Mishma Chakanyuka, Staff Writer 
CALEDONIA Mining Corporation (Caledonia) suffered a US$3,6 million foreign exchange loss in the quarter ended June 30, 2023 owing to the significant devaluation of the local currency against the US dollar.
The foreign exchange loss is from a foreign exchange gain of U$4,2 million recorded in the same quarter last year.
In June this year, the local currency witnessed a weighty depreciation against the US dollar leading to a sharp rise in inflation to 175,8 percent.
Caledonia’s foreign exchange loss resultantly affected operating profit and, accordingly, basic earnings per share showed a 0,6 cent loss compared to an 87,7 cent profit in 2022.
The miner’s gross revenues for the quarter under review marginally dropped by 0,2 percent to US$37 million, while gross profit declined to US$10,9 million from US$17,9 million in the same period last year.
“Whilst Blanket Mine contributed US$13,1 million, the group’s gross profit was affected by the costs of waste-stripping at the Bilboes oxide operation, notwithstanding a small revenue contribution of US$2,2 million in the quarter,” Caledonia said in its second quarter trading update.
“Bilboes will be returned to care and maintenance with effect from October 1, 2023, and, pending the completion of the feasibility study for the sulphide project, the remaining oxides will be mined as part of the larger project.”
During the period under review, the miner’s earnings before interests, taxes, depreciation and amortisation (EBITDA), excluding asset impairments, depreciation and net foreign exchange gains and losses, stood at US$10,5 million.
Group net cash outflows from operating activities stood at US$$2,2 million during the period under review including waste-stripping activities and the payment of legacy creditors at Bilboes. Blanket Mine achieved gold production of 17 436 ounces in the quarter under review, down from 20 091 ounces produced in 2022. On-mine cost per ounce for the quarter of US$1,084 included the costs of the Bilboes oxide operation. At Blanket the on-mine cost per ounce was US$$915 up from US$692 recorded in 2022.
“This increase was in large part due to the disappointing production performance in the quarter; the production challenges now appear to have been addressed and July 2023 showed a material improvement in production and costs,” the company said.
During the second quarter, the company commenced the direct sale of gold to an end refiner outside Zimbabwe. This arrangement is a big milestone for Caledonia and further demonstrates the pragmatic approach of the Zimbabwean authorities to resolve commercial issues facing gold producers, the company said. Going forward, the company will continue deep-level drilling at Blanket Mine to further upgrade inferred mineral resources, thereby potentially extending the life of the mine.
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