Caledonia Mining Corporation Plc · AMEX:CMCL
Caledonia Mining — FY2019 Earnings Presentation
28 slides from Caledonia Mining's earnings presentation, March 2020
Slide 1: 2019 Results Presentation
2019 Results Presentation March 2020
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
Slide 3: Introduction
Introduction 1. Strategy update 2. Challenges in 2019 and planned mitigating actions for 2019 and beyond 3. Review of operations 4. Review of financial results for 2019 5. Outlook 3
Slide 4: Strategy
Strategy Increased free cash flow to grow dividends and invest for further production Short-Medium Term (2020 – 2022): Complete the Central Shaft Project 1. Increase production to 80,000 ounces per annum from 2022 2. Increased cash flows due to higher production, lower unit costs and reduced capex f
Slide 5: Blanket offers significant exploration potential at depth
Strategy Blanket offers significant exploration potential at depth Section View Central Shaft will replace the current production shaft by 2021. Current planned development for Central Shaft is to open three new operating levels through conventional horizontal development and a fourth operating leve
Slide 6: Challenges
Challenges 6
Slide 7: Operating Challenges
Operating Challenges Operating challenges in the first half of 2019 have been addressed Challenge Effect Remedial Action • Increased management focus Unacceptable safety performance: Safety • Nyanzvi Initiative – internal mobilisation of workforce 4 fatal accidents in 2017/2018 • Introduction of lon
Slide 8: Challenges: Safety
Challenges: Safety Ensuring accident-free production is non-negotiable Blanket Safety Incident Data (2015 – 2018) Nyanzvi Safety Transformation Program 25 5 4.5 20 4 NO. INCIDENTS 3.5 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 Q2 Q3 Q4 2015 2016 2017 2018 2
Slide 9: Challenges: Low grade
Challenges: Low grade Below target grade results in lower production and higher unit production costs Head Grade (2011 – Q1 2020) 5 Inferred Grade – 4.52g/t 4.5 Head Grade (g/t) 4 M&I Grade – 3.72g/t 3.5 3 2.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 10: Challenges: Unstable Electricity
Challenges: Unstable Electricity Two issues: voltage spikes and load-shedding Challenge Effect Remedial Action Frequent voltage spikes due to • If un-regulated, spikes will damage • Auto-tap changer installed (and re-installed in lack of investment in the grid Blanket’s electrical equipment May 2020
Slide 11: Challenges: Unstable Electricity - Proposed Solar Project
Challenges: Unstable Electricity Proposed Solar Project • The generating deficit in Zimbabwe and South Africa will not be resolved quickly and diesel generators are not a long-term cost- effective solution. • Caledonia is evaluating a solar generating project which will be dedicated to supply Blanke
Slide 12: Challenges: Zimbabwe
Challenges: Zimbabwe A rapidly changing regulatory environment Before October 2018 After October 2018 From February 2019 • All currency held in Real time Gross • The banking system is bifurcated • RBZ permits inter-bank trading Settlement (“RTGS”) accounts between RTGS accounts and foreign between R
Slide 13: Operating Review
Operating Review 13
Slide 14: Operations
Review of Operations Tonnes Milled & Grade (2011 – Q1 2020) • Despite grade difficulties, tonnes milled 5 180,000 continues its long-term upward trend 160,000 • Increasing tonnes milled and an expected 4.5 140,000 increase in grade as deeper level ore is Tonnes Milled (t) Head Grade (g/t) 120,000 4
Slide 15: Financial Results
Financial Results 15
Slide 16: Review of Results: Profit and loss
Review of Results Profit and loss (US$’000’s) 2017 2018 2019 % Chg Revenue 69,762 68,399 75,826 11% Higher gold price Royalty (3,498) (3,426) (3,854) 12% 5% of revenues Production Costs (36,180) (39,315) (36,400) -7% Lower electricity and “other” cost due to RTGS$ devaluation G&A (5,911) (6,465) (5,
Slide 17: Revenue reconciliation
Review of Results Revenue reconciliation Reconciliation of 2018 and 2019 Gold Revenues Realised Change in Production Sales gold price Gold Gold Tonnes Grade Recovery ounces WIP ounces (98.75%) Revenues Revenues (t) (g/t) (%) (oz) (oz) (oz) ($/oz) (US$'m) (US$'m) 2018 Gold Revenues 560 913 3.26 92.9%
Slide 18: Production costs
Review of Results Production costs Production Costs • On-mine labour headcount increases from 1,465 in 2018 2017 2018 2019 to 1,569; variations in the labour expense arise from production bonuses and currency devaluation (Rand and ($'000's) ($'000's) ($'000's) RTGS$). Labour 13 440 13 160 13 905 Cas
Slide 19: Net Other Income
Review of Results Net Other Income Net other Income 2017 2018 2019 ($'000's) ($'000's) ($'000's) Export incentive 2 446 6 482 866 Gold support price - - 1 064 Other 494 192 -322 2 940 6 674 1 608 • Prior to February 2019, larger Zimbabwe gold producers received an Export Credit Incentive (“ECI”) at
Slide 20: Foreign Exchange Gains
Review of Results Foreign Exchange Gains • Rapid devaluation of the Zimbabwe currency after the introduction of the interbank Interbank Exchange Rate RTGS$/US$ mechanism in February 2019 February 20 2019 2.500 • Blanket’s functional currency is the US dollar: all RTGS$ denominated March 31 2019 3.00
Slide 21: Taxation
Review of Results Taxation Taxation 2019 2018 Zimbabwe S Africa UK Total Total (US$'000) (US$'000) (US$'000) (US$'000) (US$'000) Income tax 6 170 660 - 6 830 3 598 Withholding tax - - - management fee - 128 - 128 75 - deemed dividend 224 - - 224 - GMS UK dividend - - 128 128 110 Deferred tax 2 942 3
Slide 22: Cash Flow
Review of Results Cash Flow YoY Change Cash Flow Statement 2017 2018 2019 (%) • Significant non-cash adjustments to PBT are related to Profit before Tax 20,587 21,555 60,889 182% Forex gains and losses ($31.3m) and the profit on the Non-Cash Adjustments for: sale of Eersteling ($5.3m) Foreign Curren
Slide 23: Cash Flow
Review of Results Cash Flow • Operating cash flows before working capital and capex increased in Q4 2019 due to higher production, a higher gold price and lower costs • Working capital absorption in Quarters 2,3 and 4 of 2019 reflects the reduced supplier credit in Zimbabwe and increased stock level
Slide 24: Balance Sheet
Review of Results Balance Sheet Balance Sheet 2017 2018 2019 • Non-current assets increased due to the continued investment in terms of the Central Shaft project and Fixed Assets 82,143 97,525 113,714 sustaining capital Current Assets • Trade and other receivables reflect in increased level Inventor
Slide 25: Other matters
Review of Results Other matters • High capital expenditure until mid-2020 requires a prudent approach to cash management Hedging underpins cashflows • January 2019 Caledonia purchased put options over 22,500 ounces of gold at a strike price of until the high capital investment is completed in mid 20
Slide 26: Outlook
Outlook 26
Slide 27: Medium to Long-term Goals
Medium to Long-term Goals Build a mid tier gold producer with minimal dilution • Commission Central Shaft now – 24 • Increase production to 80,000 ounces per annum 70,000 – 80,000oz/yr Months • Reduce AISC to $700 - $800 per ounce • Review dividend policy 2–4 • Declining CAPEX post Central Shaft del
Slide 28: Contacts
Contacts Website: www.caledoniamining.com North America IR (3ppb LLC) : Share Codes: NYSE American 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 679