Caledonia shelves dividends payment

By Golden Sibanda

Toronto Stock Exchange (TSX) listed Caledonia Mining, the parent firm of Blanket Gold Mine in Zimbabwe has postponed declaration of its second quarterly dividend over uncertainty in the business environment due to the outbreak of Covid-19, a global pandemic that has infected and killed hundreds of thousands.

Caledonia said it would continue to monitor the situation and review it according to the prevailing circumstances.

The junior miner said its cash position as of March 26 was $12,5 million (Canadian dollars).

At the current quarterly dividend rate of 7,5 cents per share, the dividend that was scheduled for payment in April amounts to approximately $860 000, less than 7 percent of Caledonia’s currently available cash.

Caledonia has paid a quarterly dividend since 2014, regards the payments an important element of a strategy to create and enhance shareholder value.

The company said the measures taken by the Zimbabwe and South African governments do not result in severe and/or prolonged interruptions to operations; the effect of such measures should not impede the company’s ability to resume the payment of quarterly dividends.

Leigh Wilson, Caledonia chairman,commented:

“The Covid-19 pandemic has elevated global levels of uncertainty. I have full confidence that our business will emerge from this situation substantially unchanged, but, out of an abundance of caution, we have decided to defer the dividend decision until we have greater clarity on the wider implications of this highly fluid situation.

“The resumption of dividends will depend on inter alia, Blanket maintains a reasonable level of production; receiving payment in full and on-time for all gold sales; being able to make the necessary local and international payments and being able to replenish its supplies of consumables and other items.

Our balance sheet remains in an enviable position and the dividend remains comfortably affordable.

“Today’s announcement is a continuation of the prudent approach to capital allocation that we have followed for several years – a path that we expect to continue.”

Production at Blanket continues, although at a lower rate than targeted due to the introduction of measures to reduce the risk of infections being transmitted among its employees.

Blanket also said it had consumables and spare parts in its inventory to sustain uninterrupted gold production well past the end of the current lockdowns in Zimbabwe and South Africa, which have declared 21-day lockdowns, which started on March 26 in South Africa and on Monday in Zimbabwe. The Herald