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Caledonia Mining lowers production forecast as grades dip

Published: 02:39 14 Oct 2014 EDT

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Caledonia Mining (LON:CMCL TSE:CAL) has trimmed its forecast for gold production and earnings this year after a dip in grades at its Blanket mine in Zimbabwe, but vowed to maintain its dividend.

The miner produced 9,890 ounces in the three months to September, a near 12% decrease on the previous quarter as the head grade dipped below the first half’s 3.7 grams per tonne (g/t).

Production so far in the nine months of the current year was 31,354 ounces, prompting Caledonia to reduce its full year target to 40,000 ounces from 45,000.

The miner added that the lower production allied with a lower gold price would hit earnings in the quarter and mean that the full year outcome will be materially lower than market forecasts.

A change to the tax regime in Zimbabwe has exacerbated the financial impact, though costs have also fallen due to a combination of oxygen injection into the CIL process and the devaluation of the South African Rand against the US dollar.

Caledonia re-iterated that due to its strong balance sheet it expects to continue the existing dividend policy of C1.5c per quarter in 2015.

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