Last checked at 
LONDON (Alliance News) - Caledonia Mining Corp Monday said profit fell in 2015 after lower gold prices and higher production costs squeezed margins, but Caledonia said the revised plan for its flagship mine remains on track to deliver significant production growth over the foreseeable future.
The mining company focused on southern Africa said pretax profit in 2015 was USD8.0 million, down from the USD11.9 million profit booked in 2014, as revenue decreased to USD49.0 million from USD53.5 million.
The drop in revenue, alongside slightly higher production costs, caused gross profit to fall to USD13.2 million from USD18.5 million. The fall in gross profit was partly offset by the foreign exchange gain for the year rising to USD2.9 million from USD1.1 million in 2014.
The company's main asset is the Blanket gold mine in Zimbabwe, in which it owns a 49% stake.
On a 100% basis, Caledonia said gold production in 2015 amounted to 42,804 ounces compared to 41,711 ounces in 2014, but gold prices were lower year-on-year at USD1,139 per ounce compared to USD1,245 per ounce previously.
Exacerbating the fall in prices was a rise in costs, as the on-mine cash cost increased to USD701 per ounce from USD652, whilst the all-in sustaining cost rose to USD1,038 from USD969 per ounce, which resulted in the squeeze to the company's gross profit.
The longer-term aim for Caledonia is to get production from Blanket up to 80,000 ounces of gold by 2021.
Investment in Blanket during 2015 amounted to USD17.0 million due to the company's decision back in November 2014 to implement the revised mine plan on the operation. In 2014, investment in the mine only totalled USD6.0 million.
"Implementation of the revised investment plan is on-track and within budget. During the year the tramming loop was completed, which allowed a sustained increase in tonnes produced in the second half of the year," said the company.
"In the middle of March 2016, production from below 750 meters commenced, as planned, via the Number 6 Winze. Production from below 750 meters is expected to increase progressively in the remainder of 2016 and 2017 and will contribute to the higher targeted production of approximately 50,000 ounces of gold in 2016 and approximately 65,000 ounces of gold in 2017," Caledonia added.
Caledonia shares were up 1.6% to 49.25 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
