blanket delivered after tax operating cash flow for the quarter of US$4.9 million and net cash on hand at the end of the quarter was US$8 million. 

Up the shaft

The company expects to commission a new shaft at Blanket in the last quarter of 2020, and conclusion of that project is likely to release more cash as capital expenditure slows down.

“We expect the Central Shaft to be commissioned in the fourth quarter of 2020; thereafter we look forward to further increases in operating cash flow as production increases to the target rate of 80,000 ounces of gold per annum from 2022, as capital expenditure falls further and we begin to realise the operational efficiencies arising from the new shaft,” Curtis said.

 “The Board will review Caledonia’s 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.”