Caledonia Mining Corporation plc (LON:CMCL) is the topic of conversation when WH Ireland’s Analyst Paul Smith caught up with DirectorsTalk for an exclusive interview.
Q1: With gold as high as it is and a solid production being delivered does this impact your forecast in any way?
A1: The current gold price – now above $1,800/oz for the first time since its last high in 2011 – is only good news for revenue, profit and cash generation from the mine. We will look to revisit our forecasts later in the year as the story of the inexorable gold price rise unfolds. We currently use a $1,685/oz gold price for 2020 and suffice it to say if the gold price remains above $1,800/oz for a sustained period we will have to provide an upward revision to our forecasts.
Q2: What are the longer-term prospects for Caledonia Mining Corporation?
A2: A gold price rise of 30% YOY has seen the market cap valuations, on average, of global gold producers double; CMCL is no exception with its market cap rising 185% over the same period. Gold miners are currently cream of the equity crop in our opinion and will generate strong profits and cash flow and in all likelihood raise their dividends. In the company’s case it is the in the final stages of a funded development program at Blanket which will guarantee a strong production pipeline with low-cost, high margin production and a long future for the mine. It has already raised its dividend twice this year (to 35c/yr, currently yielding 2.7%) and looks set for a record 2020. This is a pivotal year in Caledonia Mining Corporation’s evolution and it remains right on track, in our view, to deliver significant returns to its shareholders over the coming years.