Caledonia Mining Corporation Plc (CMCL) on Q1 2025 Results - Earnings Call Transcript

Operator: Ladies and gentlemen, welcome to the Caledonia Mining Q1 Results Presentation. I'd like to hand over to Mark Learmonth, CEO. Mark, please go ahead. Mark Learmonth: Thank you. If we could, go to the disclaimer page, please, our forward-looking statements. Okay. So the standard disclaimer forward-looking statement, which I assume everybody will take note of. If we could just go to the presentation team. Next, please. Okay. I'd just like to introduce the team. So it’s myself, Mark Learmonth, I'm Caledonia's CEO. I'm joined -- I'm in Jersey today. I'm joined by Ross Jerrard, who is our CFO. He's sitting next to me. In Harare; we have Victor Gapare, who is an Executive Director of the company; also joined by James Mufara, our Chief Operating Officer, who is in Johannesburg; and he's with Craig Harvey, who is our Vice President, Technical Services, who will say a few words about our exploration program and our near-term revenue opportunities. We're also joined by Rusiano Tsoka from Blanket Mine. He is the Group Safety, Health and Environment Manager, and he'll be saying a few words about our new initiatives on safety. And then also in attendance, we have Maurice Mason, Vice President, Corporate Development and Investor Relations; and Camilla on Group Comm. So it's quite a large team, and we're going to cover quite a lot of ground. So some of the slides, I'm going to speak to quite quickly to leave space for colleagues. So if we could just move on to the next slide, please. So I'm not going to go into this -- I'm not going to start throwing numbers around because Ross will do that. But clearly, it was an excellent quarter. Strong financial performance, record gross profit. We strengthened the balance sheet, more particularly after the end of the quarter, so in early April with the successful sale of the Solar Plant, but Ross will tell you more about that, clearly helped by the higher gold price. We realized just under $2,900 an ounce, which helped everything. But then also a good operational performance. Production was strong. We produced and sold 19,000 ounces of gold compared to 17,500 in the comparable quarter. But one thing I would just like to touch on is that final bullet point. I just want to draw your attention to some of the steps we've taken to strengthen the Board and the management team. So recently, we have two new non-executive directors joining Stefan Buys, who is a Mining Engineer and Metallurgist. He was previously at ArcelorMittal; and Lesley Goldwasser, who's joined us from the States, where she'll give us help and support, particularly in terms of Corporate Finance and Capital Allocation. One NED retired at the most recent AGM last week, that's Johan Holtzhausen, and he retired as a non-exec director, and he was also the Chairman of the Audit Committee. I just want to make the point, these changes at the Board level are part of a structured and orderly rotation to make sure that we regularly change one or two NEDs rather than have a sort of a cliff effect where we have to change all of a sudden. So there's nothing untoward there. Then finally, Ross joined us as CFO a couple of months back, and he'll say a few words just before he starts to run through the financials. So we're very, very pleased to have him. Could we move on to the next page? Well, this is just as a summary, all these numbers will be spoken to exhaustively by colleagues. So Ross will go into more detail on the finance and James will go into more detail on operations. So given the fact we've got a lot to cover, I wouldn't spend any more time on this page. So with that, I'll hand over to Ross to take us through the financial results. But before he does that, if we could just pause on this page to allow Ross just to introduce himself and to say a few words about why he joined Caledonia and what the particular traction was. So Ross, over to you. Ross Jerrard: Thanks, Mark, and good afternoon, everybody. It's my pleasure to talk you through these financial results and first-time for me as CFO. A little bit about me, I'm Ross Jerrard. I've joined Caledonia after spending just short of the last decade with a company called Centamin plc, which was a FTSE-250 dual listed company. And it was taken over by AngloGold Ashanti late last year for $2.5 billion. During my time with Centamin, I'm -- we achieved many milestones over that time, some good and some not so good. But importantly, in the second half of my time at Centamin, it was basically navigating the reset of a Tier 1 mine, that's the Sukari gold mine in Egypt, resetting that mine for the next decade and beyond. As part of that reset, it was not just looking at production profiles and life of mine, but importantly, lowering that all-in sustaining cost base and setting that mine up for -- to provide or be the growth engine for a multi-asset portfolio. It was through consistent delivery, we were able to demonstrate this reset and basically reinforce or make the investment case for a mine in Egypt that was really a little bit of an unknown mining jurisdiction, that being Egypt. And the result exiting was really that we put both the company and the country on the map that could no longer be ignored from a mining jurisdiction or destination. So bringing that back to why I joined Caledonia, I see a number of parallels to that in terms of having a wonderful operating mine in Blanket. It's been producing for a considerable amount of time; and importantly, has a long and exciting future ahead of it. It's running well and with further optimizations and cost reductions, we have every opportunity to turn this into a real cash or a serious cash generator that will underwrite or provide a good platform for future growth and development opportunities. And many of those opportunities are already in the portfolio, which makes it even more exciting. And we operate in Zimbabwe, which is a mature mining jurisdiction. As I said, Blanket has been producing since 1907, and we have a highly skilled workforce to know how to operate in the country. Personally, I'm very biased, I'll be honest. I've been born in Bulawayo, so it's great, and I'm really excited about spending more time back in country. But I believe it's an exciting jurisdiction to operate in. And particularly when you look elsewhere around the world and particularly throughout Africa, I think we're very fortunate to be able to operate in the country that we do. And it's very much changing this concept of perception versus reality in terms of operations there. So I'm very excited about both Caledonia and the Zimbabwe opportunity. When you look at it, it's both the quality of the asset, the quality of the team that's already there and the opportunities that we have to maximize this growth. It's really quite appealing and compelling, so that's me. But importantly, let's take a dive and have a closer look at the quarter. So if we can turn to the next slide, please. Our gold revenue for the quarter was up at $56 million. So that was up 46% on the comparative quarter. And this was really driven by good gold production, both in terms of Blanket and Bilboes oxides at 19,000 ounces, which was up 9% on the comparative quarter, with the added benefit of an average realized gold price of just a shade under $2,900 per ounce, which was up 42%. So this increase obviously meant that there was a higher royalty that was paid for the period, which you'll see is up a similar 47%. Now James Mufara, our COO, will take us through some of those operational highlights a little bit later in this presentation. But basically, it was driven by higher tonnes being mined and milled, which had the resultant impact on production costs. It was a grade volume equation in terms of the deliveries for the quarter, and that's where you see that those production costs are up some 19% at $22.6 million for the -- against the comparative quarter. That increase was primarily due to higher labor, power and consumables costs, and we'll go into a bit more detail later in the presentation in terms of that breakdown. But very importantly, as you can see at the bottom right of the chart, we delivered a gross profit of $26.9 million, which was up 95%; and importantly, is a quarterly record. So let's just take a pause and talk a little bit more about those -- that gross profit and trends in a bit more detail. So if we can turn to the next slide. Here, you can see on the slide in terms of mapping our profile of profit over the previous periods, both '23, '24 and into '25, you can see consistent and significant increase in the gross profits through that period. What's really important is that we've increased considerably over the post those challenges in 2023, where you can see the difference in the orange line and the blue line, which is Blanket standalone. And those were really the challenges in terms of what we termed as the Bilboes oxide phase. And we no longer have that negative impact on gross profits from Bilboes coming through. And basically, Bilboes is able to pay its way and no longer have a negative impact. So it's a really important story in terms of how that's come together. And I talked about resets in my intro, and I think this is one clear example in terms of being able to reset the strategy and relook at the Group and the benefits and seeing that those benefits are actually being realized, both in terms of trajectory of that gross profit line but being able to mitigate some of these challenges. So I want to move back and talk a little bit more about those production costs. So if we can turn to the next slide, please. You can see in terms of our guidance ranges in Blanket on-mine cost of $1,050 to $1,150 per ounce. Our costs are slightly higher than that guidance range. And those main increases are shown on the left chart, predominantly in that dark blue color of labor, consumables and admin costs. Some of those labor and consumable costs are really a result of those additional tonnages and the overtime work to achieve the targets during the period and the production bonuses paid that were needed to achieve the quarter. We do, however, have several initiatives in place that will address these costs. And I believe that overall, the annual guidance is still well within range and will be achieved over the year. So we don't have concerns with that as these initiatives come into place. And James, again, will talk about some of the initiatives that we're rolling out. On the right of the chart, you'll see the all-in sustaining costs, and these have been impacted by admin and capital expenditure, which are higher when you're looking back at the comparative quarter. And a lot of those admin costs, again, are one-off costs, as well as having a higher CapEx profile that was scheduled for the year. So again, over the year, we expect these to be normalized and come back to within the ranges that were guided, excuse me. Some of those one-off costs when we totaled them about -- it was almost $2.2 million or bringing it back into ounce terms, $110 an ounce or just short of that when backed out. So if you back those out against those guidance ranges, we're well within the range. We're actually at the bottom end of that range. And we'll talk about those costs in a minute. So, if we move to the next slide, please. Drilling into a bit more detail below the gross profit lines. The first one is those net foreign exchange losses. And I'm glad to say that we didn't have a big impact of exchange losses this period when compared to the previous quarter of $4.9 million. But while it was a pleasing result, we really are actively trying to manage our -- and mitigate our impacts of any devaluations in the business, and it's an ongoing work stream. But importantly, that exchange loss is both realized and unrealized in terms of what is incurred for the quarter. So while we're well placed, it is very much a watching brief in terms of impact to the business. You will see mentioned in terms of the increase in working capital. So we are deploying a lot of our cash into working capital, prepayments, stores, inventories and the like in trying to best minimize any impact of currency. And again, it's been beneficial, but it is a watching brief in terms of how we go forward. Corporate was a big line item, as you will see at $6.9 million. And again that was due to a number of one-off settlements that were done in terms of the reshuffle of our HR strategy and headcount that came through and a number of areas in the admin section that came through. One in particular on admin that I must highlight is that the company had previously entered into a series of gold hedges or rather put options that set the floor in terms of gold prices that were to be received. These hedges or put options were basically an insurance policy that would set the floor and wouldn't mitigate or we wouldn't be disadvantaged by any upside in the gold prices. But I'm glad to say that with the gold price where it is and where it's expected to go that those prices are above the hedge limits, which means that we fully expensed the hedges and they've been written off in the income statement to the amount of $1.3 million that sits within that category. So it's a good position to have whilst we actually never want to use a hedge, it's like an insurance policy, and you don't want to ever dive in and use that, but that has had a consequential effect on the income statement. If we can move to the next slide, we'll have a little look at the cash flows for the period. There were increased cash flows from operations. We're up at $18.7 million for the period, driven by what we've discussed already in terms of the presentation of both gold price production and costs, with an increase in working capital. You can see the increase in terms of trade and other receivables that I've mentioned, and that was an active decision in terms of what we paid. Net cash from operating activities more than doubled at $13.3 million compared to $4.9 million in the comparative quarter. And even after the higher taxes, this provides a solid foundation for some internal funding for capital investments and debt reduction. So you can see that we did have a higher level of taxes, as I mentioned, and this was due to the good performance, but also some timing of payments that were outstanding at the end of the fourth quarter that came and were paid in the early quarter of 2025. And those higher investing spend or activities are again in line with guidance. The net cash position improved. So you'll see at the bottom of the slide, to a negative $4.6 million at the end of the quarter, and that is compared to a negative $14.2 million for the comparative period, which is a great result for the three months. So moving to the next slide and talking about what that means for cash flow. We've been really pleased with our results and the ability to capitalize on both gold price or a good production base. And with a focus on cost, we expect this to continue. This slide shows that our cash held across the various jurisdictions and how this has evolved over the quarters. But the second graph below is really the exciting one, which shows the consistent increase in cash each quarter, which is really, really pleasing. And that consistent delivery of both ounces and benefited by the gold price -- we expect that to continue further on into 2025 and for the full year ahead. However, what you don't see on this graph is that where we sit with our current cash position. And following the completion of the Solar Plant sale in April 2025, our pro forma net cash position improved to $18.6 million, which really provides us some flexibility for growth and the growth initiatives, and we expect this cash balance to build. And we put that cash sitting in Jersey in deposit accounts, and we've tucked that away, and we expect that we'll build on that good performance as we go forward. So overall, a really pleasing quarter that gets our 2025 off to a very good start. And with that, I'll hand across to James Mufara, our COO, who will talk us through some of the operational performance. James Mufara: Thank you very much, Ross. I mean, for that introduction. Good day to you all. As already stated by Ross and Mark at the beginning, Blanket achieved record quarter one production of ounces. And if you can just go to the next slide, please. You will see that as depicted first, I just want to start to talk about the graph at the bottom, which shows the ounces. This record production of ounces was a result of intentional decisions that we took as management of Caledonia. For the key decisions that we took, I want to bring them to your attention. First one, is improved focus on Health and Safety, which I'll allow at the end of my presentation, Rusiano Tsoka to talk to and detail a little of those -- some of those initiatives. The second decision that we took was to decouple the mine from the plant, and we had two initiatives to make this happen. The first was to have a focused management team that just produces from underground and a focused management team that also does production in the plant since these are two businesses that are not necessarily the same. The second thing that we do to decouple the production is to create a stockpile. I mean in the fourth quarter of last year, we realized the need that there was need to have a stockpile so that we can have smooth production in the quarter. What you don't want is the day that the mine has not produced, we are not in a position to produce in the plant. We made a deliberate decision towards the end of the year, end of November, beginning of December to build a stockpile so that we will be in a position to consistently produce even if we should have glitches on the mine. And this actually enabled us to decouple the mine from the plant. The third decision that we took also was to improve employee engagement. We did this through quite a number of initiatives, one of them including management by walkabouts, which means engaging the employees, what is the feedback from the employees and what is the feedback from management. The fourth action that we took to get to this record production, which was not in any case an incident, which didn't surprise us, it was deliberate action, was to start reducing short interval controls, so that we will be to control what's happening within the mine within shorter periods of time. You will see that this resulted in the record production that we now see. Going to the top graph, which is the first graph that you see, you will see that although, we have had quite a sustained increase with regards to our tonnage over time, one of the orange graph, which is the grade graph is almost stagnated over time. This is receiving attention through ounces that we are generating in better grade areas so that we can improve our grades with time. In the quarter, more importantly, in the quarter that just passed now, we actually saw an improvement of grade from 2.78 grams per tonne in January up to the -- when we ended the quarter in March, we actually ended on 3.3 grams a tonne. So this is -- this strategy is actually gaining traction, and we are happy with the strategy that we have to improve the grade. If you may kindly just get to the next graph. So the graph depicts how the actual production occured (ph) in the quarter throughout the quarter, with -- from January as compared to the budget that we have for the quarter. So if you look at this graph, it will show you the orange line is the actual that we -- actual production that we actually produce from the plant as of gold and the purple line represents the budget ounces over the same period within the quarter. This is a very nice graph. It's a dream graph where you see that consistently throughout the quarter, the orange line remained above the purple line, which is showing both a flawless and consistent delivery by the team. If you look at the -- I mean, this graph also shows us that we had a little bit of a glitch, which I've already alluded to with the grade, which was at 3.09 grams a tonne against the plan of 3.21. I've already alluded to the fact that we started off on our back foot with a grade of 2.78. However, we ended the quarter on a good grade well above the plan of 3.3 grams per tonne, showing that the initiatives that we put in the quarter have paid off. The stockpile assisted us to leverage the consistency also with regards to the mill throughput, showing that the decisions that we've taken, deliberate decisions that we've taken in the fourth quarter began to pay-off in this particular quarter. If you can just turn to the next graph -- so the graphs, I know, shows the different graphs, which is the three graphs that you will see there, they show the measurements of the key performance areas of the mine and the different sections in the mine. I mean, of importance is to see that all the areas, which is on the left-hand side -- the table on the left-hand side shows that all the key performance areas were actually exceeded. I mean, this is broken tonnes, and these are the key inputs into what we produce on the mine. This resulted actually in the surface stockpile, which we'd already built in the fourth quarter, which was 7,000 tonnes, doubling to about 15,000 tonnes already on surface. The middle top, the top graph shows that there is achievement in the four mining areas. There is four mining areas, the one being shallow, section one being shallow, which is the extreme left, and the section four on the extreme right being the biggest portion of the mine, and all the sections actually achieved growth, so we're consistent with production. If you, what is also most encouraging is the bottom graph, which is the reserve generation graph. This shows that although we exceeded production there was also an increase in the reserves that was generated. This sets up the mine for better consistent production in the future, so overall, this picture shows discipline and focus in the execution of the plan, and that we expect to achieve our targets even going into the future. One of the key areas that Ross spoke about is the area with regards to cost, which is what I'm going to talk to before I head over to Rusiano. So if I look at the next slide, if we get to the next slide again. So -- and the next one. So the focus on the cost has not been lost while we are pursuing higher production, and the following actions, which are some of the actions that we have already taken so that we can reduce our costs on the mine, and thereby actually impacting our all-in sustaining cost. We recruited -- we sourced and recruited a Business Improvement Manager to join the team as from the third quarter. This is the office that will look at key initiatives with regards to cost, document them; and more importantly, being able to see that these initiatives are brought to fruition, so that we can reduce this cost within the mine. Central Shaft was fully headed over a few years back, but one of the things that we need to do is to get this Central Shaft to be optimized and produce better. Central Shaft accounts for 60% of our production, and we need to ensure that whatever we do in this area, we're in a position to operate optimally with regards to cost. The second, within the top three costs that we do have, and electricity is the second most expensive item that we do use on the mine. We have onboarded a company Voltvision to identify and measure the usage of energy within the different parts of the mine, which means to say now we are in a position, we currently have visibility of all the energy as it is being used at each energy center, we have got more than 100 measuring units on the mine that we can actually measure the units, so we have real-time ability now to see where the energy is being used. This is going to be useful for us going forward when we try to optimize the areas because we know where all the large areas where all the energy is actually being utilized. Labor is also a major cost. In fact, it's our biggest cost, and we have decided to attack this, the cost grip within the labor, so that we can utilize our labor better going forward. We have started, we've put a Time and Attendance System called Firefly on Blanket, so the whole mine has got that system now. It's been fully commissioned on the mine. This Time and Attendance System is going to give us visibility with regards to where our workforce is. We'll be in a position to determine the underground hours at work, how many hours are the people going, and we will be in a position to determine where the overtime and all the hours that we may need to work on actually comes from. So this is, we are very happy with regards to the introduction of this Time and Attendance System. The other area that we may need to look at, which is the third most highest area, which is the area of consumables that we need to look at is we need to do better planning with regards to resources. We have actually introduced a better planning system now where we are in a position to look at where each area of our mine, where are we using what, so that we can be in a position to see how can we put systems in place so that we can have better resource utilization and better resource control. So I will hand over now to Rusiano Tsoka to talk to some of the safety initiatives that we have put on the mine. But before I give him a time to speak, I just want to introduce who Rusiano Tsoka is. So Rusiano was hired in the third quarter of last year 2024, to steer the Safety and Health strategy for the company. Rusiano has worked for Anglo, Goldfields, Rio Tinto, and for the last 15 years, Rusiano Tsoka was working for Goldfields as a Group Health and Safety Manager for the company. Harmony, just to put into context, is a $10.8 billion market cap company, which produces 1.5 million ounces of gold and has a workforce of about 48,000 employees. Rusiano is in Zimbabwe and has more than 35 years of experience in Health and Safety Management. So if you might, I might just hand over to Rusiano to talk to the health and safety initiatives that he has put across. Thank you. Rusiano Tsoka: Good morning, ladies and gentlemen. Thank you, James for the introduction. Thank you. I'm going to give you an update on one of our key pillars of our operational excellence, which is Safety. Since we reviewed the safety strategy, can you go to the next slide, please? Since the safety strategy was reviewed in May 2024, we have focused on several safety initiatives, which are all listed in this slide. But today, I'm just going to highlight two of the most impactful, which is the Visible Felt Leadership, VFL and the structured management of our top 20 operational risks. Visible Felt Leadership has ensured that our leaders, our managers and supervisors are consistently present where it matters most, which is underground and in the plant and in the field. And they are personally engaging with employees through two-way communication. This dialogue provides management with valuable insights and information that is not typically obtained during routine inspections and audits. So in this quarter -- last quarter alone, we conducted 47 VFL engagements, which helped identify and address unsafe acts and conditions at the source, while also fostering trust from the employees, accountability on the managers and providing the platform for a proactive safety culture. In managing the COPE 20 operational risks, we have identified and prioritized the mine's most critical safety and health risks, which include falls of ground, heat stress, fire safety and tailings storage integrity and using the industry best practices and international standards such as the ICMM guidelines, the ISO 45001 risk management principles, we have assigned clear ownership deadlines and measurable outcomes. I'm pleased to report that over 85% of the high priority actions have already been completed and closed out. This proactive closeout has significantly strengthened our critical controls, reduced our overall risk exposure and directly contributed to the improved safety performance we have seen in this last quarter. The impact of the combined initiatives, including these two, which I've just highlighted is clear. We have reduced incidents from five incidents in January this year to 1 in March. This has provided us in achieving 26 accident-free days in January to 30 accident-free days in March. Safety is non-negotiable, and we are committed not only to protecting lives, but also to securing the long-term sustainability of our operation. Our vision is to build and embed a proactive safety culture across the operations, where every employee feels responsible, empowered and supported to prevent incidents before they occur. So our journey to zero harm still continues. Thank you. Next slide? Mark Learmonth: Okay. Can I ask -- we're going to talk about Bilboes now. Could you just make a couple of introductory comments before I hand over to Victor. So could you go to the next slide, please? Okay. Just before we get into the detail of what's going on Bilboes, I just want to say a few words about capital allocation. I've said this before, but just to reiterate, our management's objective in approaching the development route for Bilboes is to maximize the uplift in Caledonia's net present value per share, which is the closest approximation we can actually get to our share price. There's a couple of ways to do this. The first, and Victor will talk about this in more detail, is the various work streams that are happening now to optimize the project economics, so to make the project as robust as possible. But the other side of the coin is that we need to minimize our equity dilution. So the way we do that is we're looking at ways to reconfigure the development approach to minimize the upfront capital cost, so that's the immediate amount of money we need to build a project. We're also looking at options to increase Caledonia's internal equity contribution, so that's our internal cash flow. And again though, in a few moments, Craig will give you some background as to the initiatives that we're looking at there. And then finally, to minimize the equity dilution, we also need to look at debt funding, but prudently. We clearly don't want to saddle the company with a burdensome amount of debt. We have had very fruitful engagements through Cutfield Freeman, our debt advisors, with potential funders. Those engagements are currently paused until we finish off the work that Victor is going to outline now. So I just want to be clear on capital allocation is the most important element in how we approach this project. So can I hand over to Victor, who will just run through what we're doing to achieve these objectives of optimizing the project. So Victor, over to you. Thank you, Mark. Victor Gapare: Thank you, Mark. On the Bilboes project, basically, over the last few months, working with DRA on the feasibility study, the work is actually revealed that there are some opportunities for further optimization given the size of the project in terms of the amount of ore we'll be mining, the waste we'll be mining as well as the capital required for the project. As far as the Mining side of things is concerned, the feasibility study, which we're looking at looks at 240,000 tonnes per month. So there are opportunities to relook at the pit and mine scheduling, particularly as this relates to our McCays and Isabella operations, which are really within a 5 kilometer radius of each other. So there are opportunities there to reduce the upfront capital costs and also the operating costs over the life of mine. On the Metallurgical side, as you know, we are going to use the bio processing method -- the way we have looked at it now is that Phase 1 of the project will focus on Isabella and McCays. And then Phase 2, which will come around year six, we will focus on processing ore from our Bubi mine. So what we have done to optimize the capital there, we're looking at actually stripping out whatever upfront capital we were going to put in on the Biox plant, strip out the CapEx related to Bubi, so that upfront we only deal with CapEx related to Isabella and McCays. Obviously, this has implications in terms of maybe the future capital, but at least the upfront capital, which we have to put up now will have gone down a bit. We're also exploring the option of exporting concentrates. In the last few months, we have established that the Zimbabwe government can actually allow us to export concentrate, which means we won't have to put up the Biox plant upfront. So we can put it maybe after two or three years, that saves upfront capital cost. So it's one of the optimization options, which we're looking at. As far as the infrastructure is concerned, this is really focused on the power requirements of the project. The biggest cost there is actually the power line, the direct supply power line, which will -- which will be about 70 kilometers. So we are in negotiations with the power authorities to actually put up -- we will put up the CapEx required for that line, but we can recoup that in the form of credits on our monthly electricity bill. So that will change the economics of the project. We're also looking at other things like the conveyors which will result in us reducing again the upfront capital cost and also the OpEx over time. There's also the issue of the contractor pricing. We think we can get better pricing from contractors when we look at the earth moving, the civils and the infrastructure. So that's an area we're looking at. We think there are savings to be had there. We are looking at the tailings storage facility, the TSF. It is the single largest cost in this project. So we are really looking at the west itself in terms of what the impact will be on the lining for us to comply from an environmental point of view. So that's work which may be requires us to spend a little bit of money on it and a little bit of time on it to actually come up with the right lining requirements for the TSF and actually reduce the cost. There's the issue of the relocation in the last presentation, we did say there was an opportunity to relook at the location of the TSF. We do own the Motapa property next door, as you know. So the terrain there is a little bit more suitable for the tailings storage facility. So we are looking at that, but that's more long term. If we do that, that will come in at construction stage. The other important aspect we are looking at, given that we are optimizing the feasibility study, we are relooking at the smaller options, which we have looked at before, but really at a conceptual level, at a scoping study level to see whether the economics of those can be looked at -- can be options for us to look at. As far as timing of the publication or rather for us to come back to the market and say this is what we have. The preliminary results should be out before the end of the year. So we should be able to discuss -- we should have a firm idea of the capital costs and other than the issues relating to the TSF site, which might take a little bit longer or which will take a bit of longer actually. After we finish all this, we expect to engage with the Zimbabwean authorities first on the issue of concentrates and other matters related to the project in general. Mark has already said, once we finish this process, when we got a firm CapEx cost, we will engage with our prospective debt funders and move the project forward. The smaller scale options, as I have said, we are really looking at the meta scoping study level, but they should tell us whether there is merit to assess them. This will also be available at the same time as the feasibility study itself. Mark, that's all I can say about the project. Mark Learmonth: Okay. Thank you, Victor. Can we now go to ask Craig, our Vice President of Technical Services, to quickly outline what we're doing in terms of exploration? But also to talk about the -- some of the near-term opportunities that we're working on? So Craig, over to you. Craig Harvey: Thanks, Mark. I'll just quickly take you guys through exploration and the near-term opportunities for Caledonia. So if we can move on to the next slide, please. One of our key focus areas for this year is Motapa. So at the end of last year, we put out a press release detailing the initial work that we had done. So for this year, exploration at Motapa, we've got a budget of just under $3 million. So the three trends that are there, North, Central, i.e., Mpudzi and South. On the Motapa North, we are focusing this year to drill out a minimum of 250,000 ounces into a mineral resource. It's about 19,500 meters of drilling that we've got planned. It's about 170 drill holes. Important to note is that we're only targeting down to about 150 meters. So that doesn't mean that everything stops there. It's kind of the first phase. I'm pretty sure that we'll be drilling there next year to grow that sulfide resource. In our central area, as we've said before, the Mpudzi block, it's an abandoned iron formation. It outcrops on surface, lots of surface scratchings and things like that. We've trenched the area significantly. The goal for this year is to define an oxide mineral resource of greater than about 30,000 ounces. I just want to caveat that it comes with everything relating to, is it amenable to a heap leach? What is the characteristics of the ore? Where is the oxide, sulphide boundary and things like that? We've got about 6,000 meters of drilling planned to have a look at that. And quite clearly, Bilboes is being from Mapudzi, it's probably about 400 meters to 500 meters away from the Bilboes heap leach pads. So quite clearly, if we do the work, we've got a source of ore for the Bilboes heap leach pads. With all of the work that we're doing, we're continually trenching across the shear zones that we find. As we dig out some more info, Motapa South has revealed that there's a 600 meter on strike anomaly, where the trenches have returned anomalous values over a 20 meter to 25 meter width. So in this year, we are going to be doing some infill trenching there. I hope to get a few more funds on the -- towards the back end of the year to go and do a bit of drilling, if the results are actually quite positive. So that's Motapa in a nutshell. If we can move on to the next slide and we talk a bit about Blanket. Blanket, the underground exploration. So just briefly, it was the beginning of 2024, we released drilling results from Blanket, currently working on an update, which should come out in the next two to three weeks on our long-haul drilling. Long haul drilling remains very, very positive, very positive, the grades better than what we think, widths in some areas very much better than what we think. But currently, we have drilled almost about 95% of what we want to drill down to 34 level to get it all into an indicated resource or better. We are targeting extensions of the main ore bodies below 34 level, as we do need to look at that to determine if we do end up going deeper. First of all, is the mineralization there. But one of the things that has also stuck out at Blanket is that kind of pre or -- sorry post-1970, maybe post-1980, there hasn't been a lot of work done on surface. So to put it into context, just to our South or on our Southern boundaries, the Vumbachikwe Gold Mine, that's now gone into receivership and things like that, that's on a banded iron formation as well. It's probably separated across strike -- or yes, cross strike 300 meters to 400 metres away from the Blanket shear zone. Now, this banded iron formation runs all the way through the Blanket lease area. It's about 10 kilometers in strike length. Pre-1970, there's some historic data that we are working through. And quite clearly, there are showings of good grades, there are showings of poor grades. But we have now embarked on a strategy of what can we get from surface, typically oxide type material that we can bring into the Caledonia stable, some low-cost dollar per ounce of gold. It's not all just limited to surface. The bottom one there is Smiler. We'll put out some info in due course. But again, historically, it's been mined down to about a depth of 150 meters. It's 1.5 kilometers north of Lima, which is the northernmost shaft at Blanket. It's got very good grades, it's got good widths, very amenable to mining. So your typical type of mining widths. So again, we'll start to have a look at that, and we'll bring that into the stable at Blanket. If we move on to the next slide, something I'm quite excited about is what we call these near-term opportunities, so both at Motapa and at Bubi, as Victor said, Bubi is part of the Bilboes project. But both of these old mines or old areas have what we call spent heap leach pads. Now what we mean by that is that they were last irrigated in the year 2000 or last irrigated in the year 2020. But the big thing about these heap leach pads is they were run-of-mine heap leach pads. So what I mean by that is that the owners would mine and they would drill and blast and they would take the blaster block and load it directly on to a pad. So it did not go through a crushing circuit at all. If we just have a look there, Motapa, the spent heap leach pad had a historical recovery from the records that we have of 53%. Bubi had just under a 61% historical recovery. To put it into context, Bilboes installed a crushing circuit into their run-of-mine flow of ore. And the Bilboes recovery is just north of 82%, I think it is. So in a nutshell, very, very quickly, we've already started this work, a crushing and screening operation with a low onto a pad and leach. We could probably add somewhere in the region of 30,000 ounces to 40,000 ounces of recoverable gold over the next two to three year period at even lower cost than a normal open pit mine would operate at. So we are clearly pushing quite hard and exciting. Okay. That's all I'm going to add on the exploration side. Mark Learmonth: Thank you. Thank you, Craig. So we've spent quite a long time. We've almost gone 50 minutes or so. So can we quickly go to the outlook, I'll get through this quickly. Our objectives are -- it's really a strategic focus on disciplined growth. So the objectives are to maintain Blanket production as it is at the moment. We've got off to an excellent start this year. We'll continue to progress our cost reduction initiatives. Hopefully, by the end of the year, we'll see some progress on that. As you've heard, we are expanding the exploration activities at Blanket with a view to extending Blanket life of mine and also to explore new opportunities on the lease area. We'll continue, as I explained, to evaluate beneficial development options for Bilboes with a view to optimizing economics and reducing the upfront capital cost. And then as Craig has also outlined, we're very excited about the potential at Motapa. So we've covered a lot of ground there. Sorry about that. I find it useful. Can we open this up to questions? Operator: [Operator Instructions] And then we've got our first question, which is from Howdy Flinker. Howdy, please go ahead. So Howdy, please go ahead. If you just unmute yourself, you can ask your question. Howard Flinker: I’ve no questions. Mark Learmonth: No more questions. Operator: Okay. That’s… Howard Flinker: Nice quarter. Nice quarter, guys. Mark Learmonth: Thank you, Howdy. Very usual for you to have no questions Operator: Okay. We'll go to the next question is from Nic Dinham. Nic, please go ahead. Nic Dinham: Thank you. Hi, everybody. Thanks. It was a really impressive presentation. Thank you. A couple of questions. James, you've unpacked a lot more data than we've seen traditionally about the mine itself. And you've given us some comfort that you're balancing out the reserves against the production. What about the longer-term aspects of mine development? The developments on the declines and the other work that you're doing. Is that where it should be at the moment? That's the first question. Mark Learmonth: James? You want me to exchange. James Mufara: Yeah. Thank you. Thanks, Nic. So yes, so the development on the decline at the moment, as you can see, we have made a decision when we took over, we realized quite some shallow reserves that we could mine. I mean myself and Craig, we went in and realized closer to the surface, you don't have ventilation, you don't need a lot of energy, you can just, get these ounces out to surface, so we have decided to down, going down, because it's going to be costly both in terms of trimming and all the other. So we actually are getting our production better, closer to surface. But obviously, in the medium to long term, we will have to restart those declines and go better, go deeper. Nic Dinham: Thank you. Next question is really a little bit about Blanket dividends and part it can play in the future over the next two or three years. Your mine is obviously making a lot of money. What were the dividends that came out of Blanket in 2024? And I know, this is a difficult one for you. But if we look ahead for the year, how much money do you think you can extract from Blanket to fund the rest of your business? And what is the likely closeout horizon on the facilitation loans under the current gold price scenario? Mark Learmonth: Ross, do you want do that or? Ross Jerrard: Well, I’m going to talk about facilitation first? Mark Learmonth: Well, let me talk about facilitation loan first. The first thing is, Blanket's not a cash drop. Okay. So it’s in all the shareholders’ interests, all the banking shareholder interest, so it has much cash as anybody, but you can out of Blanket. We want that, and the other shareholders want that, too. Okay, so the balance has to be you don't overdistribute, which we've already been doing. At this rate, I would expect the facilitation rates to get repaid in about 12 months’ time at this rate of distribution to cash generation. I'll leave it to Ross to talk about how much cash he thinks he might be able to get out of Blanket over the course of the year. Ross Jerrard: Thanks, Mark. Hi, Nic. Yeah. Quite feasibly, we'd be able to end up at end of the year with a cash balance of between $50 million and $60 million depending on various levers that we look at. So it's quite an exciting trajectory in terms of cash flows coming through. We are looking at various initiatives as part of that cost program in terms of -- various initiatives in terms of longer-term saving, bringing costs down. So there might be some additional capital that's deployed into those projects. So short-term spend to gain the longer-term horizon, and we'll use our cash on that. But quite feasibly, we're looking at closing balance of about anywhere between $50 million and $60 million. Mark Learmonth: Okay. Anything else, Nic? Nic Dinham: Yeah, I just wanted to. You still own a couple of small exploration projects, which would just not be the right time to shake yourself loose on them, given how big your commitment is in Bilboes. Mark Learmonth: Which ones are particularly in Bilboes? Nic Dinham: What's the other one? The two, Maligreen Mark Learmonth: Maligreen, there's nothing wrong with Maligreen. It's being incubated at the moment. No, we wouldn't sell that. I can't think of anything else that we've got. Nic Dinham: Okay. And yeah, so finally, I think you touched on it, is the tempting things that you could do with now the money, the strategic, the position the company is in now is materially different from what it was a year ago and possibly even when your budgets were set. So there are potential opportunities. And I think you previously have spoken about investment in electricity. But is there anything else out there that attracts you like more investment in exploration around. Mark Learmonth: No. I think we've got plenty on our plate right now. We've got some exciting potential investment opportunities. So we've got more than enough. Thank you very much. Nic Dinham: Okay, pleasure. Operator: Thanks very much, Nic. [Operator Instructions] So we've got our next question, which is from [indiscernible]. Please go ahead. Unmute yourself in order to ask your question. Thank you. Unidentified Participant: All right. Can you hear me? Mark Learmonth: Yeah. We can hear you. Unidentified Participant: You had previously set aside $41 million in CapEx for 2025 modernize operations and mining efficiency and invest in exploration efforts. I think of this amount, you had said $3.4 million have been set aside for Blanket, $6.9 million for Bilboes and Motapa. How much of that has been spent to date? Mark Learmonth: That's a slow one, but Ross, do you want to? Ross Jerrard: We've done approximately $10 million across both. Mark Learmonth: Yes. We've done approximately $10 million. So the only impediment to spending that money is just the speed of doing it. It comes down to sometimes procuring things can take quite a long lead time, sometimes getting billing service providers to actually get that. So I think the only impediment isn't the availability of cash, it's just physically spending that much money that quickly. Does that help? Unidentified Participant: Thank you. Operator: Do you have any further questions or does that answer your question? Or is that -- does that answer your question? Mark Learmonth: I think we must have lost him. Operator: Okay. We've got no further questions. Unidentified Participant: Sorry, sorry. Operator: Yes. Unidentified Participant: Yes. Just one more follow-up. Since there's been an increase in your cash generation and throughout the quarter and indications that you want to build up your cash balance sheet at the end of the year to between $50 million and $60 million. So in terms of sourcing for your CapEx for the rest of the year, is it safe to assume that most of that will be coming from this? Could you explain on that? Mark Learmonth: All of our CapEx is funded from internal cash. So the $50 million to $60 million that Ross referred to is after CapEx. So the mine will generate $100 million, of which $40 million will get spent in CapEx and the balance is what's left over. So we fund the CapEx from cash flows. Unidentified Participant: All right. Thank you. Mark Learmonth: Okay. Thank you. Operator: Thanks very much. We've no further questions at the moment, so maybe if I could turn back to you Mark for any closing remarks. Mark Learmonth: Okay. Well, thank you all for your attendance. It was a good quarter, but hopefully this gold price continuing and with a robust start to production in the year, hopefully, we'll see improvements in quarter two and thereafter. So we'll update you next quarter. Thank you very much for attending.
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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.