Caledonia Mining Corporation is in the process of selling its US14 million solar project after receiving an offer from a major solar operator. Caledonia owns the solar project, which was completed earlier this year and provides power to Blanket Mine.
With the mining sector being impacted by power outages, Caledonia sees an economic opportunity in selling its solar plant to a global solar operator, and as part of the ongoing negotiations, it is proposed that the new owner supply electricity from the current plant on a take or pay basis, an arrangement that will secure Blanket’s future power supply.
Commenting on the company’s Q3 report and the nine months ended September 30, 2023, CEO Mark Learmonth said that “the solar plant, which was commissioned in early 2023, continues to operate well. The solar plant is owned by Caledonia rather than Blanket, and therefore the economic benefit arising from the solar plant has been realised in the consolidated all-in sustaining cost rather than the on-mine cost. An offer has been received from a global solar operator to buy the solar plant, and the sale process is underway.”
The solar plant provides approximately a quarter of Blanket’s total electricity requirement during the day. This transaction is expected to realise a profit on Caledonia’s investment in the plant and release cash for reinvestment in Caledonia’s core business. Caledonia has saved money from its operational environment since the solar project was commissioned.
Meanwhile, Caledonia intends to begin the first phase of exploration at Motapa once the Environmental Impact Assessment has been granted. Caledonia increased revenue and production during the period under review, as the Blanket gold mine in Zimbabwe improved significantly after experiencing challenges in the first half of the year.
Revenues for the three months ended September 30 were US$41.2 million, totaling US$107.7 million for the first nine months, with underlying profits of US$15.5 million, a 2.9% decrease from the same time last year.
Production in the quarter totaled 21,120oz, a new quarterly record, and the miner claimed it is on course to exceed its 2023 projection of 75-80,000oz, with cumulative gold production now standing at 55 244 ounces. The Blanket mine is predicted to produce a similar number of gold ounces in 2024.Gross profit was $14.1 million, and EBITDA was $15.5 million, a 2.5% decrease from the previous year.
Bilboes produced 1 151 ounces of gold in the quarter under review, a small rise from the previous quarter’s output. During the reporting year, the mine also reduced its monthly costs from nearly a million dollars to under US$200,000. This, together with the proceeds from the sale of gold recovered from the heap leach, is expected to allow Bilboes to operate on a breakeven basis for the remainder of the year.
Caledonia stated that work on a new feasibility assessment for the sulphide project is continuing, with a focus on capital allocation, and that the project will be staged to lower the initial capital requirement. The preliminary findings are expected early 2024.
