Caledonia Mining Corporation Plc (LON:CMCL) has announced its operating and financial results for the quarter and the six months ended June 30, 2022. Further information on the financial and operating results for the Quarter and First Half can be found in the management discussion and analysis (“MD&A”) and the unaudited financial statements which are available on the Company’s website, and which have been filed on SEDAR.
Financial Highlights for the Quarter ended June 30, 2022
· Gross revenues of $36.99 million, a 23.4 per cent increase on the $29.98 million achieved in the second quarter of 2021 (“Q2 2021”).
· Gross profit of $17.9 million, a 28.8 per cent increase on the $13.9 million in Q2 2021.
· EBITDA (excluding asset impairments, depreciation and net foreign exchange gains) of $17.8 million, a 23.8 per cent increase on the $14.0 million in Q2 2021. This represents EBITDA (excluding asset impairments, depreciation and net foreign exchange gains) for the six months ended June 30, 2022 of $31.5 million (H1 2021: $23.5 million).
· On-mine cost of $692 per ounce (Q2 2021: $715 per ounce).
· All-in sustaining cost (“AISC”)[1] of $925 per ounce (Q2 2021: $901 per ounce). The 3 per cent increase to the comparable quarter reflects the lower on-mine cost per ounce offset by higher administrative costs.
· Basic IFRS earnings per share (“EPS”) of 87.7 cents (Q2 2021: 21.1 cents).
· Adjusted EPS of 56.2 cents (Q2 2021: 62.6 cents).
· Net cash from operating activities of $16.7 million (Q2 2021: $12.7 million).
· Net cash and cash equivalents of $10.9 million (Q2 2021, $16.7 million).
· Total dividend paid in the Quarter of 14 cents per share paid in April 2022; a further dividend at the same rate of 14 cents per share was paid in July 2022.
Operating Highlights
· 20,091 ounces of gold were produced in the Quarter, 20 per cent higher than the 16,710 ounces produced in Q2 2021 and a new production record for any quarter.
· 38,605 ounces were produced in the First Half, 29 per cent higher than the 29,907 ounces produced in the first half of 2021.
Other highlights – Transaction to acquire the Bilboes gold project
· On 21 July 2022, Caledonia announced that it had signed an agreement to purchase Bilboes Gold Limited, the parent company which owns, through its Zimbabwe subsidiary, the Bilboes gold project in Zimbabwe (“Bilboes” or the “Project”)[2]. Subject to satisfaction of the conditions to completion, the total consideration for the acquisition will be 5,123,044 Caledonia shares, representing approximately 28.5 per cent of Caledonia’s fully diluted equity, and a 1 per cent net smelter royalty (“NSR”) on the Project’s revenues.
· Bilboes hosts NI 43-101 compliant proven and probable mineral reserves of 1.96 million ounces of gold in 26.6 million tonnes at a grade of 2.29 g/t, measured and indicated mineral resources of 2.56 million ounces of gold in 35.2 million tonnes at a grade of 2.26 g/t and inferred mineral resources of 577,000 ounces of gold in 9.5 million tonnes at a grade of 1.89 g/t[3].
· The feasibility study which has been prepared by the vendors indicates the potential for an open-pit gold mine producing an average of 168,000 ounces per year over a 10-year life of mine. Caledonia will prepare a feasibility study to identify the most judicious way to commercialise the Project (with regard to the availability of funding on acceptable terms).
Outlook
· Increase production at Blanket Mine to the target of 80,000 ounces of gold per annum[4], reduce operating costs and increase the flexibility to undertake further development and exploration, thereby safeguarding and enhancing Blanket’s long-term future.
· Satisfy the conditions to enable the completion of the acquisition of Bilboes Gold Limited and, thereafter, prepare a feasibility study to identify the most judicious way to commercialise the Project with regard to the availability of funding on acceptable terms.
· Restart the oxides operation at Bilboes under the terms of a tribute arrangement with a view to creating a cash-generative operation within approximately six months.
· Upgrade the NI 43-101 compliant inferred mineral resources at the Maligreen mining claims which are currently estimated to host approximately 940,000 ounces of gold in 15.6 million tonnes at a grade of 1.88g/t[5].
· Commission the 12MWac solar plant, which is expected to provide 27 per cent of Blanket’s total electricity demand.
· Continue to evaluate other investment opportunities in the Zimbabwe gold sector and elsewhere.
Mark Learmonth, Caledonia Mining Chief Executive Officer, said:
“This has been a terrific quarter and, indeed, half year with second quarter production of just over 20,000 ounces which set a record for any quarter. The first half of 2022 exceeded our expectations and we have now achieved our quarterly production target. Excellent production, along with a higher gold price and good cost control, has contributed to a 321% increase in IFRS earnings per share and a 31% increase in net cash from operating activities over the comparable quarter in 2021.
“In July, Caledonia announced that it had signed an agreement to purchase Bilboes Gold Limited, which is the holding company for a large, high-grade, open-pittable gold resource. We have followed the progress of the project for several years and believe that Bilboes is the premier gold development project in Zimbabwe, and indeed one of the best gold development projects in Africa.
“The completion of the transaction is subject to several conditions, but once achieved we can prepare a feasibility study to identify the most judicious way to commercialise the project with regard to the availability of funding on acceptable terms. Caledonia also intends to re-start the oxides operation at Bilboes under a tribute arrangement before completion of the transaction with a view to creating a cash-generative operation within approximately six months.
“Our immediate strategic focus continues to be on Blanket and we are on track to meet our target production of between 73-80,000 ounces of gold for this year, with first half production of 38,605 ounces of gold. We will also continue to reduce our operating costs and increase the flexibility to undertake further development and exploration, thereby safeguarding and enhancing Blanket’s long-term future.
“The proposed acquisition of Bilboes also builds on the recent acquisition of the Maligreen claims, where we continue to evaluate the existing geological information and are focused on increasing the confidence of the resource base. Caledonia will also consider other investment opportunities in the Zimbabwe gold sector within the constraints of its financing and management capacity.
“2022 has been an outstanding year so far and I would like to thank the team for their continued hard work.”
Caledonia Mining Corporation will host an online presentation and Q&A session open to all investors on 12 August 2022 at 14:00 London Time
The Zoom details for this call are set out below.
Topic: Q2 2022 Results Call for Shareholders.
Please click the link below to join the webinar:
https://caledoniamining.zoom.us/j/95386976088?pwd=NDV4OFFaU2syMnNzeG42Y2FUcGswUT09
Webinar ID: 953 8697 6088
Passcode: 147538
International numbers available: https://caledoniamining.zoom.us/u/afzb3xKSY
[1] Non-IFRS measures such as “on-mine cost per ounce”, “all-in sustaining cost per ounce” and “adjusted EPS” are used throughout this announcement. Refer to section 10 of the MD&A for a discussion of non-IFRS measures.
[2] See press release dated July 21, 2022 entitled “Transaction to acquire the Bilboes gold project in Zimbabwe”.
[3] Refer to the technical report entitled “BILBOES GOLD PROJECT FEASIBILITY STUDY” dated with effective date 15 December 2021 prepared by DRA Projects Africa Holdings (Pty) Ltd and filed by the Company on SEDAR (www.sedar.com) on July 21, 2022.
[4] Refer to the technical report entitled “Caledonia Mining Corporation Plc NI 43-101 Technical Report on the Blanket Gold Mine, Zimbabwe” dated May 17, 2021 prepared by Minxcon (Pty) Ltd and filed by the Company on SEDAR on May 26, 2021.
