increased operating costs for 2023 and several significant one-off, non-operating costs in the final quarter resulted in reduced profit for the full year, Victoria Falls Stock Exchange-listed Caledonia Mining Corporation has said.

The company expects to report an adjusted profit before tax for the year ended December 31, 2023 materially below market expectations.

In its trading update for the year ended December 31, 2023, Caledonia reported that Blanket Mine had continued to perform well since the end of the quarter ended September 30, 2023, with full year production for 2023 at 75 416 ounces.

“It is regrettable that, at a group level, we have been adversely affected by a series of higher-than-expected costs in the second half of 2023 which have had a negative effect on the full year profitability,” Caledonia chief executive officer Mark Learmonth  said.

“The performance of Blanket Mine remains strong and, notwithstanding some unforeseen overtime and power cost issues in the second half, has met guidance and produced a robust performance for the second half of 2023.”

He added: “A number of the other cost items are not anticipated to be recurring, whereas others have arisen from our decisions to invest in the business, most notably around personnel and advancing the Bilboes sulphide project.

“I am confident that many of these will not recur in 2024 which has started positively and I look forward to the future with optimism as we pursue our goal of becoming a multi-asset production company.”

The group indicated that the increase in operating costs comprised higher than expected overtime payments and power costs at Blanket Mine.

In relation to non-operating costs, general and administrative costs rose with global inflation and these also included higher than expected staff termination costs.

The company also encountered higher financing costs, including hedging, interest and foreign exchange losses and a one-off impairment charge in relation to a value-added tax refund claim at the Blanket Mine solar project.

“Reassuringly, a significant proportion of these cost increases are not expected to be carried through into 2024. Specifically, costs associated with Bilboes are now reduced to care and maintenance only and the project was cash neutral in the fourth quarter of 2023,” the company said.

“Production and costs at Blanket in 2024 to-date are also within expectations of full year guidance, and the company is introducing measures aimed at reducing electricity costs over the medium term.”

As at December 31, 2023, the company had cash on hand of US$6,7 million and overdrafts and term loans of US$17,7 million.

Caledonia expects to publish its operating and financial results for the quarter ended December 31, 2023 on or before March 28, 2024.