Caledonia Mining Corporation Plc (“Caledonia” or the “Company”)
(NYSE AMERICAN: CMCL; AIM: CMCL)
announces
its operating and financial results for the quarter and the six
months ended June 30, 2020 (the “Quarter” and “First Half”
respectively). Further information on the financial and
operating results for the Quarter and First Half can be found
in the management discussion and analysis (“MD&A”) and the
un-audited financial statements which are available on the
Company’s website and which have been filed on SEDAR.
Financial Highlights for the
Quarter
- Gross revenues of $22.9 million, a 39 per cent increase on the
$16.5 million achieved in the second quarter of 2019 (“Q2
2019”).
- Gross profit1 of $9.2 million, a 30 per cent increase on the
$7.0 million in Q2 2019 at a gross margin of 40 per cent (Q2 2019,
42.5 per cent).
- EBITDA2 (excluding net foreign exchange gains) of $9.6 million,
a 35 per cent increase on the $7.1 million in Q2 2019 at a margin
of 41.9 per cent (Q2 2019, 43.0 per cent).
- On-mine cost3 of $811 per ounce (Q2 2019, $534 per ounce).
- All-in sustaining cost3 of $868 per ounce (Q2 2019, $656 per
ounce).
- Basic IFRS earnings per share (“EPS”) of 43.1 cents (Q2 2019,
210.9 cents).
- Adjusted EPS 3 of 36.8 cents (Q2 2019, 24.6 cents).
- Net cash from operating activities of $4.0 million (Q2 2019,
$2.1 million).
- Net cash and cash equivalents of $11.7 million (December 31,
2019, $8.9 million).
- Total dividend paid in the Quarter of 7.5 cents per share; a
further dividend at the increased rate of 8.5 cents per share was
paid in July.
Operating Highlights
- 13,499 ounces of gold produced in the Quarter (Q2 2019, 12,712
ounces); 27,732 ounces produced in the First Half (first half of
2019, 24,660 ounces).
- Tonnes mined and milled in the Quarter increased by 5 per cent
compared to Q2 2019; grade and recoveries were also slightly
improved.
- Improved safety performance due to intensive management
intervention.
- Equipping of Central Shaft continued in the Quarter.
Effect of COVID-19 and
Outlook
- COVID 19 had a negligible effect on production in the
Quarter. Production continued at approximately 93% of target
during the three-week lockdown which started in Zimbabwe on March
30, 2020; production subsequently returned to above-normal levels
and production for the Quarter was only 1.2% below target but was
above target for the First Half of 2020. Production guidance
for 2020 remains unchanged at 53,000 to 56,000 ounces.
- Progress on the Central Shaft continued, but at a slower pace
due to a reduced contractor team. If current travel and
transport restrictions continue, delays in sourcing specialist
contractors and equipment may delay the completion of Central
Shaft.
- Blanket has made substantial contributions of $1,048,000 to the
in-country fight against COVID-19 in addition to incremental
production costs of $509,000 which were directly related to
COVID-19.
- All-in sustaining costs for the Quarter excluding COVID-19
related production costs were $831 per ounce.
- On-track to achieve on-mine cost guidance for 2020 of between
$693 to $767 per ounce and all-in sustaining cost guidance of
between $951 to $1,033 per ounce.
- Caledonia’s April dividend of 7.5 cents per share was deferred
and was paid in May 2020 when management had ascertained the
negligible effect of COVID-19 on operations. The July
dividend was increased by 13.3 per cent to 8.5 cents per share
following the continued strong financial and operating performance.
Further dividends will depend upon, inter alia, Blanket maintaining
production, while also considering the balance between delivering
returns to shareholders and pursuing the significant growth
opportunities within Zimbabwe.
Caledonia will be hosting an online presentation
and Q&A session open to all investors on Thursday the 13th of
August 2020 at 16:00 UK time (17:00 South Africa/Zimbabwe, 11:00AM
ET, 08:00AM Pacific Time).
Dial in numbers: |
New York |
|
+1 212 999 6659 |
South Africa Toll Free |
|
0800 980 512 |
Standard International Access |
|
+44 (0) 20 3003 2666 |
UK Toll Free |
|
0808 109 0700 |
USA Toll Free |
|
+1 866 966 5335 |
|
|
|
Call Password |
|
Caledonia Mining Results |
Steve Curtis, Chief Executive Officer, commented:
“I am delighted by Blanket Mine’s continued
strong financial and operating performance in the second quarter of
2020. The management initiatives which were implemented in 2019
have continued into 2020 and have resulted in a 12.4 per cent
increase in gold production in the first six months of 2020
compared to the same period of 2019. This continued
improvement is despite the challenges we encountered as a result of
the COVID-19 pandemic: production in the initial 3-week lockdown in
early April was 7 per cent below target but was better than planned
in the remainder of the Quarter. Therefore, production for
the entire Quarter was only 1.2 per cent below plan; production for
the first six months of 2020 was 2.5 per cent above plan.
This trend has continued into July with July’s production also
exceeding expectations. The resilience of Blanket’s operations
during this difficult period is testament to the outstanding
commitment of the entire team at Blanket Mine. We therefore
remain on track to achieve our production guidance for 2020 of
between 53,000 and 56,000 ounces of gold.
“Cost control in the quarter continued to be
excellent, but a comparison of the costs for the Quarter to costs
in the second quarter of 2019 is complicated by special factors
which reduced the costs in previous quarters and increased the
costs in this Quarter. The on-mine cost per ounce in the
Quarter was $811 compared to $534 in Q2 of 2019. However, the
costs in Q2 2019 benefitted from the devaluation of the Zimbabwe
dollar which reduced the cost of electricity in that quarter to an
artificially and unsustainably low level: the electricity cost in
Q2 2019 was only $447,000 compared to an average quarterly cost of
approximately $2.3 million in the five preceding quarters.
Production costs in the Quarter were adversely affected by, inter
alia, $509,000 relating to the COVID-19 pandemic and $871,000
relating to increased maintenance costs of the fleet of trackless
mining equipment. Notwithstanding these and other factors, we
remain on track to achieve our cost guidance for 2020 of between
$693 and $767 per ounce for on-mine costs and between $951 and
$1,033 per ounce for all-in sustaining costs.
“The excellent performance was also reflected in
continued strong cash generation: net cash flow from operating
activities (i.e. before interest, taxation payments and capital
expenditure) was $4.0 million in the Quarter compared to $2.1
million in Q2 of 2019. Caledonia ended the Quarter with net
cash and cash equivalents of $11.7 million (excluding $1 million of
a gold ETF which we purchased in the Quarter to protect cash in
South Africa against devaluation of the South African Rand).
“The continued strong performance was achieved
without compromising on safety performance. The Total Injury
Frequency Rate has been substantially reduced from the levels in
2019 after a concerted effort by management over the last 18 months
to improve and enforce safety standards.
“The improved operating environment, which I
have referred to in previous quarters, has been sustained, although
the country continues to face challenges. The interbank foreign
exchange market was suspended in March 2020 but, by the end of
June, an equivalent mechanism was introduced as a result of which
the local currency has devalued further and allows us to better
protect our workers from the effects of high inflation.
“Interruptions to the supply of electricity from
the grid have continued, but Blanket can manage these using its
increased suite of diesel generators. We have completed an
evaluation of a solar project to provide some of Blanket’s power
supply and reduce its dependence on imported power and diesel
gensets during daylight hours. The Company has now resolved
to construct a 12MW solar plant at a cost of approximately $12
million, which is expected to provide 100% of Blanket’s baseload
electricity demand during daylight hours and approximately 27% of
Blanket’s total daily electricity demand. Whilst expected to
deliver an acceptable financial return, this investment is
primarily intended to protect Blanket from a further deterioration
in its electricity supply. Subject to the continuation of
travel and transport restrictions arising from the COVID-19
pandemic, this project could be operational by mid-2021.
“The coronavirus pandemic had no appreciable
effect on Blanket’s production in the Quarter. However, work
on Central Shaft has been slower than planned because several
members of the supervisory team returned to South Africa when the
lockdown started in late March. Due to continued travel
restrictions, it has not been possible to replace these team
members. Although the slower rate of work has not yet delayed
the project significantly, the project requires specialised
equipment and contractors to travel to Blanket from South Africa
which under the restrictions is not currently possible. We
are receiving a high level of support from the Zimbabwe government
to address these issues with the relevant authorities in South
Africa. It is not possible to predict when travel and other
restrictions will be lifted so that work can resume on the project
as planned and it is likely the timetable for commissioning of the
Central Shaft will be extended to an indeterminate extent. This may
affect the anticipated build-up in production which is currently
expected to be 75,000 ounces of gold in 2021 and 80,000 ounces of
gold from 2022 onwards4 but it is not currently possible to provide
revised guidance.
“In light of the improved performance and the
brighter outlook for 2020 and beyond, Caledonia increased its
quarterly dividend from 6.875 cents per share to 7.5 cents per
share in January 2020. At the end of June, in light of
Blanket’s strong performance, the higher gold price and the return
to normal levels of production including renewed access to supply
chains, Caledonia increased its quarterly dividend further to 8.5
cents per share which means the cumulative increase in the
quarterly dividend in 2020 is 23.6 per cent. 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.”
___________________________________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”, “all-in
sustaining cost” and “adjusted EPS” are used throughout this
announcement. Refer to section 10 of the MD&A for a
discussion of non-IFRS measures.4. The projected gold production
figures in this news release are explained in the management
discussion and analysis (“MD&A”) dated March 17, 2020. 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 supervised the preparation of the technical information
contained in this news release.
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; 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.
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
(unaudited) |
($’000’s) |
3 months ended June 30 |
|
6 months ended June 30 |
|
|
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
|
|
|
|
|
|
Revenue |
|
16,520 |
|
22,913 |
|
32,440 |
|
46,515 |
|
Royalty |
|
(864 |
) |
(1,146 |
) |
(1,683 |
) |
(2,328 |
) |
Production costs |
|
(7,571 |
) |
(11,451 |
) |
(17,340 |
) |
(22,138 |
) |
Depreciation |
|
(1,052 |
) |
(1,141 |
) |
(2,100 |
) |
(2,314 |
) |
Gross profit |
|
7,033 |
|
9,175 |
|
11,317 |
|
19,735 |
|
Other income |
|
749 |
|
2,791 |
|
2,038 |
|
4,709 |
|
Other expenses |
|
(220 |
) |
(1,314 |
) |
(309 |
) |
(1,522 |
) |
Administrative expenses |
|
(1,309 |
) |
(1,275 |
) |
(2,705 |
) |
(2,822 |
) |
Profit on sale of subsidiary |
|
- |
|
- |
|
5,409 |
|
- |
|
Net foreign exchange gain |
|
21,645 |
|
1,486 |
|
24,925 |
|
3,709 |
|
Cash-settled share-based payment |
|
(9 |
) |
(762 |
) |
(370 |
) |
(946 |
) |
Derivative financial assets fair value loss |
|
(194 |
) |
(113 |
) |
(324 |
) |
(148 |
) |
Operating profit |
|
27,695 |
|
9,988 |
|
39,981 |
|
22,715 |
|
Net finance (cost)/income |
|
28 |
|
(129 |
) |
(20 |
) |
(267 |
) |
Profit before tax |
|
27,723 |
|
9,859 |
|
39,961 |
|
22,448 |
|
Tax expense |
|
223 |
|
(3,507 |
) |
(1,296 |
) |
(6,417 |
) |
Profit for the period |
|
27,946 |
|
6,352 |
|
38,665 |
|
16,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to: |
|
|
|
|
|
Shareholders of the Company |
|
23,303 |
|
5,134 |
|
32,621 |
|
13,374 |
|
Non-controlling interests |
|
4,643 |
|
1,218 |
|
6,044 |
|
2,657 |
|
Profit for the period |
|
27,946 |
|
6,352 |
|
38,665 |
|
16,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (cents) |
|
|
|
|
|
Basic |
|
210.9 |
|
43.1 |
|
299.4 |
|
114.3 |
|
Diluted |
|
210.8 |
|
43.0 |
|
299.3 |
|
114.1 |
|
Adjusted |
|
24.6 |
|
36.8 |
|
51.6 |
|
93.5 |
|
Dividends declared per share (cents) |
|
6.875 |
|
16.0 |
|
13.75 |
|
23.5 |
|
Condensed Consolidated Statement of Cash Flows
(unaudited)($’000’s) |
|
|
|
3 months ended June 30 |
|
6 months ended June 30 |
|
|
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
Cash flows from
operating activities |
|
|
|
|
|
Cash generated from
operations |
|
2,484 |
|
5,413 |
|
9,117 |
|
16,371 |
|
Net interest paid |
|
16 |
|
(123 |
) |
(96 |
) |
(263 |
) |
Tax paid |
|
(362 |
) |
(1,315 |
) |
(608 |
) |
(2,034 |
) |
Net cash from
operating activities |
|
2,138 |
|
3,975 |
|
8,413 |
|
14,074 |
|
|
|
|
|
|
|
Cash flows used
in investing activities |
|
|
|
|
|
Acquisition of property,
plant and equipment |
|
(4,186 |
) |
(3,228 |
) |
(9,326 |
) |
(7,921 |
) |
Purchase of derivative
financial asset |
|
- |
|
(1,058 |
) |
- |
|
(1,058 |
) |
Proceeds from disposal
of subsidiary |
|
- |
|
- |
|
1,000 |
|
900 |
|
Net cash used in
investing activities |
|
(4,186 |
) |
(4,286 |
) |
(8,326 |
) |
(8,079 |
) |
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
Dividends paid |
|
(882 |
) |
(1,012 |
) |
(1,620 |
) |
(1,981 |
) |
Payment of lease
liabilities |
|
- |
|
(32 |
) |
- |
|
(57 |
) |
Proceeds from share
option exercises |
|
- |
|
30 |
|
- |
|
30 |
|
Net cash used in financing activities |
|
(882 |
) |
(1,014 |
) |
(1,620 |
) |
(2,008 |
) |
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(2,930 |
) |
(1,325 |
) |
(1,533 |
) |
3,987 |
|
Effect of exchange rate
fluctuations on cash held |
|
1,063 |
|
(861 |
) |
(1,779 |
) |
(1,241 |
) |
Net cash and cash
equivalents at beginning of the period |
|
9,742 |
|
13,825 |
|
11,187 |
|
8,893 |
|
Net cash and cash equivalents at end of the
period |
|
7,875 |
|
11,639 |
|
7,875 |
|
11,639 |
|
Summarised Consolidated Statements of
Financial Position (unaudited) |
($’000’s) |
|
As at |
June 30 |
Dec 31 |
|
|
|
2020 |
2019 |
Total non-current assets |
|
|
119,506 |
113,714 |
Inventories |
|
|
12,010 |
11,092 |
Prepayments |
|
|
2,915 |
2,350 |
Trade and other receivables |
|
|
7,170 |
6,912 |
Cash and cash equivalents |
|
|
11,639 |
9,383 |
Derivative financial assets |
|
|
1,112 |
102 |
Total assets |
|
|
154,352 |
143,553 |
Total non-current liabilities |
|
|
6,488 |
8,762 |
Short-term portion of term loan facility |
|
|
458 |
529 |
Trade and other payables |
|
|
8,111 |
8,697 |
Income tax payable |
|
|
1,267 |
163 |
Cash-settled share-based payments – short term portion |
|
|
73 |
195 |
Bank overdraft |
|
|
- |
490 |
Total liabilities |
|
|
16,397 |
18,836 |
Total equity |
|
|
137,955 |
124,717 |
Total equity and liabilities |
|
|
154,352 |
143,553 |
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