Caledonia Mining Corporation Plc (NYSE AMERICAN: CMCL; AIM: CMCL;
TSX: CAL) (“Caledonia” or the “Company”) announces its operating
and financial results for the year ended December 31, 2019 (the
“Year”). Further information on the financial and operating
results for the Year and the quarter ended December 31, 2019 (the
“Quarter” or “Q4”) can be found in the Management Discussion and
Analysis (“MD&A”) and the audited financial statements which
are available on the Company’s website and which have been filed on
SEDAR.
2019 Financial Highlights
- Gross revenues of $75.8 million (2018, $68.4 million).
- Gross profit1 of $31.1 million (2018, $21.6 million) at a gross
margin of 41 per cent (2018, 32 per cent).
- EBITDA2 of $29.9 million (2018, $19.1 million) at a margin of
39 per cent (2018, 28 per cent).
- On-mine cost3 of $651 per ounce
(2018, $690 per ounce).
- Normalised all-in sustaining cost2
(i.e. excluding the effect of the export credit incentive and its
successor scheme)4 of $856 per ounce (2018, $920 per ounce).
- IFRS earnings per share of 382
cents (2018, 99 cents); IFRS earnings per share adjusted for net
foreign exchange gains of 152 cents (there were no significant
foreign exchange gains in 2018).
- Net cash from operating activities
of $18.1 million (2018, $17.7 million).
- Net cash and cash equivalents of
$8.9 million (2018, $11.2 million) after capital investment of $20
million, including the Central Shaft.
- Total dividend paid of 27.5 cents
per share.
Operating Highlights
- 55,182 ounces of gold produced in
the Year (2018, 54,511 ounces); record production of 16,876 ounces
in the Quarter (fourth quarter of 2018 (“Q4 2018”), 14,952
ounces).
- Grade dilution experienced in the
early part of 2019 has been resolved: average grade for the
Year was 3.31 g/t (2018, 3.26 g/t); average grade for the Quarter
was 3.61 g/t (Q4 2018, 3.27 g/t).
- Gold recoveries have improved
following the installation of the new oxygen plant in the Quarter:
gold recovery in the Quarter was 93.8 per cent (Q4 2018, 92.8 per
cent).
- Shaft sinking at Central shaft was
completed in July 2019 to the target depth of 1,204 metres (4,000
feet approx.). Work has commenced on equipping the shaft with
commissioning expected before the end of 2020.
- Improved safety performance as a
result of intensive management intervention.
Post Year-End Highlights and
Outlook
- Quarterly dividend increased by 9
per cent to 7.5 cents per share in January 2020 due to Caledonia’s
improved financial and operating performance and the enhanced
outlook as we approach the end of the Central Shaft project.
- Completion of the purchase of an
additional 15 per cent shareholding in Blanket increasing
Caledonia’s shareholding to 64 per cent.
- 2020 gold production of between
53,000 and 56,000 ounces i.e. similar to 2019 pending the
completion of the Central Shaft.
- Central Shaft commissioning is
expected in the last quarter of 2020 after which production can
begin to ramp up: target production in 2021 is approximately 75,000
ounces and approximately 80,000 ounces in 2022.5
- 2020 on-mine cost of between $693
to $767 per ounce; all-in sustaining cost of between $951 to $1,033
per ounce; costs per ounce are expected to fall after Central Shaft
is commissioned.
Conference Call
Management will host a conference call on
Monday, March 23, 2020 to discuss the results for 2019 and the
outlook for the Company. The details for this call are set
out towards the end of this announcement.
Steve Curtis, Chief Executive Officer, commented:
“I am delighted by Blanket Mine’s strong
performance which resulted in a record level of production in the
Quarter. Increased production, combined with lower on-mine
costs per ounce and an improved gold price, resulted in a
substantial increase in profit. Gross profit for the Year
increased by 44 per cent to over $31 million; gross profit for the
Quarter was over 100 per cent higher than Q4 2018 and 33 per cent
higher than in the preceding quarter.
“On-mine costs per ounce for the Year were $651
compared to $690 in 2018 due to lower electricity costs in the
first part of the Year and lower on-mine administration costs due
to the devaluation of the Zimbabwe currency.
“All in sustaining costs (“AISC”) for the Year
are not directly comparable with the AISC reported in 2018 which
benefited by approximately $120 per ounce due to the export credit
incentive scheme (and its successor, the gold support price) both
of which were terminated in the course of the Year. After
adjusting for the effects of these schemes (which were government
grants intended to encourage increased gold production), AISC per
ounce in the Year was approximately 7 per cent lower than in
2018.
“The excellent financial and operating
performance is particularly pleasing given the difficult start to
the Year and is testament to the resilience and tenacity of the
management and workforce at Blanket and at Caledonia.
“The improved performance was achieved with no
compromise in safety performance. The Total Injury Frequency Rate
has been substantially reduced following a concerted effort by
management over the last 18 months to improve and enforce safety
standards.
“Profit in the Year was further enhanced by a
net foreign exchange gain of approximately $30 million. This
gain, which is largely unrealised, was due to the sharp devaluation
of the Zimbabwe currency from February 2019 onwards, which reduced
the US Dollar values of bank loans and the deferred tax
liability. If exchange rates remain unchanged, these
unrealised losses will be realised from 2021 onwards as the
deferred tax liability begins to unwind and the term loans begin to
fall due for payment.
“Basic earnings per share (“EPS”) for the Year
on an IFRS basis were 382 cents per share compared to 99 cents per
share in 2018; IFRS EPS after adjusting for the net foreign
exchange gain were 152 cents per share compared to 97 cents in
2018. EPS after adjusting for other items including deferred
tax and the profit on the sale of a subsidiary were 144 cents for
the Year compared to 132 cents in 2018.
“Cash flows remain strong, despite continued
substantial investment in the Central Shaft. Cash flows from
operating activities were $23.9 million for the Year compared to
$21.1 million for 2018. Cash flows from operating activities
in the Year are after a $4.2 million increase in working capital
due to increased inventories (part of which relates to increased
stocks of diesel to protect against interruptions to the
electricity from the grid) and higher prepayments and lower
payables which reflect the reduced availability of supplier credit
in Zimbabwe due to the high level of inflation.
“Capital investment in the Year was $20 million
(2018: $20 million) and included approximately $1.5 million of
unbudgeted expenditure on additional diesel generators to protect
against the sharp increase in electricity outages from July
2019.
“The Central Shaft continues to be the main
focus of our investing activities: when the new shaft is
commissioned towards the end of 2020, Blanket will be able to
increase production to the target rate of approximately 80,000
ounces of gold per annum from 2022 onwards. The shaft sinking
phase of the project was completed in July 2019 and work has
commenced on equipping the shaft; the substantial capital
investment period is expected to be completed in the third quarter
of 2020.
“In parallel with the improved financial and
operating performance, I am also pleased to report an improvement
in the operating environment in Zimbabwe. Although the
country continues to face challenges, the introduction of the
interbank rate early in 2019 allowed us to better protect our
workers from the effects of high inflation. The interruptions
to the supply of electricity from the grid which we experienced in
July and early August have largely been addressed following the
conclusion of an agreement whereby Blanket (and other gold
producers) purchases power which is imported into Zimbabwe.
This power is cheaper than under the previous arrangements prior to
the devaluation of the Zimbabwe currency and Blanket can manage the
reduced incidence of power interruptions using its increased suite
of diesel generators. We are also well-advanced in the
evaluation of a solar project to provide some of Blanket’s power
supply and reduce its dependence on imported power during daylight
hours.
“The increased monthly production towards the
end of the Year in conjunction with the higher price of gold and
lower costs per ounce means that our rate of cash generation has
improved.
“In light of the improved performance and the
brighter outlook for 2020, Caledonia increased its quarterly
dividend from 6.875 cents per share to 7.5 cents per share in
January 2020. The increased dividend equates to an annual
dividend of 30 cents per annum which compares to net cash from
operating activities in 2019 of 169 cents per share. The
board will review Caledonia’s future dividend distributions as
appropriate while considering the balance between delivering
returns to shareholders and pursuing the significant growth
opportunities within Zimbabwe and in line with a prudent approach
to financial management.
"I expect 2020 to be a pivotal year for our
business with the commissioning of the Central Shaft and the
improved operating performance. The level of the gold price and the
effects of the Covid-19 pandemic are being closely monitored and I
look forward to keeping our shareholders updated on our
progress.”
Shareholder Conference Call
A presentation of the 2019 results and outlook
for Caledonia is available on Caledonia’s website
(www.caledoniamining.com). Management will host a conference call
at 1500 GMT on March 23, 2020.
Details for the call are as follows:
Date: March 23, 2020
Time (local): 1500 London, 1700 Johannesburg, 1600 Zurich and
Frankfurt, 1100 Toronto and New York
Password: Caledonia Mining Full Year Results
UK Toll free |
0808 109 0700 |
USA Toll free |
1 866 966 5335 |
South Africa Toll free |
0 800 980 512 |
Canada Toll free |
1 866 378 3566 |
Other (standard International access) |
+44 (0) 20 3003 2666 |
For further information please contact:
Caledonia Mining Corporation PlcMark
LearmonthMaurice Mason |
Tel: +44 1534 679 800Tel: +44 759 078 1139 |
WH Ireland (Nomad & Broker)Adrian Hadden/James
Sinclair-Ford |
Tel: +44 20 7220 1751 |
BlytheweighTim Blythe/Camilla Horsfall/Megan
Ray |
Tel: +44 207 138 3204 |
3PPBPatrick ChidleyPaul Durham |
Tel: +1 917 991 7701Tel: +1 203
940 2538 |
The information contained within this
announcement is deemed by the Company to constitute inside
information under the Market Abuse Regulation (EU) No.
596/2014.
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”, “envisage”,
“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.
Securityholders, potential securityholders 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; 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.
Shareholders 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 common
shares of Caledonia for sale in the United States. 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 common
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 Statement of Profit or Loss and
Other Comprehensive Income |
($’000’s) |
3 months ended December 31 |
12 months endedDecember 31 |
|
|
2018 |
|
2019 |
|
2017 |
|
2018 |
|
2019 |
|
Revenue |
|
17,495 |
|
23,433 |
|
69,762 |
|
68,399 |
|
75,826 |
|
Royalty |
|
(877 |
) |
(1,172 |
) |
(3,498 |
) |
(3,426 |
) |
(3,854 |
) |
Production costs |
|
(10,060 |
) |
(9,650 |
) |
(36,180 |
) |
(39,315 |
) |
(36,400 |
) |
Depreciation |
|
(1,184 |
) |
(1,275 |
) |
(3,763 |
) |
(4,071 |
) |
(4,434 |
) |
Gross profit |
|
5,374 |
|
11,336 |
|
26,321 |
|
21,587 |
|
31,138 |
|
Other income |
|
2,317 |
|
231 |
|
2,594 |
|
7,101 |
|
2,274 |
|
Other expenses |
|
(316 |
) |
(184 |
) |
(14 |
) |
(336 |
) |
(666 |
) |
Impairment loss on trade receivables |
|
- |
|
- |
|
(181 |
) |
- |
|
- |
|
Administrative expenses |
|
(1,840 |
) |
(1,686 |
) |
(5,911 |
) |
(6,465 |
) |
(5,637 |
) |
Profit on sale of subsidiary |
|
- |
|
- |
|
- |
|
- |
|
5,409 |
|
Net foreign exchange gain/(loss) |
|
338 |
|
1,391 |
|
(380 |
) |
223 |
|
29,661 |
|
Cash-settled share-based payment |
|
135 |
|
(283 |
) |
(976 |
) |
(315 |
) |
(689 |
) |
Equity-settled share-based payment |
|
- |
|
- |
|
(835 |
) |
(14 |
) |
- |
|
Gold hedge expense |
|
- |
|
(277 |
) |
- |
|
(360 |
) |
(601 |
) |
Operating profit |
|
6,008 |
|
10,528 |
|
20,618 |
|
21,421 |
|
60,889 |
|
Net finance cost |
|
(78 |
) |
(162 |
) |
(31 |
) |
(220 |
) |
(198 |
) |
Profit before tax |
|
5,930 |
|
10,366 |
|
20,587 |
|
21,201 |
|
60,691 |
|
Tax expense |
|
(2,344 |
) |
(7,136 |
) |
(8,691 |
) |
(7,445 |
) |
(10,290 |
) |
Profit for the period |
|
3,586 |
|
3,230 |
|
11,896 |
|
13,756 |
|
50,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to: |
|
|
|
|
|
|
Shareholders of the Company |
|
2,784 |
|
2,390 |
|
9,384 |
|
10,766 |
|
42,018 |
|
Non-controlling interests |
|
802 |
|
840 |
|
2,512 |
|
2,990 |
|
8,383 |
|
Profit for the period |
|
3,586 |
|
3,230 |
|
11,896 |
|
13,756 |
|
50,401 |
|
Earnings per share (cents)1 |
|
|
|
|
|
|
Basic |
|
25.1 |
|
21.5 |
|
86.5 |
|
98.9 |
|
382.0 |
|
Diluted |
|
25.2 |
|
21.3 |
|
86.3 |
|
98.9 |
|
381.5 |
|
|
|
|
|
|
|
|
Dividends declared per share (cents)1 |
|
6.875 |
|
6.875 |
|
27.5 |
|
27.5 |
|
27.5 |
|
- Earnings per share (“EPS”) and dividends per share for 2017
have been adjusted to reflect the effective 1-for-5 share
consolidation which was effected on June 26, 2017.
Summarised Consolidated Statements of
Financial Position |
($’000’s) |
|
As at |
Dec 31 |
Dec 31 |
|
|
|
2018 |
2019 |
Total non-current assets |
|
|
97,525 |
113,714 |
Inventories |
|
|
9,427 |
11,092 |
Prepayments |
|
|
866 |
2,350 |
Trade and other receivables |
|
|
6,392 |
6,912 |
Cash and cash equivalents |
|
|
11,187 |
9,383 |
Gold hedge |
|
|
- |
102 |
Assets held for sale |
|
|
296 |
- |
Total assets |
|
|
125,693 |
143,553 |
Total non-current liabilities |
|
|
34,687 |
8,957 |
Short-term portion of term loan facility |
|
|
- |
529 |
Trade and other payables |
|
|
10,051 |
8,697 |
Income tax payable |
|
|
1,538 |
163 |
Bank overdraft |
|
|
- |
490 |
Liabilities associated with assets held for sale |
|
|
609 |
- |
Total liabilities |
|
|
46,885 |
18,836 |
Equity attributable to shareholders |
|
|
70,463 |
108,415 |
Non-controlling interests |
|
|
8,345 |
16,302 |
Total equity |
|
|
78,808 |
124,717 |
Total equity and liabilities |
|
|
125,693 |
143,553 |
Condensed Consolidated Statement of Cash
Flows($’000’s) |
|
|
|
|
12 months ended December 31 |
|
|
|
2017 |
|
2018 |
|
2019 |
|
Cash flows from operating activities |
|
|
|
|
|
Cash generated from operations |
|
|
28,885 |
|
21,119 |
|
23,885 |
|
Net interest paid |
|
|
(161 |
) |
(108 |
) |
(308 |
) |
Tax paid |
|
|
(4,212 |
) |
(3,344 |
) |
(5,517 |
) |
Net cash from operating activities |
|
|
24,512 |
|
17,667 |
|
18,060 |
|
|
|
|
|
|
|
Cash flows used in investing activities |
|
|
|
|
|
Acquisition of property, plant and equipment |
|
|
(21,639 |
) |
(20,192 |
) |
(20,024 |
) |
Proceeds on sale of subsidiary |
|
|
- |
|
- |
|
1,000 |
|
Net cash used in investing activities |
|
|
(21,639 |
) |
(20,192 |
) |
(19,024 |
) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Dividends paid |
|
|
(3,310 |
) |
(3,497 |
) |
(3,395 |
) |
Repayment of term loan facility |
|
|
(1,500 |
) |
(1,500 |
) |
- |
|
Term loan proceeds |
|
|
- |
|
6,000 |
|
2,340 |
|
Term loan – transaction cost |
|
|
- |
|
(60 |
) |
(46 |
) |
Share issue |
|
|
246 |
|
- |
|
- |
|
Payment of lease liabilities |
|
|
- |
|
- |
|
(124 |
) |
Share repurchase |
|
|
(146 |
) |
- |
|
- |
|
Net cash used in financing activities |
|
|
(4,710 |
) |
943 |
|
(1,225 |
) |
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(1,837 |
) |
(1,582 |
) |
(2,189 |
) |
Effect of exchange rate fluctuations on cash held |
|
|
258 |
|
13 |
|
(105 |
) |
Net cash and cash equivalents at beginning of the period |
|
|
14,335 |
|
12,756 |
|
11,187 |
|
Net cash and cash equivalents at end of the
period |
|
|
12,756 |
|
11,187 |
|
8,893 |
|
1 Gross profit is after deducting royalties,
production costs and depreciation but before administrative
expenses, other income, interest and finance charges and
taxation.
2 EBITDA is after deducting royalties,
production costs and administrative expenses, but is before
depreciation, net other income, profit on sale of a subsidiary, net
foreign exchange gains, cash-settled share-based payments, hedging
expenses, finance charges and taxation.
3 Non-IFRS measures such as “On-mine cost per
ounce” and “all-in sustaining cost” are used throughout this
announcement. Refer to section 10 of the MD&A for a
discussion of non-IFRS measures.
4 All-in sustaining cost in 2019 benefitted from
a government grant of $1.9 million (2018, $6.5 million).
Normalised all-in sustaining costs exclude the effects of this
(being the export credit incentive and gold support price), as set
out in section 10.1 of the MD&A.
5 The projected gold production figures in this
news release are explained in the management discussion and
analysis (“MD&A”) dated March 20, 2019 and the MD&A dated
August 13, 2019. Refer to technical report dated 13 February 2018
entitled "National Instrument 43-101 Technical Report on the
Blanket Mine, Gwanda Area, Zimbabwe (Updated February 2018), a copy
of which was filed by the Company on SEDAR on March 2, 2018 for the
key assumptions, parameters, and methods used to estimate the
mineral resources and mineral reserves from which planned gold
production, as set out in this news release, is to be derived and
risks that could materially affect the potential development of the
mineral resources or mineral reserves. Mr Paul Matthews, the
Company's qualified person and Group Mineral Resource Manager,
supervised the preparation of the technical information in the
technical report, and also supervised the preparation of the
technical information contained in this news release.
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