Mishma Chakanyuka, Staff Writer 
CALEDONIA Mining Corporation (Caledonia) has warned that increased operating costs for 2023 and several significant one-off, non-operating costs in the final quarter of 2023 will see a reduction in profit for the full year.
The Victoria Falls Stock Exchange-listed miner said the increase in operating costs comprises higher-than-expected overtime payments and power costs at Blanket Mine.
The gold miner said about non-operating costs, general and administrative costs rose with global inflation and these also included higher than expected staff termination costs.
Caledonia said it now expects to report an adjusted profit before tax for the year ended December 31, 2023, materially below market expectations.
In a trading update for the year ended December 31, 2023, Caledonia said it encountered higher financing costs, including hedging, interest, and foreign exchange losses and a one-off impairment charge about a VAT refund claim at the Blanket Mine solar project.
Caledonia said it now expects to report an adjusted profit before tax for the year ended December 31, 2023, materially below market expectations.
“It is regrettable that, at a group level, we have been adversely affected by a series of higher-than-expected costs in the second half of 2023 which have had a negative effect on the full year profitability,” Caledonia’s chief executive Mark Learmonth said.
“The performance of Blanket Mine remains strong and, notwithstanding some unforeseen overtime and power cost issues in the second half, has met guidance and produced a robust performance for the second half of 2023.
“A number of the other cost items are not anticipated to be recurring, whereas others have arisen from our decisions to invest in the business, most notably around personnel and advancing the Bilboes sulphide project. I am confident that many of these will not recur in 2024 which has started positively and I look forward to the future with optimism as we pursue our goal of becoming a multi-asset production company,” Learmonth added.
Caledonia said a significant proportion of the cost increases are not expected to be carried through into 2024.
“Specifically, costs associated with Bilboes are now reduced to care and maintenance only and the project was cash neutral in the fourth quarter of 2023,” Caledonia said.
Production and costs at Blanket in 2024 to-date are also within expectations of full-year guidance, and the company is introducing measures aimed at reducing electricity costs over the medium term.”
Caledonia noted that Blanket Mine has, however, continued to perform well with full-year production for 2023 at 75,416 ounces.
As a result, Caledonia expects to report revenue for the full year in line with market expectations.
