Caledonia Mining Corporation Plc (LON:CMCL) has announced its operating and financial results for the quarter and the nine months ended September 30, 2022 (the “Quarter” and “Nine Months” respectively). Further information on the financial and operating results for the Quarter and Nine Months can be found in the management discussion and analysis (“MD&A”) and the unaudited financial statements, which are available on the Company’s website and which have been filed on SEDAR.
Financial Highlights
· Gross revenues in the Nine Months of $107.9 million, a 21.0 per cent increase on the $89.2 million achieved in the first nine months of 2021.
· Gross profit in the Nine Months of $50.5 million, a 26.1 per cent increase on the $40.0 million achieved in the first nine months of 2021.
· EBITDA in the Quarter (excluding asset impairments, depreciation, and net foreign exchange gains) of $16.9 million, an 11.8 per cent increase on the $15.1 million in the third quarter of 2021 (“Q3 2021”). This represents EBITDA (excluding asset impairments, depreciation, and net foreign exchange gains) for the Nine Months of $52.9 million (nine months to September 30, 2021: $35.0 million).
· On-mine cost per ounce for the Quarter of $734 (Q3 2021: $695 per ounce).
· All-in sustaining cost (“AISC”) per ounce for the Quarter of $944 (Q3 2021: $870 per ounce). The 8.5 per cent increase compared to Q3 2021 is due to higher on-mine cost per ounce and higher administrative costs.
· Basic IFRS earnings per share (“EPS”) for the Quarter of 66.2 cents (Q3 2021: 57.1 cents).
· Adjusted EPS for the Quarter of 60.7 cents (Q3 2021: 68.9 cents).
· Net cash from operating activities in the Quarter of $8.9 million (Q3 2021: $7.1 million).
· Net cash and cash equivalents at the end of the Quarter of $6.2 million (Q3 2021: $13.0 million).
· Total dividend paid in the Quarter of 14 cents per share paid in July 2022; a further dividend at the same rate of 14 cents per share was paid in October 2022.
Operating Highlights
· 21,120 ounces of gold were produced in the Quarter, 11.4 per cent higher than the 18,965 ounces produced in Q3 2021 and a new quarterly production record.
· 59,726 ounces were produced in the Nine Months, 22.2 per cent higher than the 48,872 ounces produced in the first nine months of 2021.
Other highlights
Transaction to acquire the Bilboes gold project
· On July 21, 2022, Caledonia announced that it had signed an agreement to purchase Bilboes Gold Limited, the parent company which owns, through its Zimbabwe subsidiary, the Bilboes gold project in Zimbabwe (“Bilboes” or the “Project”). Subject to satisfaction of the conditions to completion and to customary adjustments to the purchase price to account for any extraordinary liabilities incurred before completion, the total consideration for the acquisition will be 5,123,044 Caledonia shares, representing approximately 28.5 per cent of Caledonia’s fully diluted equity, and a 1 per cent net smelter royalty (“NSR”) on the Project’s revenues.
· The Project has NI43-101 compliant measured and indicated mineral resources of 2.56 million ounces of gold at a grade of 2.26 g/t and inferred mineral resources of 576,672 ounces of gold at a grade of 1.89 g/t[1]. This includes proven and probable mineral reserves of 1.96 million ounces of gold at a grade of 2.29 g/t.
· The feasibility study which has been prepared by the vendors indicates the potential for an open-pit gold mine producing an average of 168,000 ounces per year over a 10-year life of mine. Caledonia will prepare a feasibility study to identify the most judicious way to commercialise the Project (with regard to the availability of funding on acceptable terms).
· Caledonia is making progress towards satisfying the outstanding conditions to complete the transaction: it has received certain approvals from the Reserve Bank of Zimbabwe, and continues to engage with the Competition and Tariff Commission, the Ministry of Finance, the Ministry of Energy and Fidelity Printers and Refiners (Private) Limited regarding further outstanding approvals.
Acquisition of the Motapa gold exploration project in Zimbabwe
· On November 2, 2022, Caledonia announced that it has purchased Motapa Mining Company UK Limited, the parent company of a Zimbabwe subsidiary which holds a registered mining lease over the Motapa gold exploration property in Southern Zimbabwe (“Motapa”). The Company made the purchase from Bulawayo Mining Company Limited, a privately owned UK company.
Updated Mineral Resources and Technical Report for Maligreen
· On November 7, 2022, Caledonia announced an update to the NI 43-101 compliant Mineral Resources statement at the Company’s 100% owned Maligreen project in the Zimbabwe Midlands (“Maligreen”) and the publishing of an updated technical report with an effective date of September 30, 2022 (the “2022 Technical Report”)[2]. The 2022 Technical Report replaces the previous technical report filed on SEDAR in November 2021 as the current technical report for the Maligreen project. Since Caledonia acquired the Maligreen claims in November 2021 it has been focused on reviewing the geological work conducted at the property with a view to upgrading the Mineral Resources in 2022. In summary, the 2022 Technical Report states Measured and Indicated Mineral Resources of 442 thousand ounces of gold in 8.03 million tonnes at a grade of 1.71 g/t and Inferred Mineral Resources of 420 thousand ounces of gold in 6.17 million tonnes at a grade of 2.12 g/t.
Outlook
· Increase production at Blanket Mine (“Blanket”) to the target of 80,000 ounces of gold per year[3], reduce operating costs and increase the flexibility to undertake further development and exploration, thereby safeguarding and enhancing Blanket’s long-term future.
· Satisfy the conditions to enable the completion of the acquisition of Bilboes and, thereafter, prepare a feasibility study to identify the most judicious way to commercialise the Project with regard to the availability of funding on acceptable terms.
· Restart the oxides operation at Bilboes under the terms of a tribute arrangement with a view to creating a cash-generative operation within approximately six months of the re-commencement of activities.
· Commission the 12MWac solar plant, which is expected to provide 27 per cent of Blanket’s total electricity demand.
Commenting on the announcement, Mark Learmonth, Chief Executive Officer, said:
“This has been another terrific quarter: production of just over 21,000 ounces set a new quarterly production record. In both of the last two quarters we have exceeded our quarterly production target of 20,000 ounces and we are on-track to achieve the top end of our annual production target of between 73,000 and 80,000 ounces of gold.
“The benefit of higher production was diluted by a lower gold price and a modest increase in costs as, in common with other mining companies, we experience inflation on consumables and diesel. Costs were also adversely affected by the increased use of diesel generators due to a further deterioration in the grid supply. However, we are now within a few weeks of seeing the benefit of the new solar plant which is currently being commissioned. This, along with other initiatives to reduce our diesel consumption, should curb the inflationary pressure on our costs.
“We have made good progress on implementing our strategy to acquire a portfolio of high-quality exploration and development assets in the Zimbabwe gold sector.
“In July, Caledonia announced that it had signed an agreement to purchase Bilboes Gold Limited, which is the holding company for a large, high-grade, open-pitable gold resource. Completion of the transaction is subject to several conditions, and we are making progress towards satisfying them. Once the transaction has completed, we intend to prepare a feasibility study to identify the most judicious way to commercialise the Project with regards to the availability of funding on acceptable terms. Caledonia also intends to re-start the oxides operation at Bilboes, under a tribute arrangement before completion of the transaction, with a view to creating a cash-generative operation within approximately six months of the commencement of activity.
“The proposed acquisition of Bilboes also builds on the acquisition of the Maligreen claims in November 2021. We have evaluated the existing geological information which allowed us to improve the geological confidence of approximately half the Mineral Resources from Inferred to Measured and Indicated Mineral Resources. This supports our confidence in the project and its geological continuity.
“Last week we also announced the acquisition of Motapa, a large exploration property which is contiguous to the Bilboes gold project. Motapa was formerly owned and explored by Anglo American Zimbabwe prior to its exit from the Zimbabwean gold sector in the late 1990s. The project has a mining lease covering approximately 2,200 hectares. Motapa has been mined throughout most of the second half of the 20th century. Caledonia understands that during this period the region produced as much as 300,000 ounces of gold.
“2022 has been an outstanding year so far and I would like to thank the team for their continued hard work.”
Caledonia Mining will host an online presentation and Q&A session open to all investors on 11 November at 14.00 London Time
The zoom details are set out below
When: Nov 11, 2022 14.00 London Time
Topic: Q3 2022 Results Shareholder Call
Register in advance for this webinar:
https://caledoniamining.zoom.us/webinar/register/WN_odZTjNcNRyme5BI1HGiW7w
After registering, you will receive a confirmation email containing information about joining the webinar.
