Gold producer, Caledonia Mining Corporation has announced a zero cost contract to hedge approximately 25 percent of its 2022 target gold production at Blanket Mine via a cap and collar hedging contract for 20,000 ounces of gold over a period of five months from March to July 2022.
The hedging contract has a cap of $1,940 and a collar of $1,825, meaning that, for the 4,000 ounces of gold per month for the period, Caledonia will receive an effective gold price per ounce of not less than $1,825 or greater than $1,940 and will receive an effective spot gold price between these two levels.
Commenting on the announcement, Caledonia’s Chief Executive Officer Steve Curtis said:
“Hedging gold production is not an easy decision for a gold miner as investors usually wish to maximise exposure to gold price upside.
“However, given the fact that our capital expenditure phasing is heavily weighted towards the first half of 2022 as we ramp up gold production, the board considered it prudent to take advantage of the current strong gold price to protect the balance sheet during this phase of higher capital investment with a five-month hedging arrangement over a portion of our production.”
Meanwhile there was a fatal accident at the company’s Gwanda based mine last week which claimed one employee, Andrew Clydon Phiri (aged 35).
The accident involved a load, haul and dump (LHD) loader in one of Blanket’s underground haulages.