REG - Caledonia Mining Crp - Results for the Quarter ended March 31, 2023
15/05/2023 07:00
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RNS Number : 3397Z Caledonia Mining Corporation PLC 15 May 2023
Caledonia Mining Corporation Plc
Results for the Quarter ended March 31, 2023
Notice of Management Conference Call
(NYSE AMERICAN: CMCL; AIM: CMCL; VFEX: CMCL)
St Helier, May 15, 2023: Caledonia Mining Corporation Plc ("Caledonia" or the
"Company") announces its operating and financial results for the quarter ended
March 31, 2023 (the "Quarter"). Further information on the financial and
operating results for the Quarter can be found in the Management Discussion
and Analysis ("MD&A") and the unaudited interim financial statements which
are available on the Company's website and which have been filed on SEDAR.
This Quarter's results are the first to reflect Caledonia's ownership of
Bilboes, the acquisition of which was completed on January 6, 2023. The
near-term actions relating to Bilboes are to re-start oxide mining operations
and prepare a revised feasibility study in respect of the larger sulphide
project. Technical challenges were encountered on re-starting the oxide
mining, but it is hoped that gold mining from near surface oxide deposits will
be cash neutral and will help the Company to maintain Bilboes' operational
integrity pending completion of the feasibility study. In addition, the
waste material that will be moved as part of the oxide mining activities is
material that would have had to be moved later when work starts on the main
sulphide project.
As stated in the first quarter production update dated April 24, Blanket Mine
("Blanket") suffered some technical challenges which adversely affected its
contribution in the Quarter. Management believes these challenges have now
been resolved and is encouraged by production and cost data in April and to
date in May. Accordingly, Caledonia reiterates its production guidance of
75,000-80,000 ounces for Blanket for 2023.
Financial Highlights
Financial performance was largely affected, as expected, by the integration
and start-up of the Bilboes operation and technical challenges at Blanket:
· Gross revenues of $29.4 million (Q1 2022: $35.1 million). Lower
revenues reflect lower gold production at Blanket.
· Reduced EBITDA contribution in the period of $2.25 million (Q1 2022:
$14.5 million). The disappointing contribution was due to lower revenues and
higher operating costs at Blanket and the costs at the Bilboes oxide mine.
Blanket Mine contributed EBITDA of $11.3m in the Quarter (Q1 2022: $19.5m).
· On-mine cost 1 (#_ftn1) per ounce increased by almost $500 per ounce
from $698 in Q1 2022 to $1,196 per ounce. Approximately $300 of the increase
was due to the Bilboes oxides mining activities where production only
commenced in the last week of the Quarter, but operating costs were incurred
for much of the Quarter. The on-mine cost per ounce at Blanket increased due
to lower gold production (which meant that fixed costs were spread across
fewer ounces) and higher than anticipated electricity costs.
· All-in sustaining cost 1 of $1,412 per ounce (Q1 2022: $848 per
ounce). The increase was due to the higher on-mine cost and advisory fees
payable on the completion of the Bilboes acquisition.
· Adjusted loss per share of 29.1 cents (Q1 2022: profit of 62.5 cents).
Reduced EBITDA for the Quarter was exacerbated by higher administrative
expenses, a higher interest charge and an increase in the effective tax rate.
· Net cash outflow from operating activities of $0.9 million (Q1 2022:
net cash inflow of $10.2 million).
· Net cash and cash equivalents of $3.2 million (Q1 2022: $14.4
million). The net cash position at March 31, 2023 was negatively impacted by a
build-up in undelivered gold to a value of approximately $2.8 million at the
end of the Quarter pending the implementation of a new gold sale mechanism in
early April. In early April net cash was enhanced by these gold sales and
the receipt of approximately $5.0 million from the Zimbabwe leg of the equity
raise.
· Dividends of 14 cents per share were paid in January.
A segmental analysis showing the summarised financial performance of Blanket
and Bilboes is set out below.
Segmental Analysis
Blanket Bilboes Oxides Other(1) Consolidated
Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 Q1 2023 Q1 2022
($'m) ($'m) ($'m) ($'m) ($'m) 2022 ($'m) ($'m)
($'m)
Revenues 29.3 35.1 0.2 - - - 29.4 35.1
Royalty (1.5) (1.8) - - - - (1.5) (1.8)
Production costs (16.1) (13.7) (3.3) - (0.4) (0.7) (19.9) (14.4)
Depreciation (2.8) (2.6) - - 0.6 0.5 (2.3) (2.1)
Gross profit/(loss) 8.9 17.0 (3.2) - 0.2 (0.2) 5.9 16.8
Other(2) (0.4) (0.1) (0.3) - (5.2) (4.3) (5.9) (4.4)
Net finance cost (0.5) (0.2) (0.1) - (0.4) 0.1 (0.8) (0.1)
Profit/(loss) before tax 8.0 16.7 (3.4) - (5.4) (4.4) (0.8) 12.3
Taxation (3.0) (4.4) - - (0.5) (0.3) (3.5) (4.7)
(Loss)/profit after tax 5.0 12.3 (3.4) (5.9) (4.7) (4.3) 7.6
Source: note 24 to the unaudited interim financial statements for the Quarter
1. Comprises costs relating to the South African operations,
intergroup eliminations and adjustments, and corporate and other reconciling
amounts.
2. Comprises other income, other expenses, administrative expenses,
cash and equity settled share-based expenses, net foreign exchanges gains and
losses and fair value loss on derivative instruments.
Safety
· Regrettably, a fatality occurred on February 16, 2023 as a result of
a secondary blasting accident. The directors and management of Caledonia and
Blanket express their sincere condolences to the family and colleagues of the
deceased. Management has provided the necessary assistance to the Ministry of
Mines Inspectorate Department in its enquiries into the incident.
Operating Highlights
· 16,141 ounces of gold produced in the Quarter (Q1 2022: 18,515
ounces) of which 16,036 ounces were produced at Blanket and 105 ounces were
produced at the Bilboes oxide mine. Gold produced in the Quarter was lower
due to lower mine production at Blanket than anticipated and the
slower-than-expected restart of the Bilboes oxide mine.
· Production at Blanket was lower than expected due to minor mechanical
breakdowns and logistical issues which have now been resolved. The rate of
production improved in April with 5,202 ounces of gold being produced in the
month (which has 23 scheduled production days due to public holidays and
production cut-off), which equates to an annualised production rate of
approximately 80,000 ounces per annum.
· The Company is reviewing the commercial viability of the low margin
oxides mining activities, which includes assessing the scope to mine and
process oxide material from the recently acquired Motapa property, which is
immediately adjacent to Bilboes. Approximately 217 ounces of gold were
produced from the Bilboes oxide mine in April; a further approximately 338
ounces of gold was contained in material that was deposited onto the leach pad
in April and is expected to report to production in May.
· The 12.2MWac solar plant was fully commissioned on February 2, 2023
and is generating slightly more power than anticipated.
Outlook
· Production guidance for Blanket for the year to December 31, 2023 of
between 75,000 and 80,000 ounces of gold is maintained.
· On mine costs at Blanket are expected to fall in future quarters due
to increased production and lower electricity costs. Accordingly, guidance
for on-mine costs at Blanket for 2023 is maintained at the range of $770 to
$850 per ounce of gold produced at Blanket.
· Guidance for consolidated all-in sustaining costs per ounce was
between $1,150 and $1,250 per ounce, which included the anticipated production
and associated costs at the Bilboes oxide mine in respect of which production
and cost guidance has been withdrawn. Guidance for AISC is re-stated to
exclude production and related production costs at the Bilboes oxide mine.
AISC excluding Bilboes oxides is expected to be in the range of $935 to $1,035
per ounce.
· Deep level drilling at Blanket has re-commenced with the objectives
of upgrading inferred mineral resources and identifying new resources thereby
extending the life of mine.
· The feasibility study on the Bilboes sulphide project should be
completed in Q1 2024 with the objective of maximising value accretion for
Caledonia's shareholders.
Commentary
The inclusion, for the first time, of Bilboes in this Quarter's report
inevitably makes it difficult to carry out like-for-like comparisons with the
equivalent quarter in 2022.
Production from Blanket in the Quarter was below target due to equipment
failures and logistical issues. These included two separate failures of the
No.4 Shaft winder and a persistent blockage in an ore-pass at Central Shaft
which required alternative tramming arrangements which were more expensive and
reduced tramming capacity. These issues have been resolved and production in
April has been higher than expected, equating to an annualised production rate
of approximately 80,000 ounces of gold per annum. This improved performance
has continued into May and we confirm production guidance from Blanket for the
year to December 31, 2023 in the range of 75,000 to 80,000 ounces.
The increased on-mine cost per ounce was due to the high cost per ounce at the
Bilboes oxide mine where production only commenced in the last week of the
Quarter. The remainder of the increase was due to higher on-mine costs at
Blanket where lower production meant that fixed costs were spread across fewer
production ounces and a higher electricity use. The increased electricity cost
was a combination of higher consumption due to the continued heavy use of
certain elements of infrastructure which had been expected to be used more
sparingly and an increase in the tariff for grid power. From April, Blanket
has seen a reduction on the cost of grid power following the implementation of
alternative supply arrangements on April 1.
The 12.2MWac solar plant was commissioned in February and generated slightly
more power than anticipated and has contributed to a substantial reduction in
the amount of diesel consumed at Blanket.
In January, Caledonia announced that it had satisfied the conditions precedent
to purchase Bilboes, a large, high-grade gold deposit located approximately 75
km north of Bulawayo. The main objective at Bilboes is to construct a large,
open-pit operation to extract sulphide resources. Work on a revised
feasibility study has commenced, with the objective of identifying the optimal
way to commercialise the Bilboes sulphide project with a view to maximizing
the uplift in value for Caledonia shareholders.
The start-up of the additional, small oxide mining and processing activity at
Bilboes was affected by contractors' drill rigs underperforming and variations
between the realised and anticipated grade at the first target mining area. We
are evaluating other target areas for oxide mining - both at Bilboes and next
door at Motapa with the objective of focusing future mining on areas where we
have a high confidence level in the target mining areas. Caledonia has
withdrawn guidance for the oxide mining activity and in future will report
production and costs retrospectively.
Mark Learmonth, Chief Executive Officer, commented:
"The first quarter of 2023 presented several operational challenges at Blanket
which resulted in lower production and higher costs. We are confident these
issues have been identified and addressed, and we reiterate our production
guidance for Blanket of between 75,000 and 80,000 ounces of gold.
"We were pleased to complete the acquisition of Bilboes at the start of the
Quarter. Although the start-up of the Bilboes oxide mining activity was
disappointing, this does not detract from the attraction of the main sulphide
project.
"The sulphide resource is based on direct drilling results and has been
subjected to independent third-party reviews. Caledonia has commenced work
on a revised feasibility study for the sulphide project which will consider
updated commercial assumptions and will focus on the most judicious way to
commercialise this project with the objective of maximising value for
Caledonia shareholders.
"Following Caledonia's oversubscribed fundraise in March and April, which
raised approximately $16.5m, our balance sheet and operational flexibility
have been improved and we are delighted to have new shareholders on our
register who believe in our vision, and we hope will support us in the next
stage of our growth."
Conference Call Details
A presentation of the results for the Quarter and outlook for Caledonia is
available on Caledonia's website (www.caledoniamining.com). Management will
host a conference call / webinar at 3pm London time on May 16, 2023.
When: May 16, 2023 - 3pm London time
Topic: Q1 2023 Shareholder Call
Register in advance for this webinar:
https://caledoniamining.zoom.us/webinar/register/WN_5VLZvSeeQyOZ0BAr1saBqA
(https://caledoniamining.zoom.us/webinar/register/WN_5VLZvSeeQyOZ0BAr1saBqA)
After registering, you will receive a confirmation email containing
information about joining the webinar.
Enquiries:
Caledonia Mining Corporation Plc
Mark Learmonth Tel: +44 1534 679 800
Camilla Horsfall Tel: +44 7817 841 793
Cenkos Securities plc (Nomad and Joint Broker)
Adrian Hadden Tel: +44 207 397 1965
Neil McDonald Tel: +44 131 220 9771
Pearl Kellie Tel: +44 131 220 9775
Liberum Capital Limited (Joint Broker)
Scott Mathieson/Kane Collings Tel: +44 20 3100 2000
BlytheRay Financial PR (UK)
Tim Blythe/Megan Ray Tel: +44 207 138 3204
3PPB (Financial PR, North America)
Patrick Chidley Tel: +1 917 991 7701
Paul Durham Tel: +1 203 940 2538
Curate Public Relations (Zimbabwe)
Debra Tatenda Tel: +263 77802131
IH Securities (Private) Limited (VFEX Sponsor - Zimbabwe)
Lloyd Mlotshwa Tel: +263 (242) 745 119/33/39
Note: This announcement contains inside information which is disclosed in
accordance with the Market Abuse Regulation (EU) No. 596/2014 ("MAR") as it
forms part of UK domestic law by virtue of the European Union (Withdrawal) Act
2018 and is disclosed in accordance with the Company's obligations under
Article 17 of MAR.
Cautionary Note Concerning Forward-Looking Information
Information and statements contained in this news release that are not
historical facts are "forward-looking information" within the meaning of
applicable securities legislation that involve risks and uncertainties
relating, but not limited, to Caledonia's current expectations, intentions,
plans, and beliefs. Forward-looking information can often be identified by
forward-looking words such as "anticipate", "believe", "expect", "goal",
"plan", "target", "intend", "estimate", "could", "should", "may" and "will" or
the negative of these terms or similar words suggesting future outcomes, or
other expectations, beliefs, plans, objectives, assumptions, intentions or
statements about future events or performance. Examples of forward-looking
information in this news release include: production guidance, estimates of
future/targeted production rates, and our plans and timing regarding further
exploration and drilling and development. This forward-looking information
is based, in part, on assumptions and factors that may change or prove to be
incorrect, thus causing actual results, performance or achievements to be
materially different from those expressed or implied by forward-looking
information. Such factors and assumptions include, but are not limited to:
failure to establish estimated resources and reserves, the grade and recovery
of ore which is mined varying from estimates, success of future exploration
and drilling programs, reliability of drilling, sampling and assay data,
assumptions regarding the representativeness of mineralization being
inaccurate, success of planned metallurgical test-work, capital and operating
costs varying significantly from estimates, delays in obtaining or failures to
obtain required governmental, environmental or other project approvals,
inflation, changes in exchange rates, fluctuations in commodity prices, delays
in the development of projects and other factors.
Security holders, potential security holders and other prospective investors
should be aware that these statements are subject to known and unknown risks,
uncertainties and other factors that could cause actual results to differ
materially from those suggested by the forward-looking statements. Such
factors include, but are not limited to: risks relating to estimates of
mineral reserves and mineral resources proving to be inaccurate, fluctuations
in gold price, risks and hazards associated with the business of mineral
exploration, development and mining, risks relating to the credit worthiness
or financial condition of suppliers, refiners and other parties with whom the
Company does business; inadequate insurance, or inability to obtain insurance,
to cover these risks and hazards, employee relations; relationships with and
claims by local communities and indigenous populations; political risk; risks
related to natural disasters, terrorism, civil unrest, public health concerns
(including health epidemics or outbreaks of communicable diseases such as the
coronavirus (COVID-19)); availability and increasing costs associated with
mining inputs and labour; the speculative nature of mineral exploration and
development, including the risks of obtaining or maintaining necessary
licenses and permits, diminishing quantities or grades of mineral reserves as
mining occurs; global financial condition, the actual results of current
exploration activities, changes to conclusions of economic evaluations, and
changes in project parameters to deal with unanticipated economic or other
factors, risks of increased capital and operating costs, environmental, safety
or regulatory risks, expropriation, the Company's title to properties
including ownership thereof, increased competition in the mining industry for
properties, equipment, qualified personnel and their costs, risks relating to
the uncertainty of timing of events including targeted production rate
increase and currency fluctuations. Security holders, potential security
holders and other prospective investors are cautioned not to place undue
reliance on forward-looking information. By its nature, forward-looking
information involves numerous assumptions, inherent risks and uncertainties,
both general and specific, that contribute to the possibility that the
predictions, forecasts, projections and various future events will not
occur. Caledonia undertakes no obligation to update publicly or otherwise
revise any forward-looking information whether as a result of new information,
future events or other such factors which affect this information, except as
required by law.
This news release is not an offer of the shares of Caledonia for sale in the
United States or elsewhere. This news release shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
the shares of Caledonia, in any province, state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such province, state or
jurisdiction.
Condensed Consolidated Statements of profit or loss and Other comprehensive
income (Unaudited)
($'000's) 3 months ended
Mar 31
2023 2022
Revenue 29,435 35,072
Royalty (1,480) (1,758)
Production costs (19,850) (14,359)
Depreciation (2,255) (2,063)
Gross profit 5,850 16,892
Other income 18 2
Other expenses (640) (793)
Administrative expenses (5,938) (2,371)
Net foreign exchange gain 1,533 909
Cash-settled share-based expense (280) (367)
Equity-settled share-based expense (110) (82)
Net derivative financial instrument expenses (434) (1,738)
Operating (loss) profit (1) 12,452
Net finance costs (767) (116)
(Loss) profit before tax (768) 12,336
Tax expense (3,502) (4,719)
(Loss) profit for the period (4,270) 7,617
Other comprehensive (loss) income
Items that are or may be reclassified to profit or loss
Exchange differences on translation of foreign operations (369) 693
Total comprehensive (loss) income for the period (4,639) 8,310
(Loss) profit attributable to:
Owners of the Company (5,030) 5,940
Non-controlling interests 760 1,677
(Loss) profit for the period (4,270) 7,617
Total comprehensive (loss) income attributable to:
Owners of the Company (5,399) 6,633
Non-controlling interests 760 1,677
Total comprehensive (loss) income for the period (4,639) 8,310
(Loss) earnings per share (cents)
Basic (30.3) 44.6
Diluted (30.2) 44.6
Adjusted (loss) earnings per share (cents)
Basic (29.1) 62.5
Dividends paid per share (cents) 14.0 14.0
Condensed Consolidated Statements of Cash Flows (Unaudited)
($'000's)
3 months ended
March 31
2023 2022
Cash inflow from operations 664 11,844
Interest received 5 1
Net finance costs paid (200) (31)
Tax paid (1,345) (1,659)
Net cash (outflow) inflow from operating activities (876) 10,155
Cash flows from investing activities
Acquisition of property, plant and equipment (4,593) (9,734)
Acquisition of exploration and evaluation assets (144) (224)
Net cash outflow from investing activities (4,737) (9,958)
Cash flows from financing activities
Dividends paid (2,424) (1,788)
Payment of lease liabilities (37) (40)
Shares issued - equity raise (net of transaction cost) 10,823 -
Loan note instruments - Motapa payment (5,399) -
Loan note instruments - Solar bond issue receipts 4,500 -
Net cash inflow (outflow) from financing activities 7,463 (1,828)
Net increase (decrease) in cash and cash equivalents 1,850 (1,631)
Effect of exchange rate fluctuations on cash and cash equivalents (157) (204)
Net cash and cash equivalents at beginning of the period 1,496 16,265
Net cash and cash equivalents at end of the period 3,189 14,430
Summarised Consolidated Statements of Financial Position (Unaudited)
($'000's) As at Mar 31 Dec 31
2023 2022
Total non-current assets 269,069 196,764
Inventories 18,477 18,334
Prepayments 3,356 3,693
Trade and other receivables 9,957 9,185
Income tax receivable 82 40
Cash and cash equivalents 19,021 6,735
Derivative financial assets 6 440
Total assets 319,968 235,191
Total non-current liabilities 13,196 9,291
Loan notes payable - short term portion 2,514 7,104
Lease liabilities - short term portion 136 132
Trade and other payables 26,048 17,454
Income tax payable 2,210 1,324
Overdraft 15,832 5,239
Cash-settled share-based payments - short term portion 482 1,188
Total liabilities 60 412 41,732
Total equity 259,550 193,459
Total equity and liabilities 319 968 235,191
1 (#_ftnref1) Non-IFRS measures such as "On-mine cost per ounce", "AISC",
"average realised gold price" and "adjusted EPS" are used throughout this
document. Refer to section 10 (#NONIFRSMEASURES) of the MD&A for a
discussion of non-IFRS measures.
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