The company’s majority-controlled Blanket gold mine in Zimbabwe churned out 13,428 ounces in the three months to 30 September, up from 10,927 ounces in the same period of 2015.
The increase was mainly due to a rise in tonnes mined and milled following the completion of infrastructure works. A third mill was installed at Blanket during the quarter, and this should further improve plant capacity.
Gold was produced at an all-in sustaining cost (AISC) of US$969 an ounce, versus US$1,005 an ounce a year earlier, despite a higher royalty cost resulting from a rise in the gold price.
The company expects to see further reductions in the average cost of production, as output ramps up, with the company targeting an AISC of somewhere between US$810 and US$850.
Next year the company is looking to produce 60,000 ounces of gold, which would be around a 20% increase on 2016’s output, and expects to crank this up towards 80,000 ounces by 2021.
Gold was sold at an average price of US$1,312 an ounce, compared to US$1,106 an ounce in the third quarter of last year.
Profit before tax rose to US$4.11mln from US$2.24mln the previous year, but the tax bill shot up to US$2.29mln from £703,000.
Foreign exchange movements also put a dent in earnings, and diluted earnings per share (EPS) eased to 1.9 cents from 2.6 cents the year before. Adjusted EPS, which excludes foreign exchange movements, rose to 4.4 cents from 2.9 cents last year.
The company’s cash pile diminished to US$12.39mln at the end of the quarter from US$14.65mln a year earlier, reflected continued capital investment, but was up from US$10.6mln at the end of June 2016.
The company recently increased its dividend payments to 5.5 cents a year, and with earnings running comfortably above that rate it expects to maintain that dividend rate, barring unforeseen circumstances.
"The transformational Central Shaft project continues to progress well with completion on track for mid-2018 with the shaft depth currently standing at 330 metres. The completed shaft down to a level of 1,080 metres will establish Blanket as a large, low cost operation with excellent prospects to extend the existing mine life,” said Steve Curtis, Caledonia’s president and chief executive officer
"We remain positive about the future prospects for Caledonia and look forward to updating the market with our progress in the future," he added.