Caledonia Mining Corporation plc (LON:CMCL) Chief Financial Officer Mark Learmonth caught up with DirectorsTalk for an exclusive interview to discuss highlights from their results, greatest achievements in 2021, update on Maligreen, other projects and the focus for the next six months.
Q1: Mark, can you just talk us through some of the highlights from the results?
A1: We’d already announced previously the production for 2021, which was a new record, just over 67,000 ounces, up from about 58,000 ounces last year so production was strongly up. Gold price didn’t move that much, marginal 1% movement, so that increased turnover by about 20 odd percent but gratifying the gross profit was up.
More importantly at the end of the day it’s cash and the cash flow before things like CapEx and working capital. So the real cash that we’re generating from the business that was about $50 million so about $1 million a week, which for a little mine in Zimbabwe is phenomenal. That translates into earnings per share increased from about $2 to $2.20 so a very good result.
Q2: It looks like Caledonia Mining’s had a good year. What do you think were the greatest achievements through the year?
A2: Undoubtedly, it was finishing the commissioning of the central shaft. The central shaft is a project we’ve been working on since early 2015, we’ve spent $80 odd million on this thing, it’s a brand new shaft for surface down to 1.2 kilometres. That was commissioned at the end of March in 2021 and we started using that shaft commercially in April and that’s contributed to the increase in production last year and will contribute to the further increase in production this year.
So, that was undoubtedly our biggest achievement in 2021.
Q3: Now, in Q4 you completed the acquisition of the mining claims at Maligreen. What are you currently doing there at Maligreen?
A3: Maligreen has got just under 1 million ounces of resources, mainly at the inferred level so what we’re doing right now is we are busy cutting and re-assaying the old core samples that are still existing with a view to improving that confidence level to a higher degree of confidence. At this stage, we’re not necessarily looking for a bigger resource base, we’re just looking for a better resource base. We should probably have some news on that that before the middle of the year, perhaps May/June. With a higher resource space then, we can then start turning our attention to how we would commercialise that.
Indicatively, resource space of that size should support an open pit operation of 50,000/60,000/70,000 ounces a year before we start looking for further material at depth and along strike and also in a quite an attractive new exploration area towards the north of the property.
So that’s a progress and hopefully the news flow will start flowing on that from mid-year onwards.
Q4: Are there any other projects that you’re looking at?
A4: Of course, yes, we’re always looking at projects in Zimbabwe. There are one or two that we believe we’re moving towards. Hopefully again, there will be some new flow on that towards the middle of the year.
I think we’ve said many times that we regard Zimbabwe as a highly perspective gold area and clearly being a substantial operator in country, we’re very well positioned to both identify opportunities and, subject getting the right pricing, to getting our hands on them.
So, yes, we’re very optimistic about our ability to grow further in Zimbabwe.
Q5: Just looking forward, what is Caledonia Mining’s focus over the next six months?
A5: The focus over the next six months is further increasing production of Blanket so last year we did 67,500 ounces, this year we’re looking for 80,000 ounces and that’s going very well.
We need to lock in that 80,000 ounces a year production level to further increase our cash generation which allow us then to spread our wings further, both financially and from a managerial perspective, looking at turning new opportunities to account.
