TIDMCMCL
RNS Number : 7857I
Caledonia Mining Corporation PLC
13 August 2019
Caledonia Mining Corporation Plc
Results for the Quarter ended 30 June 2019 and details of a
shareholder conference call
St Helier, 13 August 2019 - Caledonia Mining Corporation Plc
("Caledonia" or the "Company") announces its operating and
financial results for the second quarter of 2019 ("Q2" or the
"Quarter").
Gold production in the Quarter was 12,712 ounces, an increase of
6.4 per cent on gold produced in the first quarter of 2019 of
11,948 ounces taking production for the first six months of 2019 to
24,660 ounces. Gross profit for the Quarter was $7 million, 37 per
cent higher than in the second quarter of 2018 (the "comparable
quarter") due to lower on-mine costs. Operating profit for the
Quarter, before foreign exchange gains, was just over $6 million,
21 per cent higher than the comparable quarter. Net profit
attributable to shareholders for the Quarter increased by almost
800 per cent to $23.3 million compared to the comparable quarter
due to the substantial devaluation of the newly introduced Zimbabwe
currency which resulted in some cost savings and a large net
foreign currency gain. Adjusted earnings per share[1], which
excludes inter alia unrealised foreign exchange gains, were 26.8
cents - 19.5 per cent lower than in the second quarter of 2018 due
to deferred tax adjustments arising from the calculation of
Blanket's taxes in local currency. Cash generated by operating
activities remains robust with net cash of approximately $8.4
million generated in the first half of 2019.
Due to operational difficulties relating to grade and unreliable
power, production guidance for 2019 has been reduced from a range
of 53,000 to 56,000 ounces to a range of 50,000 to 53,000
ounces[2]. Management has not reduced earnings guidance for 2019
which remains in the range of 86 to 117 cents per share due to a
higher than expected gold price and lower than expected costs.
Blanket has recently signed a new power supply agreement which
appears to have reduced the incidence of load-shedding.
After the end of the Quarter, on 24 July 2019, the Company
announced the completion of the shaft sinking at Central Shaft.
This important milestone marks a very significant step towards
completing the Investment Programme at Blanket in the second half
of 2020 after which production is expected to increase to the
target level of 80,000 ounces per annum from 2022.
Following the implementation of indigenisation in September
2012, Caledonia owns 49 per cent of the Blanket Mine in Zimbabwe.
Caledonia continues to consolidate Blanket and the operational and
the financial information set out below is on a 100 per cent basis
unless otherwise indicated. We continue to work with the relevant
regulatory bodies in Zimbabwe to obtain the outstanding approvals
so that we can complete the purchase of the 15 per cent
shareholding in Blanket that is owned by one of its indigenous
shareholders.
3 Months to June 6 Months to June Comment
30 30
------------------------ ---------------------
2018 2019 % Chg 2018 2019 % Chg
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
Production was similar to
previous periods, but lower
than expected due to lower
Gold produced than expected mine production
(oz) 12,657 12,712 0.4% 25,582 24,660 -3.6% and grade
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
On-mine costs are lower primarily
On-mine due to lower electricity costs
cost per due to the devaluation of
ounce ($/oz)1 717 534 -25.5% 702 662 -5.7% the Zimbabwe currency
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
AISC is lower due to lower
on-mine costs and benefits
All-in sustaining from lower administrative
cost ($/oz) expenses and sustaining capital
("AISC")(1) 856 656 -23.4% 843 797 -5.5% expenditure
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
The average realised gold
Average price reflects international
realised spot prices and excludes revenues
gold price from the gold support price
($/oz)(1) 1,278 1,298 1.6% 1,296 1,291 -0.4% or the export credit incentive
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
Gross profit in the Quarter
Gross profit is higher due to lower production
($'000's) 5,144 7,033 36.7% 11,367 11,317 -0.4% costs
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
Net profit in the Quarter
includes net foreign exchange
gains of $22.8 million; net
Net profit profit for the six months
attributable to June 30, 2019 also includes
to shareholders profit of $5.4 million arising
($'000's) 2,604 23,303 794% 5,758 32,621 466% on the sale of a subsidiary
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
Adjusted Adjusted EPS excludes, inter
earnings alia, unrealised foreign exchange
per share gains and deferred tax arising
("EPS") from the calculation of Blanket's
(US cents)(1) 33.3 26.8 -19.5% 72.0 53.5 -25.7 taxation in local currency
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
Net cash
and cash Cash excludes term debt (repayable
equivalents in 2022); cash position remains
($'000's) 5,308 7,875 48.4% 5,308 7,875 48.4% robust
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
Net cash
from operating
activities
($'000's) -1,216 2,138 323.8% 5,829 8,413 54.3% Continued robust cash generation
------------------- ------- ------- ------ ------ ------ ----- -----------------------------------
Commenting on the results and the period under review, Steve
Curtis, Chief Executive Officer, said:
"By far the most important news in the period covered by this
review is the completion of the shaft sinking at the Central Shaft,
which we announced in late July. This is a major milestone and
marks the successful culmination of five years work and
approximately $45 million of capital investment. I am delighted to
report the shaft sinking phase was completed without serious
accidents and the entire project is broadly on schedule. The
completion of the shaft sinking substantially de-risks the project
and we have now moved on to the equipping phase which we expect to
last approximately 12 months. We look forward to commissioning the
shaft in the second half of 2020 after which we can begin to
increase production to the target level of 80,000 ounces in
2022.
"Production of 12,712 ounces was marginally higher than the
first quarter of 2019 although below plan. Production was adversely
affected by lower than expected grade as problems with mining
dilution adversely affected the grade and mine production continued
to be disrupted due to the instability of the incoming power
supply. Grade continues to receive close management attention.
"The electricity situation worsened considerably in July and
early August and Blanket experienced frequent and long
interruptions to its power supply. To address this problem Blanket
has procured additional back-up diesel generators which will be
installed in the coming weeks. We have had constructive engagement
with the state electricity utility and the chamber of mines as a
result of which Blanket has signed a new electricity supply
agreement in terms of which it will receive un-interrupted imported
power at a lower cost than it previously paid. Caledonia is at an
advanced stage of evaluating a solar PV generating facility which
would reduce Blanket's dependence on grid power. Although the
electricity situation has improved in recent days, we feel it
prudent to continue to implement plans to protect Blanket from any
recurrence of this problem.
"Due to the continued low grade and difficulties with
electricity supply in July and early August, management has reduced
full year production guidance from the previous range of 53,000 to
56,000 ounces to a revised guidance range of 50,000 to 53,000
ounces. Whilst it is disappointing to reduce production guidance,
earnings guidance for 2019 remains unchanged at 86 to 117 cents per
share due to a higher than anticipated gold price and lower than
expected costs.
"Our cost performance for the Quarter was excellent as a result
of stringent cost control, aided by the devaluation of the Zimbabwe
currency, the South African rand and sterling which reduced the
dollar value of expenses incurred in such currencies. On-mine costs
of $534 per ounce for the Quarter were over 25 per cent lower than
the corresponding quarter of 2018 and the all-in sustaining cost of
$656 per ounce was 23 per cent lower than the second quarter of
2018. We are pleased to see this level of cost control in the
business and remain confident in our longer-term all-in sustaining
cost guidance target of $700 - $800 per ounce as the business grows
towards 80,000 ounces per year by 2022.
"Caledonia also remains highly cash generative with operating
cash generated in the first half of 2019 of approximately $8.4
million, this cash contributed to a healthy balance sheet with cash
on hand of approximately $8 million at the end of the Quarter.
"Other macroeconomic events during the quarter were the
continued devaluation of the Zimbabwean currency, which experienced
an almost 10-fold devaluation since late February 2019. This
contributed towards a significant increase in inflation which has
made life difficult for our staff in country. We note that the
exchange rate appears to have stabilized in recent weeks and it is
important to note that government fiscal discipline remains robust.
The current currency devaluation and inflationary conditions appear
for the most part to be a legacy of past fiscal indiscipline rather
than as a result of current policy: indeed, government continues to
run a primary budget surplus, a level of fiscal discipline that
bodes well for future stability. Moreover, in the Finance
Minister's recent interim budget statement he announced the royalty
payable to the Zimbabwe government will be deductible for the
purposes of calculating income tax. He also revised the royalty
rate which is reduced from five per cent to three per cent of
revenues when the gold price is below $1,200 per ounce. We welcome
the government of Zimbabwe's continued efforts to promote
investment in the sector.
"The devaluation of the Zimbabwe currency resulted in very
substantial foreign exchange gains as the value of liabilities such
as bank loans and deferred tax were eroded in US-dollar terms.
Earnings per share reported under IFRS for the Quarter was 211
cents per share - almost a nine-fold increase on the second quarter
of 2018. Adjusted earnings per share which is a measure of the
underlying performance of the business and excludes items such as
unrealised foreign exchange gains were 26.8 cents per share,
unchanged from the previous quarter and in-line with guidance for
2019.
"Capital investment for the quarter was in-line with our capex
plan for 2019 at $4.2 million, most of which was incurred at
Central Shaft. We expect capex to decline substantially after we
commission the Central Shaft as planned in 2020. Thereafter we
expect free cash flow to increase significantly driven by rising
production, an expected decline in operating costs and importantly,
reduced capital investment. We are also pleased to see the recent
strength in the gold price which, if sustained will be a welcome
boost for patient gold investors.
"Finally, I would like to thank our staff who have worked very
hard during the Quarter in very difficult conditions: their
dedication is a key component of our continued success."
Strategy and Outlook
Caledonia is on track to achieve the production target of 80,000
ounces per year by 2022 at its Zimbabwean subsidiary, Blanket Mine
(also referred to as "Blanket"). The Company's strategic focus
continues to be the implementation of the Investment Plan at
Blanket, which was announced in November 2014 and revised in
November 2017 and is expected to extend the life of mine by
providing access to deeper levels for production and further
exploration. Implementation of the Investment Plan remains on
target in terms of timing and cost. Caledonia's board and
management believe the successful implementation of the Investment
Plan is in the best interests of all stakeholders because 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 Investment Plan; Caledonia will
continue to assess new opportunities to invest surplus cash in
addition to returning cash to shareholders.
Dividend Policy
Caledonia pays a quarterly dividend of 6.875 US cents per share,
the quarterly dividend is paid at the end of January, April, July
and October respectively. It is envisaged that the current dividend
policy will be maintained.
Shareholder Conference Call
Management will host a conference call at 1500 BST on 14 August
2019.
Details for the call (in local times) are as follows:
Date: 14 August 2019
Time: 1500 London, 1600 Johannesburg, 1600 Zurich and Frankfurt,
1000 Toronto and New York
Password: Caledonia Mining
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 Plc
Mark Learmonth Tel: +44 1534 679 802
Maurice Mason Tel: +44 759 078 1139
WH Ireland Tel: +44 20 7220 1666
Adrian Hadden/ Jessica Cave/James
Sinclair-Ford
Blytheweigh Tel: +44 207 138 3204
Tim Blythe/Camilla Horsfall/Megan
Ray
Curate Communications Tel: +263 772 802 131/+263 719 802 131
Debra Tatenda
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.
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; 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.
Condensed Unaudited Consolidated Statement of Profit or Loss
and Other Comprehensive Income
($'000's) 3 months ended 6 months ended
June 30 June 30
2018 2019 2018 2019
Revenue 16,198 16,520 34,257 32,440
Royalty (811) (864) (1,715) (1,683)
Production costs (9,297) (7,571) (19,307) (17,340)
Depreciation (946) (1,052) (1,868) (2,100)
------------------- -------- --------- ---------
Gross profit 5,144 7,033 11,367 11,317
Other income 1,720 749 3,101 2,038
Other expenses - (220) - (309)
Administrative expenses (1,660) (1,309) (3,202) (2,705)
Profit on sale of subsidiary - - - 5,409
Net foreign exchange gains 89 21,645 160 24,925
Cash-settled share-based payment (223) (9) (337) (370)
Equity-settled share-based payment - - (14) -
Gold hedge expense - (194) - (324)
------------------- -------- --------- ---------
Operating profit 5,070 27,695 11,075 39,981
Net finance (cost)/income (29) 28 (45) (20)
------------------- -------- --------- ---------
Profit before tax 5,041 27,723 11,030 39,961
Tax expense (1,787) 223 (3,897) (1,296)
------------------- -------- --------- ---------
Profit for the period 3,254 27,946 7,133 38,665
------------------- -------- --------- ---------
Other comprehensive income/(loss)
Items that are or may be reclassified
to profit or loss
Foreign currency translation
differences for foreign operations (648) 144 (440) -
Reclassification of accumulated
exchange differences on the sale
of subsidiary - - - (2,109)
Total comprehensive income for
the period 2,606 28,090 6,693 36,556
------------------- -------- ---------
Profit attributable to:
Shareholders of the Company 2,604 23,303 5,758 32,621
Non-controlling interests 650 4,643 1,375 6,044
------------------- -------- --------- ---------
Profit for the period 3,254 27,946 7,133 38,665
------------------- -------- --------- ---------
Total comprehensive income attributable
to:
Shareholders of the Company 1,956 23,447 5,318 30,512
Non-controlling interests 650 4,643 1,375 6,044
------------------- -------- --------- ---------
Total comprehensive income for
the period 2,606 28,090 6,693 36,556
------------------- -------- --------- ---------
IFRS earnings per share (Basic) 24.1 210.9 53.4 299.4
Adjusted earnings per share (Basic) 33.3 26.8 72.0 53.5
------------------------------------------------------ ------------------- -------- --------- ---------
Condensed Consolidated Statement of Cash Flows
(unaudited)
($'000's)
3 months ended 6 months ended
June 30 June 30
2018 2019 2018 2019
Cash flows from operating activities
Cash generated from operations 749 2,484 8,433 9,117
Net interest paid (44) 16 (82) (96)
Tax paid (1,921) (362) (2,522) (608)
-------- -------- --------- --------
Net cash (used in)/from operating
activities (1,216) 2,138 5,829 8,413
Cash flows used in investing activities
Acquisition of Property, plant and
equipment (5,618) (4,186) (10,776) (9,326)
Proceeds from disposal of subsidiary - - - 1,000
-------- -------- --------- --------
Net cash used in investing activities (5,618) (4,186) (10,776) (8,326)
Cash flows from financing activities
Dividends paid (862) (882) (1,761) (1,620)
Repayment of term loan facility (375) - (750) -
Net cash used in financing activities (1,237) (882) (2,511) (1,620)
Net decrease in cash and cash equivalents (8,071) (2,930) (7,458) (1,533)
Effect of exchange rate fluctuations
on cash held (1) 1,063 10 (1,779)
Net cash and cash equivalents at
beginning of the period 13,380 9,742 12,756 11,187
Net cash and cash equivalents at
end of the period 5,308 7,875 5,308 7,875
-------------------------------------------- -------- -------- --------- --------
Consolidated Statements of Financial Position (unaudited)
($'000's) As at June 30 Dec 31
2019 2018
Total non-current assets 105,671 97,525
Inventories 9,729 9,427
Prepayments 1,550 866
Trade and other receivables 6,492 6,392
Cash and cash equivalents 7,875 11,187
Assets held for sale - 296
---------- --------
Total assets 131,317 125,693
---------- --------
Total non-current liabilities 7,411 34,687
Trade and other payables 7,601 10,051
Income tax payable 1,598 1,538
Liabilities associated with assets
held for sale - 609
---------- --------
Total liabilities 16,610 46,885
Equity attributable to shareholders 100,460 70,463
Non-controlling interests 14,247 8,345
---------- --------
Total equity 114,707 78,808
---------- --------
Total equity and liabilities 131,317 125,693
-------------------------------------------------- ---- ------- ---------- --------
[1] Non-IFRS measures such as "Adjusted earnings per share",
"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] 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.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SFEFMEFUSEDA
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