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LONDON (Alliance News) - Caledonia Mining Corp PLC shares continued their upward trend on Tuesday after the miner increased its dividend payout on the back of high levels of confidence about the company's future earnings and cash generation.
Caledonia shares were trading up 7.8% to 82.0 pence per share on Tuesday afternoon, and have more than doubled since the start of the year.
The miner, which is the 49%-owner of the Blanket gold mine in Zimbabwe, has upped its quarterly dividend payment by 1.375 cents per share.
Caledonia said the rise represents an annual increase of 22%, with the payout for the year set to total 5.5 cents per share compared to the annual dividend in the last financial year of 4.5 cents per share.
"The declaration of the increased dividend reflects the company's confidence that its earnings and cash generation will increase," said Chief Executive Steve Curtis.
The miner is expecting 2016 to be "transformational" as it moves deeper into underground operations at the Blanket mine. In March, production started from ore bodies lying below 750- metres after the miner completed the No.6 Winze and the decline development into the AR South ore body was also completed to improve the miner's "operational flexibility".
Caledonia produced over 42,000 ounces of gold last year and is confident that can rise to 50,000 ounces in 2016, 65,000 ounces in 2017 and 67,000 ounces by 2018.
"The planned increases in production in 2016 and 2017 are expected to result in a lower average cost of production as fixed costs are spread across an increased number of gold ounces. Approximately 80% of Blanket's costs and 100% of Caledonia's costs are fixed and the marginal cost is approximately USD160 per ounce," said Curtis.
"Notwithstanding the increased dividend, Caledonia intends to retain a robust balance sheet so that it can take advantage of further investment opportunities," he added.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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