TIDMCMCL
RNS Number : 9902Z
Caledonia Mining Corporation PLC
21 March 2017
Caledonia Mining Corporation Plc
Results for the Fourth Quarter and Year ended December 31,
2016
St Helier, 21 March, 2017. Caledonia Mining Corporation Plc
("Caledonia" or the "Company") announces its operating and
financial results for the fourth quarter ("Q4" or the "Quarter")
and the year ended 31 December, 2016 (the "Year"). Caledonia owns
49 per cent of the Blanket Mine ("Blanket") in Zimbabwe. The
Company continues to consolidate Blanket and the operational and
financial information set out below is on a 100 per cent basis
unless indicated otherwise.
3 months 12 months
to 31 December to 31 December
---------------------- ------------------ ------------------ ------------------------------
2015 2016 2015 2016 Comment
---------------------- -------- -------- -------- -------- ------------------------------
Record gold production
in the Year and Quarter
Gold produced due to increased tonnes
(oz) 11,515 13,591 42,804 50,351 milled
---------------------- -------- -------- -------- -------- ------------------------------
Lower on-mine cost per
On-mine cost ounce as fixed costs
per ounce are spread across higher
($/oz)(1) 701 614 701 636 production ounces
---------------------- -------- -------- -------- -------- ------------------------------
Lower AISC per ounce
as fixed costs are spread
across higher production
All-in sustaining ounces. AISC also includes
cost per ounce the effect of the export
($/oz) ("AISC")(1) 1,127 843 1,037 912 incentive.
---------------------- -------- -------- -------- -------- ------------------------------
Higher average realised
Average realised gold price per ounce
gold price reflects the increased
per ounce gold price compared to
($/oz)(1) 1,083 1,187 1,139 1,232 comparative periods
---------------------- -------- -------- -------- -------- ------------------------------
Increased profit due
to higher sales, the
higher realised gold
Gross profit price and reduced costs
($'000)(2) 3,408 6,888 13,181 23,492 per ounce
---------------------- -------- -------- -------- -------- ------------------------------
Increased net attributable
Profit attributable profit due to higher
to owners profit before tax offset
of the company by a higher effective
($'000) 1,940 3,258 4,779 8,526 tax rate
---------------------- -------- -------- -------- -------- ------------------------------
Adjusted basic
earnings per Increased earnings per
share ("EPS")(3) share due to higher adjusted
(cents) 1.1 7.8 8.8 21.4 attributable earnings
---------------------- -------- -------- -------- -------- ------------------------------
Increase in cash due
to strong operational
cashflows and draw-down
of $3m term facility
Cash and equivalents offset by the continued
net of overdraft high level of expansion
($'000) 10,880 14,335 10,880 14,335 investment
---------------------- -------- -------- -------- -------- ------------------------------
Net cash from Increased cash from operating
operating activities due to higher
activities profit and increased
($'000) 2,556 6,940 6,869 23,011 net non-cash expenses
---------------------- -------- -------- -------- -------- ------------------------------
(1) Non-IFRS measures
such as "On-mine cost per ounce", "AISC" and "average realised
gold price" are used throughout this document. Refer to Section 10
of the MD&A for a discussion of non-IFRS measures
.
(2) Gross
profit is after deducting royalties, production costs and
depreciation but before administrative expenses, other income,
interest and finance charges and taxation.
(3) Ad
justed EPS is a non-IFRS measure which aims to reflect
Caledonia's ordinary trading performance. Refer to Section 10 of
the MD&A for a discussion of non-IFRS measures.
Steve Curtis, Chief Executive Officer, said:
"2016 was a pivotal year for Caledonia as we continued to
progress towards our long-term production target of 80,000 ounces
at Blanket by 2021. In 2016 we began to access ore below a depth of
750 meters, the previous limits of our development infrastructure,
we installed increased milling capacity in the plant and made
significant progress in the sinking of the new Central Shaft which
remains on track, and on-budget, for completion in 2018.
"Caledonia finished 2016 with a strong quarter with Blanket
producing 13,591 ounces at an AISC of $843 per ounce, a new
quarterly production record for the mine. Full year 2016 production
of 50,351 ounces at an AISC of $912 per ounce also represents a new
annual production record for Blanket and is an achievement for
which all of our staff can be justifiably proud. The mine delivered
a production increase of 18 per cent, when compared to 2015
production, and achieved a 12 per cent reduction in AISC over the
period. Our business was further supported by a higher average
received gold price of $1,232 per ounce for 2016, an increase of 8
per cent on the previous year. All of these factors combined to
deliver this strong set of results with adjusted EPS of 21.4 cents,
an increase of 143 per cent on our reported adjusted earnings, of
8.8 cents, for 2015.
"We are pleased to finish the year with a strong balance sheet
and a cash position of $14.3 million at year end. Our cash position
was boosted by the drawdown of a new $3m term facility in Zimbabwe
which will serve to improve capital efficiency. To finish the year
with an increased cash balance despite having invested almost $20
million at Blanket and while also returning $3 million to our
shareholders in dividends in 2016 is testament to the very strong
cash generation potential of the mine. We look forward to the
completion of our Central Shaft capital investment program in 2018
after which capital investment is expected to decline
significantly.
"I would also like to acknowledge the constructive engagement we
have experienced with various Zimbabwean authorities throughout
2016 in supporting Blanket during a period of significant capital
investment. The Zimbabwean Government also showed its commitment to
the gold sector by introducing several financial incentives to
encourage Blanket and other gold producers to increase production,
which included the royalty rate on incremental production being
reduced from five per cent to three percent from May 2016, and
Blanket receiving an export incentive to the value of 2.5 per cent
of the value of gold sales. The total investment in Blanket for
2015 and 2016 exceeds $36 million and a further $18 million is
budgeted for 2017. The investment project at Blanket has been a
significant logistical, technical and financial undertaking for
which we are grateful to have the support of our local partners in
the mine and the Zimbabwean authorities. We look forward to
continued constructive engagement as the project nears completion
in 2018.
"During the year there was significant progress in sinking the
new Central Shaft, which is currently at a depth of 633 meters.
Central Shaft remains on track to reach a target depth of 1,080
meters by 2018 and is the key enabler of our longer-term life of
mine plan at Blanket. We remain confident that the shaft will
reinforce Blanket's status as a low-cost mine, and facilitate
further deep-level exploration and the exploitation of deeper ore
bodies which we anticipate will secure the future of the mine for
many years to come.
"Regarding the longer term future of the mine, we are pleased
that the exploration efforts at Blanket delivered good results in
the year with the addition of over 200,000 ounces of new inferred
resources at a grade of five grammes per tonne during the year. Our
exploration efforts were also successful in the upgrading of 47,700
ounces from inferred to indicated resource at a grade of 5.19
grammes per tonne. We remain confident that our ongoing exploration
efforts will continue to yield further successes and I am confident
that the life of mine will continue to be supplemented by further
resource additions and upgrades.
"Production guidance for 2017 is 60,000 ounces at an AISC of
$810 - $850 per ounce, a 19 per cent increase in production and
between a 7 per cent and 11 per cent decrease in AISC when compared
to 2016 as the ramp-up of production at Blanket towards 80,000
ounces by 2021 continues. I am particularly proud of our ability to
achieve the production and profitability growth we have
demonstrated so far, particularly whilst maintaining an annual
dividend of 5.5 cents payable as 1.375 cents per quarter.
Caledonia's dividend currently appears sustainable with dividend
cover for the year of 2.9 times earnings and 7.7 times operating
cash flow.
"Caledonia remains well positioned for future growth and
continues to evaluate investment opportunities as they arise. I
look forward to updating the market with our continued progress
over the course of 2017."
Strategy and Outlook
Caledonia's strategic focus continues to be the implementation
of the Revised Investment Plan at Blanket, announced in November
2014, which is expected to extend the life of mine by providing
access to deeper levels for production and further exploration.
Implementation of the Revised Investment Plan remains on target in
terms of timing and cost. Caledonia's board and management believe
the successful implementation of the plan is in the best interests
of all stakeholders as it is expected to result in increased
production, reduced operating costs and greater flexibility to
undertake further exploration and development, thereby safeguarding
and enhancing Blanket's long term future. Caledonia's cash position
is expected to improve as a result of the implementation of the
Revised Investment Plan and Caledonia will continue to assess new
opportunities to invest surplus cash.
Dividend Policy
On 5 July 2016 Caledonia announced a decision to increase its
quarterly dividend to 1.375 cents per share, or 5.5 cents per
annum, an increase of 22 per cent. The increased dividend
represents Caledonia's revised dividend policy following the
success so far of the Revised Investment Plan. It is currently
envisaged that the dividend of 5.5 cents per annum will be
maintained.
Exploration
There has been an increased focus on exploration and resource
development at Blanket Mine for several quarters which is now
beginning to bear fruit. New drilling machines were acquired and
commissioned in early 2016 as a result of which the meters of
diamond drilling have increased significantly: 22,172 metres of
deep level exploration drilling were completed in the Year, a 55%
increase on 2015. On July 27, 2016 Caledonia announced that 343,000
tonnes of ore at a grade of 5.19g/t had been upgraded from inferred
resource to indicated resource and 1.2 million tonnes of new
inferred resource at a grade of 5.00g/t had also been added to
resources. As a result of the increased exploration activity, and
notwithstanding the record level of ore production in the Year,
Blanket's Measured and Indicated Resources increased by 5% in the
Year and its Proven and Probable Reserves increased by 13% in the
Year.
Shareholder Conference Call
A presentation of the 2016 results and outlook for Caledonia is
available on Caledonia's website (www.caledoniamining.com).
Management will host a conference call at 1500 UK Time on the
21(st) of March 2017.
Details for the call are as follows:
Date: March 21, 2017
Time: 1500 London, 1700 Johannesburg, 1600 Zurich and Frankfurt,
1100 Toronto and New York
Password: Caledonia
UK Toll free 0808 109 2229
------------------------------- ---------------------
USA Toll free 1 866 924 9856
------------------------------- ---------------------
South Africa Toll free 0 800 981 321
------------------------------- ---------------------
Canada Toll free 1 866 967 8273
------------------------------- ---------------------
Other (standard International
access) +44 (0) 20 8618 8201
------------------------------- ---------------------
For further information please contact:
Caledonia Mining Corporation
Plc Tel: +44 1534 679 802
Mark Learmonth Tel: +44 759 078 1139
Maurice Mason
WH Ireland Tel: +44 20 7220 1751
Adrian Hadden/Nick Prowting
Blytheweigh Tel: +44 207 138 3204
Tim Blythe/Camilla Horsfall/Megan
Ray
Note: This announcement contains inside information which is
disclosed in accordance with the Market Abuse Regulation.
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.
Potential shareholders and 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.
Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income
($'000's)
3 months ended 12 months
December 31 ended December
31
2015 2016 2015 2016
Revenue 11,753 15,251 48,977 61,992
Royalty (591) (583) (2,455) (2,923)
Production costs (7,018) (6,873) (30,019) (32,086)
Depreciation (736) (907) (3,322) (3,491)
-------- -------- --------- ---------
Gross profit 3,408 6,888 13,181 23,492
Other income 54 1,243 110 1,330
Other expenses - (55) - (55)
Administrative expenses (2,439) (2,030) (7,622) (7,263)
Share-based payment expense (24) (41) (24) (788)
Sale of Treasury Bills - - - 3,202
Net finance cost (107) (34) (535) (176)
Net foreign exchange gain/(loss) 774 (173) 2,850 (505)
Loss on settlement of hedge - - - (435)
-------- -------- --------- ---------
Profit before tax 1,666 5,798 7,960 18,802
Tax expense 287 (1,920) (2,370) (7,717)
-------- -------- --------- ---------
Profit for the period 1,953 3,878 5,590 11,085
-------- -------- --------- ---------
Other comprehensive income/(loss)
Items that are or may be
reclassified to profit
or loss
Foreign currency translation
differences of foreign
operations (1,203) 216 (3,291) 262
Tax credit on other comprehensive
income 199 - 199 -
-------- -------- --------- ---------
Total comprehensive income
for the period 949 4,094 2,498 11,347
-------- -------- --------- ---------
Profit attributable to:
Shareholders of the Company 1,940 3,258 4,779 8,526
Non-controlling interests 13 620 811 2,559
-------- -------- --------- ---------
Profit for the period 1,953 3,878 5,590 11,085
-------- -------- --------- ---------
Total comprehensive income
attributable to:
Shareholders of the Company 936 3,474 1,687 8,788
Non-controlling interests 13 620 811 2,559
-------- -------- --------- ---------
Total comprehensive income
for the period 949 4,094 2,498 11,347
-------- -------- --------- ---------
Earnings per share (cents)
Basic 3.6 6.1 8.9 15.9
Diluted 3.6 6.2 8.9 15.8
Adjusted earnings per share
(cents)
Basic 1.1 7.8 8.8 21.4
------------------------------------ -------- -------- --------- ---------
Condensed Consolidated Statement of
Cash Flows
($'000's) For the 12 months
ended December
31
2015 2016
Cash flows from operating activities
Cash generated by operating activities 8,823 25,671
Net interest paid (492) (194)
Tax paid (1,462) (2,466)
--------- ---------
Net cash from operating activities 6,869 23,011
--------- ---------
Cash flows from investing activities
Acquisition of property, plant and equipment (16,567) (19,885)
Proceeds from sale of plant and equipment - 3
--------- ---------
Net cash used in investing activities (16,567) (19,882)
--------- ---------
Cash flows from financing activities
Dividends paid (2,504) (2,994)
Proceeds from term loan - 3,000
Term loan - transaction cost - (73)
Proceeds from issues of share options - 433
--------- ---------
Net cash from/(used) in financing activities (2,504) 366
--------- ---------
Net (decrease)/increase in cash and
cash equivalents (12,202) 3,495
Effect of exchange rate fluctuations
on cash held - (40)
--------- ---------
Cash and cash equivalents at beginning
of the year (net of overdraft) 23,082 10,880
--------- ---------
Cash and cash equivalents at end of
the year (net of overdraft) 10,880 14,335
---------------------------------------------- --------- ---------
Condensed Consolidated Statements of Financial Position
($'000's)
As December December 31
at 31
2015 2016
Total non-current
assets 49,276 64,917
Inventories 6,091 7,222
Prepayments 667 810
Income tax receivable 397 -
Trade and other
receivables 3,839 3,425
Cash and cash equivalents 12,568 14,335
---------- -------------
Total assets 72,838 90,709
---------- -------------
Total non-current
liabilities 14,080 21,560
Short term portion
of term loan - 1,410
Trade and other
payables 6,656 8,077
Income taxes payable 53 345
Bank overdraft 1,688 -
---------- -------------
Total liabilities 22,477 31,392
---------- -------------
Total equity 50,361 59,317
---------- -------------
Total equity and
liabilities 72,838 90,709
----------------------------------------------- ---------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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