Caledonia Mining Corporation PLC (LON:CMCL)(TSE:CAL) has said that the lockdown in South Africa declared by President Ramaphosa is likely to have knock-on effects for operations at the company’s Blanket gold mine across the border in Zimbabwe although is currently continuing to produce gold.
The supply chain for the procurement of a significant portion of mining consumables and capital equipment comes from South Africa.
A lock-down in Zimbabwe was declared on 27 March, but Blanket is continuing to operate as it has applied for an exemption on the grounds that it is able to operate in a manner that contributes to the management of the spread of the coronavirus.
Caledonia will need to quarantine its employee village and surrounding area and reconfigure its operations to reduce the risk of infections being transmitted amongst its employees in order to qualify for the exemption.
In anticipation of supply chain disruptions arising from the coronavirus, Caledonia has increased the levels of consumable stocks at Blanket in recent weeks. Caledonia estimates that Blanket has adequate critical spares and mining consumables in its inventory to sustain uninterrupted gold production well past the expected duration of the supply interruption including allowing for a period of supply chain and inventory restocking after the end of the South African lockdown on 16 April.
Accordingly, management does not expect that Blanket will be forced to suspend gold production as a result of the disruption in the South African supply chain.
Caledonia had cash on hand, as at March 25 2020, of approximately US$12.5mln.
Cash has been boosted by strong first-quarter production.