Productivity at its 49%-owned Blanket mine in Zimbabwe rose to around 1,125 tonnes per day (tpd) in the second quarter from about 1,030 tpd in the first.
Gold produced in the quarter was 11,588 ounces, up from 10,472 ounces in the preceding quarter and ahead of the planned target of 10,000 ounces. Gold production for the third quarter has started well, with production in July clocking in at around 4,480 ounces, some 35% higher than the planned monthly target of 3,300 ounces.
Management believes that Blanket is on course to produce around 44,000 ounces in 2013, which is 10% higher than the previous guidance of 40,000 ounces.
Meanwhile, Blanket's operating costs per ounce and all-in sustaining cost per ounce (now calculated based on the most recent guidance from the World Gold Council) were both lower in the second quarter of 2013 than in the preceding quarter at US$689 per ounce and US$956 per ounce, respectively.
Gold sales in the quarter totalled 11,588 ounces at an average sales price of US$1,368 an ounce.
Net profit after tax attributable to Caledonia for the quarter eased to C$3.0mln from C$4.6mln in the first quarter. Earnings per share declined to 5.8 Canadian cents per share from 9.0 cents in the first quarter.
"The second quarter of 2013 presented significant challenges as the gold price suffered an unprecedented fall in April 2013," said Stefan Hayden, Caledonia's president and chief executive officer.
"Increased gold production in the second quarter was not achieved by high-grading the mine: the average realised grade in Q2 was 3.82 [grams per tonne] g/t, lower than the 4.04 g/t achieved in previous quarters and very close to the average mine grade of 3.84 g/t. Notwithstanding the higher plant throughput and slightly lower grade, gold recovery was virtually unchanged in the quarter at 93.2% compared to 93.3% in the previous quarter.
"Blanket's metallurgical plant has considerable surplus capacity and is believed to be one of the most efficient in the industry, which reflects our recent investments and the skills of Blanket's management and employees," Hayden added.
At the end of June, Caledonia had cash and cash equivalents of C$22.5 million, down from C$25.2 million at the end of March. The decline in cash was down to the payment of the company's maiden dividend for fiscal 2012 and C$3.8mln of capital investment, of which C$2.4mln was at the Blanket mine and C$1.4mln was at Nama, Caledonia's wholly-owned base metals mine in Zambia.
"Supported by the company's strong cash position and continued cash generation at the operational level, development and exploration activity at Blanket has accelerated. We continue to move towards achieving our targeted increase in production," Hayden maintained.
"As a low-cost producer with a robust balance sheet, we believe Caledonia is well-positioned to continue to implement its growth strategy, notwithstanding the current volatility in the gold price," Hayden concluded.
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