Caledonia Mining Corporation Plc (CMCL) on Q2 2021 Results - Earnings Call Transcript

Operator: Camilla Horsfall: Hello, everybody. Welcome to our Q2 results Call for shareholders. So, on the call from Caledonia, you've got Steven Curtis, our CEO; Mark Learmonth, our CFO; Dana Roets, our COO; Maurice Mason, our Vice President of Corporate Development; and then myself, Camilla Horsfall, Vice President of Investor Relations. So, if you have any questions, then please just raise your hand at the end of the presentation and I can unmute you or you can just write the question in the Q&A box, okay. So, I'm now in a pass you over to Steve and Mark, who can talk you through the presentation. Steven Curtis: Thanks, Camilla. And welcome everybody and thank you for joining us for this Q2 presentation. It's great to have my team with me and we're very pleased to present a very good set of results. We have a presentation, which we will quickly go through, and then we'll open it up to questions. And let me kick it off by starting initially and Mark will flick the slides and then I'll hand over to Mark. So, the disclaimer is what you're all familiar with so will just pass over that. And the next slide just gives you the focus areas, which I'm sure you are also familiar with. Central Shaft project completed. Operational, Dana can talk about that later if you'd like him to. We're ramping up production. You will have seen in our public announcements that July was a very good month of nearly 6,000 ounces and that indicates that the process of building up is working extremely well. We are committed to returning money to shareholders as we've demonstrated with our regular increases in the quarterly dividend. And as you would have seen from the results, the free cash flow generated in this quarter is in line with our thinking of being able to afford and to return more money to shareholders. We do need some of that money though for new opportunities. And we announced as well in the MD&A that one of our two exploration properties we have decided not to continue with and not to exercise the option. It's the nature of exploration. So later on in the presentation, we'll talk about the Connemara North exploration opportunity and we'll give you some detail as to where that is. The results highlights. If you haven't studied yet and this presentation will be on the website, production ounces for the quarter of 16,700 ounces, a record for any second quarter. The revenue of $30 million, 31% increase. I must mention that in the production ounces to achieve those many ounces, the 165,000 tons that we mined and milled is actually an all-time record and that just indicates how well our mining team under Dana has done in developing the mine and developing the opportunities to be able to ramp up to 80,000 ounces. Gross profit of nearly $14 million. But importantly the EBITDA number and we are quoting here a number that is taking -- which is adjusted for the unusual business items -- non-business items let me say; the write-off of the exploration property, the foreign exchange gains and losses. So, this is kind of normalized and we are looking here at 100% increase from just under $7 million to $14 million. That is a very, very pleasing number for a quarter. And that rolls into adjusted earnings per share of nearly $0.63 per quarter, 70% up on the comparable quarter. But importantly, against our dividend declaration of $0.13 a quarter, it just shows that we've got a lot of headroom and at a point in time we'll be able to ramp up that dividend I'm sure Board permitting. Net cash from operations -- operating activities nearly $13 million from a comparable $4 million. That's what the game's all about. We need to generate cash, we need to be able to allocate that cash sensibly, and I trust you will understand that we've done that well in sinking the Central Shaft and being able to progress this mine to an 80,000 ounce producer. I'm going to hand over to Mark to go through some of the intricacies of the dividend and maybe a number on the previous slide that Mark wants to just give a little bit more explanation around. Mark Learmonth: So, I've got to confess. I'm a bit naughty to hurry Steve along, I keep on moving the slides before he's finished. So, to go back to the previous slide. Steve is quite right if you look at the six months, six months this year and six months last year, there looks to be an anomaly here. The dividend declared in the first six months of 2020 was $0.235, which is more than the dividend we declared in the first six months of this year and that's because for very obscure and very arcane regulatory reason. Last year we declared three dividends. We declared one at the end of January. The one that we would ordinarily have declared in early April and paid in April, we actually deferred that to May just to get a better sense as to what was happening with coronavirus. The dividend that we would ordinarily have declared in July i.e., after the end of the half year and after the quarter, for some reason last year we declared it on June 29. So in terms of dividend declaration, in 2020 we had three dividends whereas in 2021 we only had the two dividends. So, I don't want any sort of confusion that we've cut the dividend. And actually to make that clear, here you see the graph showing our quarterly distributions and you can see we've pretty much increased it every quarter since late 2019 other than, as I mentioned, sort of April, May last year where we sort of deferred the dividend for a month to see what was going on and then we held it at an increased level of $0.075 a share rather than increase it. We thought to increase it in that environment might give it . So, we were on a dividend yield of about 4.1%. That's probably gone up since our share price reacted to the adverse movement in the gold price a few days ago. And there's nearly a 90% increase in the quarterly dividend since October 2019. Turning just to encapsulate some information here about production. What you see here is tons milled and grade and ounces produced and recovery. The driver for incremental production in the quarter was with tons milled and Steve's already mentioned that the ounces produced in quarter two is a record for any quarter two, but the tons milled in the quarter is a record for any quarter at all. That demonstrates that the Central Shaft is now contributing and what it's doing at the moment is it's now hoisting waste -- development waste so that the Central Shaft can get itself connected up to the ore bodies and that then relieves the pressure on number four shaft to focus on hoisting ore. So, we'd expect Central Shaft to actually start hoisting gold bearing material by the end of the year, but it's already making a substantial contribution. And as Steve's already mentioned, July's production was just 5,000 ounces -- 5 ounces less than 6,000 ounces so it's 5,995 ounces, which again if you extrapolate on that for the quarter, shows again continued progress towards achieving our target of 80,000 ounces a year. Just looking at the profit and loss account; revenue up to $30 million for the quarter and that's a combination of higher production and higher gold price. The royalty stays the same at 5%. Production costs, a little bit more about that later, but in general production costs were as expected or perhaps even slightly lower than expected other than in the area of electricity, but I'll come on to that later. Depreciation has increased by about $1 million for the quarter and that's because having commissioned the Central Shaft, I'm afraid we've not got to start depreciating it. So, that would increase the annual depreciation charge from about $4 million to about $8 million. So at the gross profit level, everything is looking good, $9.2 million up to $13.9 million. G&A is up slightly and I've got more information on that. That reflects primarily increased wages and salaries and that's due mainly to new hires. We've taken on an Internal Audit person to improve and strengthen our internal controls, we've taken on Camilla to help with Investor Relations, and Dana has taken on two technical staff in Johannesburg to help us with the increased complexity of the mine. Then below that -- then below that level, things kind of go wrong for this quarter really. You'll see in last year we had a net foreign exchange gain of $1.5 million and we also had net other income of $1.5 million. That net income, that was a government grant to encourage us to produce more gold. So, we had a $3 million non-operating income in 2020. But in the comparable -- in this quarter, we had a net foreign exchange loss because the rate of devaluation of the Zimbabwe dollar has pretty much stopped. Then in addition, we impaired the Glen Hume asset. So, we bought an option for $2.5 million and we spent about $1 million over the intervening period. And because we decided to walk away from that project now because it doesn't meet our criteria, we've impaired that. So, that contribution is a $3.5 million impairment. So whereas in the second quarter 2020 we had a $3 million income, in the second quarter this year we had about a $4.2 million charge and that's why profit before tax goes down from $9.9 million to $7.7 million. Tax expense, the effective tax -- overall aggregate effective tax rate for the quarter of $3.9 million was just over 50% and that's largely because the impairment -- the $3.5 million impairment reduced PBT, but there was no corresponding effect on the tax charge. There's no tax to offset against that. So, the tax expense remained unchanged. So, I'll come on that in a bit more detail later on. And then, get down to adjusted earnings per share, as Steve mentioned, of $0.626 for the quarter, which we feel is a fair reflection of the underlying performance of the business. Just turning to production costs. Here you can see that, as I said, everything was pretty much as we expected. The only area where it wasn't as expected was electricity. So for the quarter it increased from $2.1 million to $2.7 million, for the half year nearly $1 million of extra. And that's because we are having to use gensets more and we are having to use the gensets more because the -- we are having more outages and we also continue to suffer from a deterioration in the incoming grid supply, which means we're having to run our gensets more to protect our own equipment. Now, we have a strategy. First of all, I think the first point to make is that we can actually run the entire business, everything using diesel gensets so it's not an existential problem. It has a cost implication, but we could if necessary accommodate that. But we have a plan as you know to put in a solar project, which should be operational by I think April next year, which will provide about 27% of Blanket's average daily usage and will reduce our dependence on the grid. We are already evaluating how we can increase the scope of that solar project to further reduce our dependence on the grid. So, online costs very much as expected. Here you see a breakdown of G&A, almost the main headings. You can see the main increase really comes from employee costs. As I mentioned, that is largely due to an increase in our headcount. What does that mean in terms of cost per ounce? The cost per ounce -- on-mine cost per ounce for the quarter of $715 an ounce was below our guidance for the whole year of $740 to $815. And similarly all-in sustaining cost per ounce for the quarter at $933 was also below our guidance range. It's worth noting that of our on-mine costs, something like 90% of our on-mine online costs are fixed. And so as we expect production to increase for the second half compared to the first half, that means that those fixed costs get spread over more ounces and so we do expect as the year progresses to see the on-mine cost per ounce fall further. So, we're feeling very confident that our cost guidance will be -- at least match -- will probably come in below our target. I mentioned tax. The bulk of the tax is in Zimbabwe so income tax on the profits arising at Blanket Mine deferred tax and the bulk of deferred tax recognizes the difference between the accounting treatment of capital expenditure and the tax treatment of capital expenditure. If you add those two transactions together, so $2.4 million of income tax and $1.2 million of deferred tax, and express that as a percentage of IFRS gross profit which actually is very, very close to the on-mine PBT; you end up with an effective tax rate of about 26%, which is very close to the income tax rate in Zimbabwe of just under 25%. So, that should give you some comfort that the bulk of -- that should give you some comfort that the tax charge isn't completely wrong. But in addition, we also incur tax in South Africa on intercompany profits and then some other taxes as we move money around the Group and across borders. Cash flow was very strong. So, net -- cash flow before working capital for the quarter was nearly $14 million compared to $9.5 for the comparable quarter. It's also pleasing to see working capital for once go down. Typically, working capital can be quite volatile and it can increase if we have large receivables due to us from Fidelity who we sell our goal to or if we allow the electricity credit to build up and then we pay it down in a lump sum. So, it's nice to see working capital normalize a bit. So, net cash from operating activities was about $12 million, very strong. We continue to invest as you know on the development associated with Central Shaft so that's about $7.1 million there. We've not really started spending big time on the solar project. We've made some deposits for orders that we've already placed. So, the spending on the solar project will really kick in from now until probably January, February next year. So, cash flow is very, very strong and we're very pleased with it. Balance sheet, there's nothing really on the balance sheet to talk about. This derivative financial asset that we -- at the end of last year we had a surplus of cash sitting in South Africa, which we knew we would need at some point to cover procurement liabilities. Because of exchange controls in South Africa, we can't hold that in US dollars, we have to hold it in rands and the rand is quite volatile and subject to quite sharp devaluation. We could have taken it out of the country, but then it's easier to take money out of South Africa than take it back into South Africa and the problem is that when we need it, we need it. And so rather than sort of put ourselves in a position of embarrassment in South Africa where we strip money out and then can't get it back quickly enough, we did the next best thing which is to hold a gold ETF. We liquidated that in the course of this quarter and we've repatriated those funds back up to Jersey. The only other item I'd point out on the balance sheet is the liabilities. Non-current liabilities, the long-term liabilities; that's mainly deferred tax and we have provisions, there's no doubt there. For the current liabilities again, that's mainly trade payables. We've got less than $200,000 worth of debt and that is locally denominated working capital facilities. So with that, I'll move -- I'll hand it back to Steve to talk about the opportunity in Zimbabwe. Steven Curtis: Thank you, Mark. And I'm sure you'll agree, a very nice set of numbers. You can't get away from the fact that if you mine efficiently, the numbers will look after themselves as long as you've got a management team that is considerate about costs and Blanket has been very consistent in that aspect. So, we're very proud of those results and very proud of the team who's produced them. The opportunity that we're going to now progress in Zimbabwe, the Connemara North exploration property. We signed up in December and we've got 18 months to explore the property and make a decision as to whether we're going to exercise that option. Over the last six months we've been doing a desktop study producing a geological model on the information that we had at hand. We don't have a lot of information, but our consultants and our in-house people have put together their best evaluation and now we will put drill rigs on the ground. So, the next number of months will be busy in the field and we will see how that goes. It's important to understand that the exercise price for this option is $5 million. We have paid $3 million just to get the rights to do the -- $300,000 to do the right to explore and we will be very cognizant of the fact that there is a $5 million option price and the results of the drilling need to meet our own internal criteria. And as we've already demonstrated, Glen Hume unfortunately did not meet our criteria. There was gold there, we found gold, we found some resources; but they didn't meet the criteria that validated the reason to pay more money and exercise the option. There is historic information about this property. But the most important thing about the opportunity that yes, we signed up two. We've got one now going to go live, but we are still considering other options in Zimbabwe. We like brownfield opportunities and there are a couple of others that we've been working on for some time and we will continue to look at them as opportunities to build our pipeline. We are very, very aware of the fact that we've got a single asset company and we want to change that. So we've got a very successful producing mine, which is going to give us the luxury of having some money to spend on other opportunities. But we are always really very careful about how we allocate shareholder money and we think brownfield opportunities are a very good option. And always, our criteria that anything we do needs to be free cash flow enhancing and NPV enhancing so shareholders can see that we are spending their money well. Mark Learmonth: Sorry. I got sidetracked. Steven Curtis: Usually you're ahead of me. Mark Learmonth: No, I was looking at the questions. Sorry. Steven Curtis: Camilla, who you heard earlier on in the call has been the author of a very, very good ESG report, which was recently published. If you haven't had the opportunity to read it, I suggest you have a look at it. It really takes you under the covers as to the thinking of the mine management and the ethos of Caledonia. We operate a mining company in a poor country in a poor geographical area. But what we've learned through this report is that many of the things that we are now reporting on have been carried out at Blanket for a long time and we are now just formalizing the way we report them. It has also indicated to us that there is a need to capture data more efficiently and maybe measure some things a little bit more diligently than we used to measure. There are international standards against which companies are rated and scored and we stand next to anybody else when we're looking for shareholder money and we therefore have to put our best foot forward. And we have been able to identify gaps in our processes today versus where we need to go in terms of what is best practice. And you can look forward to an annual report coming out and I trust that you will see that we are making good progress in this aspect. Just our solar farm alone is a very, very significant move in the direction of this component of our business. So, we look forward to reporting back to you in a year's time on the next ESG report. Mark Learmonth: I assumed you finished, Steve, so I moved on to COVID. Steven Curtis: Yes, we finished. COVID, we can't deny the fact that COVID has been with us since March of last year. It has been hugely disruptive for the world, for South Africa, Zimbabwe where we operate. But it is huge credits to our management team in South Africa and in Zimbabwe who have managed to actually keep the operation running all the way through with our own lockdowns, with country lockdowns, with international lockdowns because we source a lot of raw materials and capital items from South Africa, which we need to bring through the borders and we need to get to Zimbabwe. Dana and his team has managed to complete the Central Shaft project in COVID times. But let's be very clear, the third wave has hurt us more than the first and the second waves hurt us. I'm pleased to say that we seem to have turned the corner in the third wave and the number of cases -- active cases on the mine has now declined to about 10 and we have managed our way through this very, very well. But it has cost us money, it has cost us a lot of anxiety and time, and it cost us the money -- it cost us time on the actual completion of the shaft. But I think it's just a testament to the quality of the management that they have managed to keep this mine running every single day through this lockdown period and for that we're very, very grateful. I think that brings us to the end, Mark. Yes, that's the who's who. Steven Curtis: So, we've got a number of questions. Mark Learmonth: Yes, I can see some questions. Shall we try and counter through those? Steven Curtis: Yes, we can. Mark, do you want to read them out or you want me to read them out and then we'll allocate? A - Mark Learmonth: Someone asked about more detail of the impairment of Glen Hume. I think I've answered that I think. Somebody else is asking... Maurice Mason: There's a question later on Glen Hume about the charge seemed high and can we clarify what it was as well? Mark, why don't we roll those two into one? Mark Learmonth: Well, I'll just go through the questions as they appear. So if there's a second question, I'll deal with it when I get there. Someone's asking if it may be possible to finish half -- the second half of the year with 36,000 ounces? We blast through our production guidance. We are not increasing our production guidance at this stage. We're well positioned to achieve our guidance. But at this stage, it's too early for us to talk about increasing our guidance. I think Dana, someone asking what are our plans to increase the resource estimate now that Central Shaft is complete. I think Dana should answer that question. Dana, if you can. Dana? Dana Roets: Can you all hear me? Steven Curtis: Yes, got you. Dana Roets: We ran our exploration platforms with the current infrastructure we had and we always said that as soon as Central Shaft is completed as we saw the horizontal development, we will create new platforms and that will obviously mean that we will drill deeper. But also above 750, the current lowest point of the mine before we started Central Shaft, there is also opportunities above 750 where we're going to putting exploration platforms. So, that exploration plan is currently being put together and after that is completed, we can give a better indication of when we expect to have given you exploration data available. But yes, the plan is definitely to start drilling as soon as possible again after we create these platforms. Steven Curtis: It's fair to say also, Dana, that we've increased the strength and depth of the exploration team at the moment. That's correct, isn't that? Dana Roets: That's correct, yes. Steven Curtis: Okay. So someone's asking about what were last year's -- Q2 last year's extraordinary items. Well, there weren't actually any formal extraordinary items. But I think if you mean the non-commercial stuff, that was primarily the export credit incentive which was I think about $1.5 million for last year and I suppose even a bit higher. That export credit incentive was some gimmick and it was a gimmick sort of dreamt up by the government in the hope that by paying us a premium for the gold price which was paid in local currency, we suddenly go and produce more gold. We don't run the mine on that basis so we just took the money and that fell by the wayside. Someone's asking the WA charges. Maurice Mason: Mark, also foreign exchange gains and losses? Mark Learmonth: Yes. There were, big foreign exchange gains last year and clearly that's not been repeated this year. But that's fully set out in our financial statements. Someone's saying the note that put out this morning forecast $18 million of CapEx for 2022. Yes, it will be that high. Don't forget that also includes the CapEx on the solar project that I've just explained, but the solar project will cost about $40 million. We'll spend -- we have not really spent very much. So far we spent about $2 million so far so there's another sort of $12-ish million to go. Some of that spending will take place next year and then also CapEx for next year includes the continuation of the horizontal development, the haulages to connect the Central Shaft to the producing areas. It will start to fall off after that so that's the answer there. Someone's asking how much of our cash is held at Blanket? It's not $19 million. $19 million I think was the end of quarter one, it's about $16 million. That is fully disclosed in the Management Discussion & Analysis, which I'm happy to find and share with you in just a minute. That's disclosed. We do disclose that because clearly it's a relevant bit of information. Let me share the screen and see if I can. So, this is all in the public domain. I think people can see this, can't they. So of the $16 -- sorry I've got the wrong -- it's the wrong one. So Maurice, can you just deal with some other questions whilst I -- can you see the questions whilst I find the right document. Maurice Mason: Yes, sure. There's a question on grade, Dana. It's just that Slide 6 shows that our ore grade has gradually declined over the last decade and can we provide any color on our thoughts on grade in the coming years and whether it will flatten out or perhaps rise. It will be best for Dana to answer that. Dana Roets: Certainly see information available. It will flatten out in probably three, four years' time there might be a slight increase in it, but nothing to write more there. Maurice Mason: Also just for everyone's detail. There was a fairly comprehensive independent technical report filed, it's on our website and that is available for anyone to download and view and that details CapEx and grade and tons and recovery for the life of the mine. Mark Learmonth: Okay. To go back to that previous question. There is a document which we file every quarter, it's called the Management Discussion & Analysis. That maybe a document that UK shareholders aren't familiar with, but it's a North American thing. And there is a massive amount of information in there and I really would encourage you to look at that. So someone asked where is our cash? Well, this is where our cash is. At the end of June we had $3 million sitting in Zimbabwe and of that $3 million -- of that $3.1 million, I should expect that that $3.1 million was sitting at Blanket. We don't hold cash -- any money that goes out from Blanket to our holding company immediately goes up to the UK. So if there's any money there, that's only there for a matter of days really. So, that's the money sitting at Zim and we need that money in Zimbabwe to do things like pay month-end payrolls, pay month-end creditors. That's a normal amount of cash that we need. It's very difficult for us to even if we wanted to, we can't borrow dollars in Zim, it's just not available. And so, given the fact that it's a reasonably sized business with quite lumpy cash flows, we need that sort of cash that we need. We have about $3 million sitting in South Africa and again, that is to fund largely our procurement business. We've got to quite a significant procurement business, which typically we've got to pay for stuff upfront and then we got $10 million sitting in Jersey. To be absolutely clear, we do not have what we regard as trapped cash in Zimbabwe. We work extremely hard and very effectively to get our money and your money out of Zimbabwe and we do that both through a combination of loan repayments, management fees, procurement margins, and dividends. And it's hard work, but it's something that we manage quite well. So, I think I think we've dealt with that question. Maurice Mason: Mark, it is important to understand that we deliver gold on a weekly basis. We get paid on a weekly basis on a regular basis and if the timing coincides with the quarter-end, there may be a lumpy position of cash in Zim. Mark Learmonth: Yes. I think we dealt with the grade question. Yes, there are 12.1 million shares outstanding. There have been difficulties. Someone's asking are difficulties getting people, machinery, materials across the border from South Africa. There were difficulties in the early stages of COVID particularly people, particularly getting specialized contractors across the border and that was reflected in a delay in the completion of the Central Shaft. There were -- I think there were some difficulties at the border during the recent disruption in South Africa associated with the imprisonment of Jacob Zuma. But actually I think our mines -- we were the only people who did manage to get our lorries through. So, we were actually quite good at getting our stuff across the border. We would like to be able to make more in-person visits to the mine. Well, I don't know if the mine reciprocates that, but we just can't do it simply because the difficulties associated with getting tested and what's it called having to sort of isolate and stuff. It is a bit sticky, but we're managing quite effectively. Dana Roets: Currently, it's actually quite good as far as getting material and equipment to the mine, no issues. And we did lockdown the mine for two weeks because of the increased cases of COVID we had at the mine, but we've got a vaccine drive on the mine as well and people going to the mine must be vaccinated and all the contractors working on the mine are vaccinated now as well as our staff except for the people younger than 35. And I would say in about two, three weeks we will return almost to normal going back to the mine. So, that situation will have improved tremendously. Steven Curtis: The only thing I would add there is the cooperation levels we've had over the last year and a bit from governments of Zimbabwe and South Africa to be able to move people and machinery across the border during absolute lockdowns has indicated that they are very keen to keep mining companies like ourselves open and running. Mark Learmonth: Well, I mean we'll have more . When the South African government immediately followed by the Zim government closed the country down in sort of April -- March 2020, they immediately said the country's closed but not the gold sector, that must keep going. Someone's asking what internal rate of return we anticipate on the solar project. Our evaluation of the solar project along with every other project that we consider is it must increase our NPV per share taking into account any equity that we issue to fund the thing. So the NPV per share enhancement coming out of the solar project I think it was about 5%, Maurice, is that right? Maurice Mason: On an NPV per share enhancement basis, yes, that's correct. Mark Learmonth: And so, the internal rate of return on the project would have been sort of at 24%, wouldn't it? Maurice Mason: Yes, it was in the low 20%. Mark Learmonth: The low 20%s. Well, look, it's not -- it was done it made money and we did it because it makes money. We're doing it because it makes money, but it's primarily a defensive move to protect us in -- or to give us partial protection in the event that the grid just collapses completely. So, we've done it. This makes money, but it's something we have no choice, we must do it. Okay. Someone's saying that the $3.5 million cost for Glen Hume is excessive. We paid -- we have to -- we spent $2.5 million to buy the option and then we did about $1 billion worth of work. The Glen Hume project is an operating mine. The owner is not a Zimbabwean national so his negotiated position was a bit stronger and he could digest a larger upfront payment. That compares with the Connemara asset where there is no production and the owner is a Zimbabwean who if we were to pay him $2.5 million would immediately lose a substantial proportion of that because of the liquidation requirements to come to -- you'd have some of the dollars confiscated for -- in return for local currency. So, I think we're looking at two completely separate sorts of vendors with very different sorts of appetites. So, I think that explains why the $3.5 million was -- why it was $3.5 million for Glen Hume and our exposure on Connemara is much lower. Okay. What expenditure and activity is taking place on extending the reserve resources at Blanket? When will drill updates get provided? Dana, we've just done a -- Dana, do you want to talk about our plans in respect of resource upgrades. Dana Roets: This year there is no deep exploration because of the reasons I explained. We exhausted our exploration platforms. So, you will first see a retraction in our resource reserves and that's fully C101 compliant, it's not a JORC compliant and that will start improving as soon as we've got our platforms in place again. But just a reminder that with the current resource and reserves, we've got the possible life until 2034 so there's enough time to get going again and update. But we will give an update yearly sort of in the end of the year. Mark Learmonth: Howards is asking what was the export credit in quarter two 2020. Offhand I can't remember. It's disclosed in the financial statements. Maurice, if you got a moment, could you find those financial statements and tell Howard what the actual amount was in 2020. Maurice Mason: I'll send it to you, Howie. Mark Learmonth: Okay. The next question -- there's a very good question about VAT receivables. Yes, VAT receivables have increased since December 2020. The amount -- the receivables are detailed in in both US dollars and RTGS. We're receiving the US dollar bit. The bit that's outstanding is the RTGS component. But it's fair to say that the tax authorities in ZIM have pretty much stopped working because of the recent wave of coronavirus. The Zimbabwean idea of working from home means you don't do anything because they got no electricity and virtually no Internet connectivity. It's not a concern because we will simply offset the amount that is due from Zim in respect to VAT against our future tax payments -- income tax payments. So, we recover it that way so we're not concerned about lot at all. It's irritating, but we're not concerned about it. That's the written questions. Are there any other? Camilla, should we open to sort of verbal questions? Camilla Horsfall: Yes. If anyone wants to, just raise their hand. Howie, I know that you raised hand here. I'm allowing you to talk although you have asked on the Q&A so I don't know if everything's been answered. Unidentified Analyst: Yes, it has been. Maurice is going to send me the export tax credit. The other usual item in last year's quarter showed $2.8 million and Mark mentioned $1.5 million so that was my confusion. Maurice will straighten that out. Maurice Mason: Yes. Unidentified Analyst: Thanks, everybody. Camilla Horsfall: So, I think that's it. I don't think we have any more raise hands. So, I that's it. Sorry, we have one more question here from Daniel. Unidentified Analyst: Hi, can you hear me? My name Daniel. Thanks for the presentation. I think in the UK, people just lump all of Southern Africa into one thing and we would just like to know a bit more. Is the political situation now stable in Zimbabwe? Has it calmed down to where it was 10-15 years ago and that kind of thing? Mark Learmonth: Daniel, I guess by your accent, are you South African or Zimbabwean? Unidentified Analyst: I'm actually South African, but I live in London. Mark Learmonth: Okay. Well, as it stands at the moment, I would say that Zimbabwe is an infinitely more stable political environment than South Africa I'm afraid to say. You're quite right under the Mugabe regime, it was completely unpredictable what could or may happen. He was capable of unpredictable and absolute irrational actions. The difference between that and the current regime is it's much more rational and much more open to constructive engagement. And so our assessment is that the -- if you ask narrowly about the political environment in Zimbabwe, we think it's much more stable at the moment than it has been for quite some time. And we get regular detailed updates as to what is happening behind the scenes politically so that we are as up to date as possible. So Steve, I don't know if you want to add anything to that. But I don't feel that Zim is -- I think Zim has actually stabilized quite a bit in recent years and months as well. Steven Curtis: Yes, I think so. If you consider the management of the inflation rate and whether we agree or disagree with the foreign currency option system, let's except the fact that it stabilized the official exchange rate. So, we are running with an inflation rate of 56% now versus 800% from a year-ago. Other aspects just show the fact that I think we have an administration that recognizes the need for business to survive and thrive is the fact that they've introduced some incentives for the export industry recently that we can retain more of our dollar proceeds on the incremental sales we make if you participate in various schemes. Those are things we've been fighting for a long time, but they've fallen on deaf years in the past. Now they're being listened to and mechanisms are being put in place. You have to be flexible and you have to be able to react and move quite quickly. But considering what Dana and his team has done since 2015 of taking a decision to invest nearly $70 million into sinking a shaft and effectively building a new mine under an old mine in a country that many people would say is uninvestable and is now demonstrating that they are ramping up production. You can manage the environment if you are in the right business and I think we're in the right business in a difficult jurisdiction. What it takes from our side and especially Mark and the financial guys side is very, very close attention to detail. And don't foot fault because you will pay the price, but I think our track record shows we know how to operate there. Mark Learmonth: So, there's been a question about the share split. I suspect that comes from someone in London. And we've had queries before about the share split and the argument being a share price of sort of GBP10 or whatever it is a disincentive for people buying our shares. I mean the facetious answer to that is our full aim was a sophisticated stock exchange not a EC2 brand or pound land. I think that's the facetious response. But I think the more considered response is that to avoid being classified as a penny stock in the United States, we need to show share price of over $5 and the US is by far our largest market in terms of liquidity. In terms of things like dividend yield and PE ratio, clearly that's completely unaffected as to whether our share price is GBP10 or GBP5. If our share price moved ahead very substantially, yes, I think we would consider share split. But at this stage that's not something we would do and it wouldn't -- I don't think it would significantly -- it wouldn't affect liquidity at all. So no, the answer there is not something we'd do. We are progressing with a listing on the Victoria Falls Exchange. The only reason for doing that is to get access to more US dollars. So, the regulation that was announced in early June is that if you -- for companies that are listed on the Vic Falls Exchange, they will receive a 100% of incremental revenues arising from incremental gold production in US dollars. As we are increasing our production from 58,000 ounces last year to 80,000, that means all of the revenue associated with that extra production will be received in US dollars, which will mean that in overall terms instead of currently we get 60% in US dollars and 40% local currency, that will move it to about 70%-30%. And so the only reason for doing that Vic Falls listing is to get better access to dollars, okay. Do you have any further questions? Camilla Horsfall: I think that's it on questions. We've got no more... Steven Curtis: No new ones? Camilla Horsfall: No more raised hands. Mark Learmonth: I don't know if there's a question here. Okay. That was just Howard responding. Hi guys. It's the issue about having a high -- a big share price is primarily -- is it primarily I think it's a UK issue. It's not something that's ever been raised in the United States. So, I'm thinking back actually to my first tutor when I was in university who was an old lady who wrote history books and she priced them in guineas because she felt it made the books sort of feel better. And I've got to say given our sort of situation as a small gold producer in an unfashionable jurisdiction having a high share price -- a big share price might give us a luster of sort of respectability, But anyway we could debate that. Camilla Horsfall: I think that's it.. Maurice Mason: I don't see any new questions., Camilla. Camilla Horsfall: No, there are no questions that have come through. Steven Curtis: Okay. And unless there's anybody who wants to put a hand up as a last minute, I think we're done. And just wanted to say thank you. We had a very nice turnout tonight. I hope we've answered your questions and provided the detail that you needed. You know where we are, you know where Camilla is, you can contact her if you've got any personal questions you want to ask. Whether we can answer them not will debate -- will depend on whether it is public information or not. But thank you for participating and we will be making our normal quarterly announcements, production update after the end of September and then the Q3 results, dividend announcements. So, keep watching this space; this is an exciting second half of the year for us. Lots of work for Dana and his team, but so far so good. And thanks for running the course with us. All the best to you. Thanks a lot, and good night.
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Related Analysis

Caledonia Mining Corporation PLC (AMEX:CMCL) Sees New Price Target Amid Anticipated Growth

  • Caledonia Mining Corporation PLC (AMEX:CMCL) receives a new price target from Maxim Group, suggesting a potential increase of about 49.31%.
  • The feasibility study for the Bilboes project could significantly reduce upfront capital costs and enhance returns, potentially reshaping Caledonia's future outlook.
  • Despite a recent decrease in stock price to $13.80, solid performance in the first quarter sets the stage for a potential rerating in the second half of the year.

Caledonia Mining Corporation PLC (AMEX:CMCL) is a gold mining company primarily focused on operations in Zimbabwe. The company is known for its Blanket Gold Mine, which has been a significant contributor to its production. Caledonia competes with other gold mining companies, but its focus on Zimbabwe gives it a unique position in the market.

On May 14, 2025, Tate Sullivan from Maxim Group set a new price target for CMCL at $21, while the stock was trading at $14.07. This target suggests a potential increase of about 49.31%. The anticipated release of a feasibility study for the Bilboes project could be a major catalyst for this potential growth.

The feasibility study is expected to reshape Caledonia's future outlook. According to Panmure Liberum, a positive outcome could reduce upfront capital costs and enhance returns. A scaled-back development strategy focusing on concentrate production could minimize execution risks and eliminate the need for costly processing techniques.

The update on the Bilboes project could unlock substantial shareholder value. With strong global demand for precious metals concentrate, the trade-offs, such as slightly lower payability and increased transport costs, might be justified. This strategic shift could significantly impact CMCL's stock performance.

In the interim, Caledonia has reported solid performance in the first quarter, setting the stage for a potential rerating in the second half of the year. Currently, CMCL's stock price is $13.80, reflecting a decrease of approximately 3.33% or $0.48. The company's market capitalization is around $266.17 million, with a trading volume of 40,925 shares on the AMEX exchange.

Caledonia Mining Corporation PLC's Impressive Financial Performance

  • Earnings per share of $0.443, surpassing estimates.
  • Record annual results with operating cash flow increasing to $42 million.
  • Gross profit surged by 86% to reach $77 million.

Caledonia Mining Corporation PLC (AMEX:CMCL), listed on the NYSE American, is a gold mining company with a focus on Zimbabwe. The company has made significant strides in its financial and operational performance, as evidenced by its recent earnings report. CMCL's competitors include other gold mining companies, but its strategic focus on Zimbabwe sets it apart.

On March 31, 2025, CMCL reported earnings per share of $0.443, surpassing the estimated $0.16. This strong performance is part of a broader trend for the company, which has seen substantial financial progress. In 2024, CMCL reported record annual results, with operating cash flow increasing to $42 million from $14.8 million, driven by the production of 76,656 ounces of gold.

The company's revenue reached $47.5 million, exceeding the anticipated $44.2 million. This growth is consistent with CMCL's overall financial performance, as gross revenue rose to $183 million in 2024, up from $146.3 million in 2023. Gross profit also surged by 86% to reach $77 million, highlighting the company's ability to capitalize on favorable market conditions.

CMCL's financial turnaround is further evidenced by a net attributable profit of $17.9 million in 2024, compared to a net loss of $7.9 million the previous year. On a per-share basis, adjusted earnings were reported at 125.2 cents. The company has rewarded shareholders with a 14 cents per share dividend, reflecting its improved financial health.

The company's financial metrics provide additional insights into its performance. With a price-to-earnings (P/E) ratio of approximately 22.69, the market values CMCL's earnings favorably. The price-to-sales ratio of about 1.33 and enterprise value to sales ratio of approximately 1.38 indicate a reasonable valuation relative to revenue. The enterprise value to operating cash flow ratio of around 7.33 shows a strong cash flow position. Additionally, a low debt-to-equity ratio of about 0.064 and a current ratio of approximately 1.44 suggest financial stability and the ability to cover short-term liabilities.

Caledonia Mining Corporation PLC's Impressive Financial Performance

  • Earnings per share of $0.443, surpassing estimates.
  • Record annual results with operating cash flow increasing to $42 million.
  • Gross profit surged by 86% to reach $77 million.

Caledonia Mining Corporation PLC (AMEX:CMCL), listed on the NYSE American, is a gold mining company with a focus on Zimbabwe. The company has made significant strides in its financial and operational performance, as evidenced by its recent earnings report. CMCL's competitors include other gold mining companies, but its strategic focus on Zimbabwe sets it apart.

On March 31, 2025, CMCL reported earnings per share of $0.443, surpassing the estimated $0.16. This strong performance is part of a broader trend for the company, which has seen substantial financial progress. In 2024, CMCL reported record annual results, with operating cash flow increasing to $42 million from $14.8 million, driven by the production of 76,656 ounces of gold.

The company's revenue reached $47.5 million, exceeding the anticipated $44.2 million. This growth is consistent with CMCL's overall financial performance, as gross revenue rose to $183 million in 2024, up from $146.3 million in 2023. Gross profit also surged by 86% to reach $77 million, highlighting the company's ability to capitalize on favorable market conditions.

CMCL's financial turnaround is further evidenced by a net attributable profit of $17.9 million in 2024, compared to a net loss of $7.9 million the previous year. On a per-share basis, adjusted earnings were reported at 125.2 cents. The company has rewarded shareholders with a 14 cents per share dividend, reflecting its improved financial health.

The company's financial metrics provide additional insights into its performance. With a price-to-earnings (P/E) ratio of approximately 22.69, the market values CMCL's earnings favorably. The price-to-sales ratio of about 1.33 and enterprise value to sales ratio of approximately 1.38 indicate a reasonable valuation relative to revenue. The enterprise value to operating cash flow ratio of around 7.33 shows a strong cash flow position. Additionally, a low debt-to-equity ratio of about 0.064 and a current ratio of approximately 1.44 suggest financial stability and the ability to cover short-term liabilities.