Profit doubles and gold production increases by 17% during Caledonia Mining’s Q1

Caledonia Mining increased gold production by 17% and nearly doubled its profit to $5,248,000 compared to $2,815,000 in the fourth quarter 2010.

Announcing its Q1 results on Wednesday, the company also said that its average cash cost per ounce of gold produced decreased by 18% to US$648 compared to the fourth quarter 2010.

As of March 31, 2011 the company had net cash and cash equivalents of $1,406,000.

The company said that it was making progress and removing constraints to achieve Blanket Mine’s targeted annual production rate. The Blanket Mine was acquired by Caledonia Mining from Kinross Gold Corporation in April 2006. It is located in Zimbabwe and operates at a depth of about 800 metres and has a production capacity of 40,000 ounces of gold per annum.

President and CEO Stefan Hayden was pleased with the results.

“I am very pleased to report a strong first quarter performance for 2011. The increased production coupled with the continued strength in the gold price and a reduction in Blanket’s cash cost resulted in a substantial improvement in Caledonia’s profitability and cash generation,” said Hayden.

“We have made significant progress during the current quarter to address the remaining constraints which, once solved, should enable us to reach our target of 10,000 ounces per quarter. A new ore pass was raise-bored and commissioned on May 13, 2011. The commissioning of the complete standby generating system commenced on May 16, 2011 and is expected to be completed by the end of May, after which Blanket will be able to maintain full operations during any interruption to the normal power supply. I am confident that Blanket will achieve its targeted quarterly production from the third quarter of 2011.”

Michael McCrae wrote this story. You can contact him at [email protected] or on twitter at @michaelmccrae. Picture of Blanket Mine from Caledonia Mining.

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