Caledonia Mining Corporation Plc · AMEX:CMCL
Caledonia Mining — FY2018 Earnings Presentation
28 slides from Caledonia Mining's earnings presentation, March 2019
Slide 1: 2018 Results Presentation
2018 Results Presentation March 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. Challenges faced in 2018 and current and planned mitigating actions for 2019 and beyond 3. Review of operations 4. Review of financial results for 2018 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: 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 from mid 2020. Current planned development for Central Shaft is to open up three new operating levels through conventional horizontal development and a fourth opera
Slide 7: Operating Challenges
Operating Challenges 7
Slide 8: Operating challenges
Operating challenges A number of internal and external operating challenges were encountered in 2018 Challenge Effect Remedial Action • Increased management focus Unacceptable safety performance: • “Nyanzvi Initiative” – behavioural change initiative Safety 4 fatal accidents in 2017/2018 • Reduced n
Slide 9: 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 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 2015 2016 2017 2018 fatal lost ti
Slide 10: Challenges: low grade
Challenges: low grade Below target grade results in lower gold production and elevated unit production costs Head Grade (2011 – 2018) Inferred Grade 5 M&I Grade – – 4.52g/t 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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 11: 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
Slide 12: Challenges: unstable electricity
Challenges: unstable electricity • Unreliable electricity supply presents a significant operating challenge for Blanket • Blanket pays a higher tariff to avoid load shedding • Supply remains unreliable with voltage spikes and power cuts (not load shedding) • Backup generators are not designed to acc
Slide 13: Challenges: Zimbabwe
Challenges: Zimbabwe A rapidly changing regulatory environment Before October After October February 2019 • All currency was held in Real Time • The banking system is bifurcated • RBZ permits inter-bank trading Gross Settlement (“RTGS”) accounts between RTGS accounts and foreign between RTGS and FCA
Slide 14: Challenges: Zimbabwe
Challenges: Zimbabwe Regulatory changes present challenges but the overall trend is positive • Zimbabwe used the USD as a functional currency since 2009. Unsustainable borrowing and domestic exchange controls placed pressure on this functional currency from 2013 to 2018 • Zimbabwe has operated a qua
Slide 15: Challenges: Zimbabwe
Challenges: Zimbabwe Despite regulatory uncertainty – there are 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 16: Operating Review
Operating Review 16
Slide 17: Review of Operations
Review of Operations Tonnes Milled & Grade (2011 – 2018) • Despite grade difficulties tonnes milled continues on its long term upward trend 5 180,000 160,000 • Increasing tonnes milled and an increase 4.5 140,000 in grade to approximately the M&I grade Tonnes Milled (t) Head Grade (g/t) 120,000 (3.7
Slide 18: Quarterly Operating Metrics
Quarterly Operating Metrics 2017 2018 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Tonnes Milled 124,225 136,163 136,064 150,755 123,628 132,585 151,160 153,540 Average Grade (g/t) 3.42 3.08 3.52 3.62 3.48 3.19 3.12 3.27 Average Recovery (%) 93.7 92.8 93.6 93.6 93.4 92.8 92.6 92.8 Gold Produced (oz) 12,794 12,518 14,396
Slide 19: 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 20: Financial Results
Financial Results 20
Slide 21: 2018 Results Summary
2018 Results Summary 12 Months to December 31 Comment 2017 2018 % Chg Gold produced (oz) 56,133 54,511 -3% Production was lower primarily due to lower grade. Higher on-mine costs were largely due to lower grades which reduced the amount of gold extracted On-mine cost per ounce ($/oz)1 633 690 9% fro
Slide 22: Review of Results - Profit and loss
Review of Results Profit and loss $’000’s 2016 2017 2018 Change (%) • Higher production costs were largely due Revenue 61,992 69,762 68,399 -2% to lower grades which reduced the amount Royalty (2,923) (3,498) (3,426) -2% of gold extracted from each tonne of material mined and processed, in addition
Slide 23: Review of Results - Cash Flow
Review of Results Cash Flow $’000’s 2016 2017 2018 • Cash flows from operating activities in 2018 were 28% Cash flows from operating activities lower than 2017 due to an increase in working capital Cash generated from operating activities 25,671 28,885 21,119 of $4.6 million compared to a reduction
Slide 24: Review of Results - Balance Sheet
Review of Results Balance Sheet 2016 2017 2018 • Non-current assets increased due to the continued Fixed Assets 64,917 82,143 97,525 investment at the Central Shaft project and sustaining Current Assets capital Inventories 7,222 9,175 9,427 • Inventory levels increased partly due to Blanket Prepayme
Slide 25: Review of Results - Other matters
Review of Results Other matters • The ECI was introduced in 2017 in an effort to boost USD export revenues to minimise the current account deficit Export Credit Incentive – • ECI increased from 2.5% to 10% in Q1 2018 and had a substantial positive impact on positive effect of $6.7M in earnings and c
Slide 26: Outlook
Outlook 26
Slide 27: 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 end 2021 • Decrease AISC to $700 - $800 per ounce • Declining CAPEX post Central Shaf
Slide 28: 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