Caledonia Mining Corporation Plc · AMEX:CMCL
Caledonia Mining — Q1 2019 Earnings Presentation
26 slides from Caledonia Mining's earnings presentation, May 2019
Slide 1: Quarterly Results Presentation Q1 2019
Quarterly Results Presentation Q1 2019
Slide 2: Disclaimer
Disclaimer This presentation does not constitute, or form part of, any offer to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in Caledonia Mining Corporation Plc (“Caledonia”), nor shall it (or any part of it) or the fact of its distribution form the basis o
Slide 3: Introduction
Introduction 1. Strategy update 2. Q1 2019 Financial Results 3. Operating Review 4. Current operating challenges and planned mitigating actions 5. Outlook 3
Slide 4: Strategy
Strategy Increase in free cash flow to grow dividends and invest in further growth Medium Term (2019 – 2022): Complete the Central Shaft Project 1. Increase annual production capacity to 80,000 ounces per annum* 2. Increased cash flows due to higher production, lower unit costs and reduced capex 3.
Slide 5: Strategy - the Zimbabwe opportunity
Strategy - the Zimbabwe opportunity World-class gold potential, under-explored and under-capitalized Historic & current 1Moz+ producers Significant regional potential • Zimbabwe has historically produced over 45 million ounces of gold • Several prolific multi-million ounce gold belts: substantial po
Slide 6: Strategy: Blanket offers significant exploration potential at depth
Strategy Blanket offers significant exploration potential at depth Section View Central Shaft will begin to replace the current production shaft from mid 2020. Current planned development for Central Shaft is to open up three new operating levels through conventional horizontal development and a fou
Slide 7: Financial Results
Financial Results 7
Slide 8: 2018 Results Summary
2018 Results Summary 3 Months to March 31 Comment 2018 2019 % Chg Lower gold production was mainly due to lower grade, which was in-line with the mine plan. The grade Gold produced (oz) 12,924 11,948 -7.6% dilution which was experienced in previous quarters has largely been addressed. Production was
Slide 9: Review of Results
Review of Results Profit and loss $’000’s Q1 2018 Q1 2019 YoY Change (%) • Higher production costs were largely due Revenue 18,059 15,920 -12% to lower grades which reduced the amount Royalty (904) (819) -9% of gold extracted from each tonne of material mined and processed, in addition Production Co
Slide 10: Review of Results - Cash Flow
Review of Results Cash Flow $’000’s 2017 2018 • Large non cash adjustments include the foreign Profit before tax 5,989 12,238 exchange gain and the profit on the sale of Eersteling Adjustments for: Unrealised foreign exchange gains (82) (3,283) • Substantial working capital movements experienced in
Slide 11: Review of Results - Balance Sheet
Review of Results Balance Sheet December 31 March 31 • Non-current assets increased due to the continued 2018 2019 investment at the Central Shaft project and sustaining Fixed Assets 97,525 102,625 capital Current Assets • Inventory levels remain elevated following increase in Inventories 9,427 9,06
Slide 12: Review of Results - Other matters
Review of Results Other matters • The ECI was cancelled in February 2019 • Monetary policy changes announced in Q1 2019 creating a willing buyer willing seller market, currently very illiquid. Gold Support Price • The government have announced a gold support price of $1,368 per ounce, a premium to s
Slide 13: Operating Review
Operating Review 13
Slide 14: Review of Operations
Review of Operations Tonnes Milled & Grade (2011 – 2019) • Despite grade difficulties tonnes milled 5 180,000 continues on its long term upward trend 160,000 4.5 • Increasing tonnes milled and an increase 140,000 Tonnes Milled (t) Head Grade (g/t) 120,000 in grade to approximately the M&I grade 4 10
Slide 15: Quarterly Operating Metrics
Quarterly Operating Metrics 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Tonnes Milled 124,225 136,163 136,064 150,755 123,628 132,585 151,160 153,540 122,389 Average Grade (g/t) 3.42 3.08 3.52 3.62 3.48 3.19 3.12 3.27 3.26 Average Recovery (%) 93.7 92.8 93.6 93.6 93.4 92.8 92.6 92.8 93.4 Gold Produced
Slide 16: Resources
Resources Increased exploration expenditure begins to bear fruit Consistent resource replacement despite growing production (300koz mined since 2011) 2,000 1,800 1,600 Contained Ounces (koz) 1,400 963 1,200 887 1,000 623 800 419 408 398 390 462 550 600 425 55 353 62 56 362 55 267 400 172 193 223 87
Slide 17: Operating Challenges
Operating Challenges 17
Slide 18: Operating challenges
Operating challenges A number of internal and external operating challenges have been encountered Operating Challenges Remedial Action • Increased management focus • “Nyanzvi Initiative” – behavioural change initiative Disappointing safety performance in 2017 and 2018 • Reduced number of incidents w
Slide 19: Safety Performance
Safety Performance Ensuring accident-free production is non-negotiable Blanket Safety Incident Data (2015 – 2019) Nyanzvi Safety Transformation Program 25 5 4.5 20 4 3.5 NO. INCIDENTS 15 3 TIFR 2.5 10 2 1.5 5 1 0.5 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019 fatal
Slide 20: Grade improvement presents significant opportunities
Grade improvement presents significant opportunities Below target grade results in lower gold production and elevated unit production costs Head Grade (2011 – 2019) 5 Inferred Grade – 4.52g/t M&I Grade – 3.72g/t 4.5 Head Grade (g/t) 4 3.5 3 2.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 21: Electricity supply remains unreliable
Electricity supply remains unreliable Back up generators mitigate production impact but are not a viable long term solution • Unreliable electricity supply presents a significant operating challenge for Blanket • Blanket pays a higher tariff to avoid load shedding ($0.125/KWh) • Supply remains unrel
Slide 22: Zimbabwe
Zimbabwe Despite regulatory uncertainty – there are significant grounds for optimism • Government has a commercial and pragmatic approach with several encouraging policy measures • Genuine attempts to stimulate investment e.g. the removal of indigenisation requirement in 2018 and recent relaxation o
Slide 23: Outlook
Outlook 23
Slide 24: Medium to Long-term Outlook
Medium to Long-term Outlook Vision to build a mid tier gold producer with minimal dilution • Commission Central Shaft 18 – 24 • Increase production capacity to 80,000 ounces per annum 70,000 – 80,000oz/yr Months by 2022 • Decrease AISC to $700 - $800 per ounce • Declining CAPEX post Central Shaft de
Slide 25: Contacts
Contacts Website: www.caledoniamining.com North America IR (3ppb LLC) : Share Codes: NYSE American and AIM – CMCL Patrick Chidley, Paul Durham TSX - CAL Tel : +1 917 991 7701; +1 203 940 2538 Caledonia Contacts: European IR: Swiss Resource Capital Mark Learmonth, CFO Jochen Staiger Tel: +44 (0) 1534
Slide 26: Challenges: low grade
Challenges: low grade Implementation of Long-hole stoping in certain areas has resulted in grade dilution • Mine design changed in certain narrow reef areas to convert from conventional underhand stoping to long-hole stoping in order to improve safety • Multiple blast cycles within a bench exposed w