Caledonia Mining Corporation PLC (LON:CMCL) (NYSE AMERICAN:CMCL) has declared a further increased quarterly dividend of 8.5 US cents, a 13% hike from the previous quarterly dividend of 7.5 cents, which, together with the increase to the dividend in January 2020 from 6.875 US cents, represents a cumulative 24% increase since October 2019.
The group highlighted significant business resilience demonstrated through the COVID 19 pandemic with gold production levels still within the range of 2020 guidance of 53,000-56,000 ounces, and with target production for 80,000 ounces of gold per annum from 2022.
READ: Caledonia Mining delivers increased gold production at Blanket and says guidance remains unchanged
it said that stable production, a high gold price and good cost control have resulted in increased cash generation in 2020, has given the group's board confidence that the business can sustain a higher level of dividend distributions.
In a statement, Steve Curtis, Caledonia's chief executive officer commented: "We are pleased to announce a 13 per cent increase in the dividend which reflects our continuing confidence in the outlook for our business. As we reported in our Q1 2020 results, our financial performance has been strong due to increased production and a higher gold price which has continued into Q2 2020.
"As we approach the end of the five-year investment programme at Blanket Mine, we anticipate the rate of capital expenditure will begin to reduce towards the end of 2020, which gives us greater flexibility to consider deploying some of our cash reserves on an increased dividend."
He added: "We expect the Central Shaft equipping to be completed in the fourth quarter of 2020; thereafter we look forward to the commissioning of the shaft and further increases in operating cash flow as production is expected to increase by over 30 per cent over the coming 24 months to approximately 75,000 ounces in 2021 and to the target rate of 80,000 ounces of gold per annum from 2022, as capital expenditure falls further and we begin to realise the operational efficiencies arising from the new shaft."
"The Board will review Caledonia's future dividend distributions as appropriate while considering the balance between delivering returns to shareholders, pursuing the significant growth opportunities within Zimbabwe and maintaining a prudent approach to financial management," Curtis concluded.