The global mining environment in 2021 was characterised by prolonged Covid-19 disruptions. Despite this, precious metals sub-sector seemed to have been resilient to the pandemic buoyed by firm demand and elevated prices. Bullion in particular performed well as investors sought a hedge against turmoil in global markets and sustained inflationary pressures. Caledonia’s operational asset, Blanket mine posted a strong year enabled by a cocktail of tailwinds. Gold production surged 16.54% to a record 67,476 ounces as the Central Shaft came online following a 5-year development phase. Revenue for the period grew 21.33% to US$121mn from a combination of increased production and a marginal increase in average realised gold price from US$1,749/ounce in FY20 to US$1,766/ounce in FY21. Production costs in the year under review grew 21.53% y/y to US$53.13mn. Consumables from operations went up 11.73% to US$17.29mn on account of increased production whilst electricity costs grew 28.4% to US$10.36mn emanating from reliance on diesel generators following increased power cuts on the national grid. Labour costs however grew 30% within the period to $20.52mn reflective of a higher head count and conclusion of collective bargaining negotiations with unions. On-mine cost per ounce marginally decreased from US$744/ounce to US$742 per ounce due to costs being spread over higher production ounces. Gross margins were however less resilient and thinned from 47% to 45% y/y. The government did not renew the Export Credit Initiative resulting in other income falling 99% to only US$46,000, subsequently operating profit registered a 5.83% decline y/y to US$38.36mn. All in sustaining cost for the period grew 2.38% to US$990 per ounce. Caledonia remained in a profitable position to FY21 posting a US$23.14mn profit for the period. Capital expenditure outflows escalated 23.81% to US$35.92mn with the net cash position for the group closing out at US$16.27mn, down 14.81% y/y. Loans and borrowings for the period were wound down leaving the entity operating on negligible borrowings. The entity has taken further steps into evolving into a multi-asset holding company with the acquisition of Maligreen at an exercise price of US$4mn.
