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14 Aug 2020
WHI Morning Comment: Caledonia Mining (CMCL) - Q2 (H1) 2020 results - Raised forecasts and new fair value
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WHI Morning Comment: Caledonia Mining (CMCL) - Q2 (H1) 2020 results - Raised forecasts and new fair value
Caledonia Mining Corporation PLC (CMCL:LON) | 825 -206.3 (-2.9%) | Mkt Cap: 158.4m
- Published:
14 Aug 2020 -
Author:
Paul Smith -
Pages:
5
Caledonia Mining announces Q2 results from its 64%-owned Blanket mine in Zimbabwe today. On the back of management focus and an increased gold price the results continue to improve quarter-by-quarter. Production is up against this time last year to 27.7koz gold for the half year (24.7koz) and on track for managements forecast of between 53-56koz (WHI est. 55.5koz) for the year. Revenues were up in H1 2020 which led to increased Gross Profit at $22.5m (adj. $15m after a one off FX gain) and an improved level of cash at $11.6m ($7.9m); despite a continued $8m investment in the mine expansion ($8.3m). COVID has had little impact on operations at the mine with Caledonia helping Zimbabwe with a $1.1m contribution. Along with its gold producing peers, Caledonia has seen a significant increase in valuation over the course of the year. The increasing gold price has allowed Caledonia to maintain its Central Shaft construction as well as increase the dividend (twice) within the year. We anticipate that the dividend will increase again as Caledonia winds down its capex spend on the Central Shaft and as the increased gold production flows through to the cash flow line. We see fair value in Caledonia at 1,900p after increasing our gold price forecast in line with recent increases. Caledonia remains a solidly run business with an expanding production profile and a potentially exciting in-country source of new projects.