BY MTHANDAZO NYONI
CALEDONIA Mining Corporation has placed on ice exploration at Glen Hume, the Midlands-based goldfields, after results failed to live up to the resources giant’s expectations, the firm said this week.
Glen Hume, which is located near Gweru, was the latest of several assets being eyed by the Jersey-headquartered resources outfit, whose flagship operation is the Gwanda-based Blanket Gold Mine, one of Zimbabwe biggest.
Chief executive officer Steve Curtis did not disclose if the giant was looking at pouncing on another asset to give impetus to its Zimbabwean growth ambition, after abandoning Glen Hume, although he said the firm was proceeding with exploration at Connemara, another project it has been looking at.
Curtis said the size, grade and width of Glen Hume fell short of what Caledonia had expected when it ventured into the exploration of the claim that lies at the heart of sprawling mineral claims in one of the country’s richest regions.
In December last year, Caledonia announced that it had entered option agreements on Glen Hume and Connemara.
These deals gave the company the right to explore each property for periods of between 15 and 18 months.
If the exploration had been successful, the two assets would have helped Caledonia grow its assets in Zimbabwe, possibly giving it capacity to produce well over 80 000 ounces of gold per annum, which the firm expects to reach within the coming year.
However, in a statement accompanying the group’s financial results for the quarter ended June 30, 2021, Curtis said the excursion into Glen Hume had produced “disappointing exploration results”.
“Higher production, lower costs and a higher gold price resulted in a significant increase in the underlying profitability of our business with gross profit increasing by 51% compared to the comparable quarter in 2020,” Curtis said in a commentary to the financial statements.
“Net profit was adversely affected by the impairment of the Glen Hume exploration asset following the board’s decision not to proceed further with this project because the property does not meet Caledonia’s strategic requirements in terms of size, grade and width,” the Caledonia CEO said.
The property gave rise to an impairment of US$3,5 million, which adversely affected international financial reporting standards profit attributable to shareholders.
The company, however, said it will conduct exploration at Connemara North, the other optioned property in Zimbabwe.
It will also consider further investment opportunities in Zimbabwe and elsewhere.
In the quarter under review, Caledonia produced 16 710 ounces of gold, 24% higher than the 13 499 ounces produced during the corresponding period.
Cumulatively to June, production stood at 29 907 ounces of gold, the report said, noting that this was 8% higher than the 27 732 ounces produced in the first half of last year.
The company realised gross revenues of US$30 million, 31% up compared to the same period last year.
Gross profit amounted to US$13,9 million, a 51% increase on the US$9,2 million registered during the second quarter of 2020.
Earnings before interest, taxes, depreciation, and amortisation — excluding asset impairments, net foreign exchange gains and losses and export incentives — increased by 103% to US$14 million.
Over 165 000 tonnes of ore were mined and milled during the quarter under review, which was a new production record for any quarter and reflected the contribution of the Central Shaft, which was commissioned at the end of March 2021 after Caledonia spent US$67 million to see the expansion through.
The firm projects that from 2022 onwards, it will be producing 80 000 ounces of gold per annum.