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Executive Interview - LPEQ

Edison TV: | Investment trusts | 10 Oct 2016

Executive Interview - LPEQ

Caledonia Mining

Ore extraction hindered by IP implementation

Update | Mining | 14 Sep 2017

As Caledonia Mining (CMCL) continues to implement its investment plan (IP), logistical issues governing ore handling volumes and access to higher-grade ore bodies have affected gold production during Q2 and H117. Underground works to ameliorate material handling bottlenecks have taken place with successful completion, inter alia an underground tramming loop. However, grades are lower due to restricted access to the higher-grade Eroica and Lima ore bodies situated on the other side of the Central Shaft development area to the main surface haulage route – the No. 4 haulage shaft. We have adjusted our valuation to reflect this and the H117 financial results, leading to a valuation of 933p for successful implementation and operation of the Blanket IP.

Caledonia Mining

Production in line, EPS down on macro factors

Update | Mining | 24 Nov 2016

Caledonia Mining's (CMCL) third-quarter results indicate the Blanket mine operating in line with expectations, bar a minor slip in the head grade, which is already improving through Q416. As such, revenue and costs remain in line with expectations and the company remains on track to meet its FY16 production target of 50koz Au. The main impacts to the company's cash flow are non-operational, relating to share-based payments, negative forex movements (with rand strengthening affecting certain costs), as well as a non-recurring cost relating to due diligence on an investment opportunity. As a result, we downgrade our 2016 adj. EPS estimate 25% from 24c to 18c, while noting that this still represents a year-on-year increase of 123% and a low P/E of 6.7x (cf FTSE Mining Index average of 27.1x). Caledonia's dividend yield is currently 4.5%.