18% production increase boosts earnings
”‹Caledonia Mining (Caledonia) achieved targeted gold production of 50,400oz (50.4koz) in 2016, an 18% increase on 2015, after processing a record quantity of ore at its Blanket mine. The company is aiming to increase production by a further 20%, to around 60koz of gold, in 2017 as part of an internally-funded expansion programme to increase gold production to 81koz by 2020. Earnings per share (EPS) for 2016 was up 78% and earnings before interest, tax, depreciation and amortisation (EBITDA) was US$16.7m. The company paid a total dividend of US5.0c per share in 2016, for a yield of 3.6%, one of the highest in the sector. According to QuotedData’s model (see pages 6 to 8), the company may be able to increase its dividend substantially as capital investment winds down. Increased production could also reduce average costs. Caledonia has a 49% interest in the 100-year-old Blanket gold mine, in Zimbabwe, although it participates currently in the mine’s cash flow at the much higher level of 77%. QuotedData’s model of Caledonia indicates an EPS of US35.1c in 2017 and US30.2c in 2018. This suggests that the company could increase its annual dividend to US10c in 2018.
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