(Alliance News) - Caledonia Mining Corp PLC on Tuesday cut annual production guidance following operational difficulties at Zimbabwe's Blanket gold mine.
Gold production in the second quarter of 2019 was 12,712 ounces, 0.4% higher year-on-year and 6.4% higher than the first quarter.
However, Caledonia's first half production was 3.6% lower on the year before, at 24,660 ounces, which was below expectations due to lower grades and power problems.
As a result, Caledonia has reduced 2019 production guidance to 50,000 ounces to 53,000 ounces of gold, from the 53,000 ounces to 56,000 ounces guided previously.
The company posted net profit attributable to shareholders for the half of USD32.6 million, over five times higher than the year before, due to a USD22.8 million foreign exchange gain and the sale of a subsidiary.
"Production was adversely affected by lower than expected grade as problems with mining dilution adversely affected the grade and mine production continued to be disrupted due to the instability of the incoming power supply. Grade continues to receive close management attention," said Chief Executive Steve Curtis.
"The electricity situation worsened considerably in July and early August and Blanket experienced frequent and long interruptions to its power supply. To address this problem Blanket has procured additional back-up diesel generators which will be installed in the coming weeks. We have had constructive engagement with the state electricity utility and the chamber of mines as a result of which Blanket has signed a new electricity supply agreement in terms of which it will receive un-interrupted imported power at a lower cost than it previously paid," he continued.
"Caledonia is at an advanced stage of evaluating a solar PV generating facility which would reduce Blanket's dependence on grid power. Although the electricity situation has improved in recent days, we feel it prudent to continue to implement plans to protect Blanket from any recurrence of this problem."
Shares in the company were flat on Tuesday, at a price of 470.00 pence each.