LONDON (ShareCast) - (ShareCast News) - Caledonia Mining Corporation had a "difficult" start to the year as rising costs and lower gold prices squeezed margins.
Caledonia said gold production was down for the half year to 20,361oz from 21,464oz, while sales for the second half were also down compared with last year at 21,174oz from 23,433oz.

Attributable earnings declined by 60% to $1.9m from $4.3m while dilute earnings were down to 3.3c per share from 8.0 cents in H1 2014.

The company said on mine cost control was good, but average costs were impacted by lower grade and increased electricity consumption, which meant mine cash costs were up by 12%.

Northland Capital Partners said in a note the first half had "difficult" for the company, and said the third quarter was likely to be the same.

"On a positive note, the expansion in 2016 is not only likely to increase production levels but also decrease all-in sustaining costs increasing the Company's profitability and allowing it to better weather a lower gold price environment," the broker said.

SP Angel said in a note the company was engaged in a major mine redevelopment programme at the Blanket mine which is designed to secure the long term future of the mine.

While current commodity prices placed extra pressure on the company, SP Angel said in a note, Caledonia would begin to bear fruit over the coming months.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE