Categories: Stories

Caledonia Mining hedges 15 000 oz of gold production

Canadian-listed Caledonia Mining, which owns Blanket Mine in Zimbabwe, today said it had sold forward 15 000 ounces of gold production under a six-month collar and cap arrangement.

Caledonia said the hedge arrangement, which set up the gold price between $1 050 per ounce and $1 080 per ounce would give it greater clarity over cashflows until July 2016 when production at its Blanket mine is expected to ramp up.

The mine has completed the first year of a six-year investment programme under which it intends to invest $70 million from 2015 to 2021 and increase production to approximately 80 000oz of gold annually by 2021.

It said it now expects to spend $45 million in capital expenditure in the three years 2015 to 2017, lower than the $50 million envisaged when its revised investment plan was announced in October 2014.

“The hedge comprises a series of weekly contracts. If the gold price at the end of each contract falls below the collar value, Caledonia will receive the value of the shortfall below the collar multiplied by the hedged ounces,” said Caledonia in an update.

“If the gold price at the end of each contract falls between the cap and the collar value, Caledonia will pay to the hedge counterparty the excess over the collar value multiplied by the hedged ounces. If the gold price at the end of each contract exceeds the cap value, Caledonia will pay to the hedge counterparty the difference between the cap and the collar multiplied by the hedged ounces.”

The hedge arrangement is a financial instrument between Caledonia and a financial counterparty although Blanket will continue to sell its gold to Fidelity Printers and Refiners in Zimbabwe in accordance with local law.

Caledonia said it intends to maintain its existing dividend policy of paying 1.125 US cents per quarter.

The Canadian junior miner owns 49 percent of Blanket Mine, with the remainder held by locals.- The Source

(57 VIEWS)

Charles Rukuni

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

Recent Posts

ZiG loses steam, falls against US dollar for five consecutive days

The Zimbabwe Gold fell against the United States dollar for five consecutive days from Monday…

November 22, 2024

Indian think tank says Starlink is a wolf in sheep’s clothing

An Indian think tank has described Starlink, a satellite internet service provider which recently entered…

November 18, 2024

ZiG firms against US dollar for 10 days running but people still do not have confidence in the currency

Zimbabwe’s new currency, the Zimbabwe Gold (ZiG), firmed against the United States dollars for 10…

November 16, 2024

Zimbabwe among the top countries with the widest gap between the rich and poor

Zimbabwe is among the top 30 countries in the world with the widest gap between…

November 14, 2024

Can the ZiG sustain its rally against the US dollar?

Zimbabwe’s battered currency, the Zimbabwe Gold, which was under attack until the central bank devalued…

November 10, 2024

Will Mnangagwa go against the trend in the region?

Plans by the ruling Zimbabwe African National Union-Patriotic Front to push President Emmerson Mnangagwa to…

October 22, 2024