Caledonia Mining attractively priced, says City broker

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By Zimbabwe Investor on April 4, 2013. No Comments

Caledonia's Blanket Mine in Mashonaland West province

Caledonia’s Blanket Mine in Mashonaland West province

Toronto-listed Caledonia Mining Corporation  has pledged to continue to declare dividends on at least an annual basis, after opening its account with a maiden dividend of half a Canadian cent.

The dividend, in respect of 2012, will be paid after the implementation of the 1-for-10 share consolidation which will take effect on 12 April 2013. On a post-consolidated basis the dividend will be 5 cents Canadian (CAD$0.05) per ordinary share.

The maiden dividend was declared on January 25th. City broker Northland Capital Partners said on Thursday that “the payment of an annual dividend is positive news that separates Caledonia Mining from the majority of its peers in the junior mining sector.”

Stefan Hayden, Caledonia’s president and chief executive officer, said: “Caledonia will continue to maintain its strong financial position so that it can deliver on its stated strategy of increasing production at the Blanket Mine to 76,000 ounces of gold by 2016 and retain the flexibility to take advantage of any further opportunities that may arise without the need to raise third party finance.”

Northland echoed this theme in its broker note. “Even with the payment of the dividend, Caledonia will be able to maintain a strong cash position, funding the expansion of the Blanket Mine, Zimbabwe (49% owned) from 45,000oz Au in 2012 to 76,000oz Au by 2016.

“This low cost producer ($571/oz Au) looks very attractive at its current share price,” Northland reckons.