Caledonia Mining Corporation Plc Common Shares

Right. Hello, everybody. Welcome to our Q2 results call for shareholders. So on the call from Caledonia, you've got Steve Clark, Curtis, our CEO, Mark Learmonth, our CFO, Dana Roots, our COO, Morris Mason, our Vice President of Corporate Development, and then myself, Camilla Walsall, Vice President of Investor Relations. So if you have any questions, then please just raise your hand at the end of the presentation and I can unmute you. or you can just write a question in the Q&A box. Okay, so I'm now going to pass you over to Steve and Mark, who can talk you through the presentation.

Thanks, Camilla, and welcome, everybody, and thank you for joining us for this Q2 presentation. It's great to have my team with me, and we're very pleased to present a very good set of results. We have a presentation, which we will quickly go through, and then we'll open it up to questions. And let me kick it off by starting initially, and Mark will flick the slides, and then I'll hand over to Mark. So the disclaimer is what you're all familiar with, so we'll just pass over that. The next slide just gives you the focus areas, which I'm sure you are also familiar with. Central shaft project completed, operational. Donna can talk about that later if you'd like him to. We're ramping up production. You will have seen in our public announcements that July was a very good month of nearly 6,000 ounces. And that indicates that the process of building up is working extremely well. We are committed to returning money to shareholders, as we've demonstrated with our regular increases in the quarterly dividend. And as you will have seen from the results, the free cash flow generated in this quarter is in line with our thinking of being able to afford and to return more money to shareholders. We do need some of that money, though, for new opportunities, and we announced as well in the MD&A that one of our two exploration properties we have decided not to continue with and not to exercise the option. It's the nature of exploration. So later on in the presentation, we'll talk about the Connemara North exploration opportunity, and we'll give you some detail as to where that is. The results highlights, if you haven't studied yet, and this presentation will be on the website, production ounces for the quarter of 16,700 ounces, a record for any second quarter. The revenue of 30 million, 31% increase. I must mention that in the production ounces, to achieve those many ounces, the 165,000 tons that we mined and milled, is actually an all-time record. And that just indicates how well our mining team under Dana has done in developing the mine and developing the opportunities to be able to ramp up to 80,000 ounces. Gross profit of nearly 14 million, but importantly, the EBITDA number, and we're quoting here a number that is taking, which is adjusted for the unusual business items, non-business items, let me say, The write-off of the expiration property, the foreign exchange gains and losses. So this is kind of normalized, and we're looking here at a 100% increase from just under $7 million to $14 million. That is a very, very pleasing number for a quarter. And that rolls into adjusted earnings per share of nearly 63 cents per quarter, 70% up on the comparable quarter. But importantly, against our dividend declaration of 30 cents a quarter, it just shows that we've got a lot of headroom. And at a point in time, we'll be able to ramp up that dividend, I'm sure, board permitting. Net cash from operations, operating activities, nearly $13 million from a comparable $4 million. That's what the game's all about. We need to generate cash. We need to be able to allocate that cash sensibly. And I trust you will understand that we've done that well in sinking the central shaft and being able to progress this mine to an 80,000-ounce producer level. I'm going to hand over to Mark to go through some of the intricacies of the dividends and maybe a number on the previous slide that Mark wants to just give a little bit more explanation around.

Sorry, I've got to confess, I'm a bit naughty to hurry Steve along. I keep on moving the slides before he's finished. So to go back to the previous slide, Steve's quite right. If you look for the six months, six months this year and six months last year, there looks to be an anomaly here. The dividends declared in the first six months of 2020 were was 23 and a half cents, which is more than the dividends we declared in the first six months of this year. And that's because for a very obscure and very arcane regulatory reason, last year we declared three dividends. We declared one at the end of January. The one that we would ordinarily have declared in early April and paid in April, we actually deferred that to May just to get a better sense as to what's happening with coronavirus. The dividend that we would ordinarily have declared in July, i.e. after the end of the half year and after the quarter, for some reason last year we declared it on the 29th of June. So in terms of dividend declaration, in 2020 we had three dividends in there, whereas in 2021 we only had the two dividends. I don't want any sort of confusion that we've cut the dividend or anything. And actually, to make that clear, here you see the graph showing our quarterly distributions. And you can see we've pretty much increased every quarter since late 2019, other than, as I've mentioned, sort of April, May last year, where we sort of deferred the dividend for a month to see what was going on. And then we held it at an increased level of 7.5 cents a share, rather than increase it. We thought to increase it in that environment might be a bit inured. So we were on a dividend yield We're about 4.1%. That's probably gone up since our share price reacted to the adverse movement in the gold price a few days ago. And that's nearly a 90% increase in the quarterly dividends since October 2019. Turning just to encapsulate some information here about production, what you see here is tons milled in grade and ounces produced in recovery. The driver for our incremental production in the quarter was tons milled. And Steve's already mentioned that the ounces produced in quarter two is a record for any quarter two. But the tons milled in the quarter is a record for any quarter at all. And that demonstrates that the central shaft is now contributing. And what it's doing at the moment is it's now hoisting development waste so that the central shaft can get itself connected up to the ore bodies. And that then relieves the pressure on number four shaft to focus on hoisting ore. So we'd expect Central Shaft to actually start hoisting gold-bearing material by the end of the year, but it's already making a substantial contribution. And as Steve's already mentioned, July's production was just 5,000 ounces, five ounces less than 6,000, so it's 5,995, which again, if you extrapolate on that for the quarter, shows again continued progress towards achieving our target of 80,000 ounces a year. Just looking at the profit-loss account, revenue up to 30 million for the quarter, and that's a combination of higher production and higher gold price. The royalty stays the same at 5%. Production costs, I'll go a bit more about that later, but in general, production costs were as expected or perhaps even slightly lower than expected, other than in the area of electricity, but I'll come on to that later. Depreciation has increased by about a million dollars for the quarter, and that's because having commissioned the central shut, I'm afraid we've now got to start depreciating it. So that would increase the annual depreciation charge from about 4 million to about 8 million. So the gross profit level, everything's looking good, 9.2 million up to 13.9. G&A is up slightly, and I've got more information on that. And that reflects primarily increased wages and salaries. And that's due mainly to new hires. We've taken on an internal audit person to improve and strengthen our internal controls. We've taken on Camilla to help with investor relations. And Dana's taken on two technical staff in Johannesburg to help us with the increased complexity of the mine. Then below that level, things kind of go wrong for this quarter, really. You'll see in last year, we had a net foreign exchange gain of one and a half million. And we also had net other income of one and a half million. That net income, that was a government grant to encourage us to produce more gold. So we had a $3 million non-operating income in 2020. But in this quarter, we had a net foreign exchange loss because the rate of devaluation of the Zimbabwe dollar has pretty much stopped. Then in addition, we impaired the Glen Hume asset. So we bought an option for $2.5 million. And we spent about a million dollars over the intervening period. And because we decided to walk away from that project now, because it doesn't meet our criteria, we've impaired that. So that contributed a $3.5 million impairment. So whereas in the second quarter of 2020, we had a $3 million income, in the second quarter this year, we had about a $4.2 million charge. And that's why profit before tax goes down from 9.9 to 7.7. The tax expense... The effective tax rate, overall aggregate effective tax rate for the quarter at 3.9 million was just over 50%. And that's largely because the impairment, the $3.5 million impairment reduced PBT, but there was no corresponding effect on the tax charge. There was no tax to offset against that. So the tax expense remained unchanged. So I can come on to that in a bit more detail later on. And then get down to adjusted earnings per share, as Steve mentioned, of 62.6 cents for the quarter, which we feel is a fair reflection of the underlying performance of the business. Just turning to production costs, here you can see that, as I said, everything was pretty much as we expected. The only area where it wasn't as expected was electricity. So for the quarter, that increased from 2.1 million to 2.7 for the half year, nearly a million dollars of extra. And that's because we're having to use the gensets more. And we're having to use the gensets more because we're having more outages. And we also continue to suffer from a deterioration in the incoming grid supply, which means we're having to run our gensets more to protect our own equipment. Now, we have a strategy. First of all, I think the first point to make is that we can actually run the entire business, everything, using diesel gensets. So it's not an existential problem. It has a cost implication, but we could, if necessary, accommodate that. But we have a plan to, as you know, to put in a solar project, which should be operational by, I think, April next year, which will provide about 27% of Blanket's average daily usage and will reduce our dependence on the grid. We're already evaluating how we can increase the scope of that solar project to further reduce our dependence on the grid. So online costs very much as expected. You see a breakdown of G&A onto the main headings. You can see the main increase really comes from employee costs. As I mentioned, that is largely due to an increase in our headcount. What does that mean in terms of cost per ounce? The cost per ounce, online cost per ounce for the quarter at $715 an ounce was below our guidance for the whole year of 740 to 815. And similarly, all the sustaining cost per ounce for the quarter at $973 was also below our guidance range. It's worth noting that of our online costs, something like 90% of our online costs are fixed. And so as we expect production to increase for the second half compared to the first half, that means that those fixed costs get spread over more ounces. And so we do expect as the year progresses, to see the online cost per ounce fall further. So we're feeling very confident that our cost guidance will be at least met. We'll probably come in below our target. I mentioned tax. The bulk of the tax is in Zimbabwe. So income tax on the profits arising of blanket mine and deferred tax. And the bulk of deferred tax recognises the difference between the accounting treatment of capital expenditure and the tax treatment of capital expenditure. If you add those two tax items together, so 2.4 million of income tax and 1.2 million of deferred tax, and express that as a percentage of IFRS gross profit, which actually is very, very close to the online PBT, you end up with an effective tax rate of about 26%, which is very close to the income tax rate in Zimbabwe of just under 25%. So that should give you some comfort that the bulk of, that should give you some comfort that the The tax charge isn't completely wrong. Then in addition, we also incur tax in South Africa on intercompany profits and then some other taxes as we move money around the group and across borders. Cash flow is very strong. So cash flow before working capital for the quarter was nearly $14 million compared to nine and a half for the comparable quarter. It's also pleasing to see working capital for once go down Typically, working capital can be quite volatile, and it can increase if we have large receivables due to us from Fidelity, who we sell our gold to, or if we allow the electricity creditor to build up and then we pay it down in a lump sum. So it's nice to see working capital normalize a bit. So net cash from operating activities was about $12 million, very strong. We continue to invest. as you know, on the development associated with Central Shaft. So that's about $7.1 million there. We've not really started spending big time on the solar project. We've made some deposits for orders that we've already placed. So the spending on the solar project will really kick in from now until probably January, February next year. So cash flow is very, very strong and we're very pleased with it. There's nothing really on the balance sheet to talk about. This derivative financial asset, at the end of last year, we had a surplus of cash sitting in South Africa, which we knew we would need at some point to cover procurement liabilities. Because of exchange controls in South Africa, we can't hold that in US dollars. We have to hold it in rands. And the rand is quite volatile and subject to quite sharp devaluation. We could have taken it out of the country, but then it's easier to take money out of South Africa than take it back into South Africa. And the problem is that when we need it, we need it. And so rather than sort of put ourselves in a position of embarrassment in South Africa where we strip money out and then can't get it back quickly enough, we did the next best thing, which is to hold a gold ETF. We liquidated that in the course of this quarter and we've repatriated those funds back up to Jersey. Then the only other item I'd point out on the balance sheet is the liabilities. Non-current liabilities, the long-term liabilities, that's mainly deferred tax and rehab provisions. There's no debt there. The current liabilities, again, that's mainly trade payables. We've got less than $200,000 worth of debt, and that is locally denominated working capital facilities. So with that, I'll hand back to Steve to talk about the opportunity in Zimbabwe.

Thank you, Mark. And I'm sure you'll agree, a very nice set of numbers. You can't get away from the fact that if you mine efficiently, the numbers will look after themselves, as long as you've got a management team that is considerate about costs, and Blanket has been very consistent in that aspect. So we're very proud of those results and very proud of the team who's produced them. The opportunity that we're going to now progress in Zimbabwe, the Connemara North exploration property, we signed up in December, and we've got 18 months to explore a property and make a decision as to whether we're going to exercise that option. Over the last six months, we've been doing a desktop study producing a geological model on the information that we had at hand. We don't have a lot of information, but our consultants and our in-house people have put together their best evaluation, and now we will put drill rigs on the ground. So the next number of months will be busy in the field, and we will see how that goes. It's important to understand that the exercise price for this option is $5 million. We have paid $3 million just to get the rights to do the – $300,000 to do the right to explore. And – We will be very cognizant of the fact that there's a 5 million option price and the results of the drilling needs to meet our own internal criteria. And as we've already demonstrated, Glen Hume, unfortunately, did not meet our criteria. There was gold there. We found gold. We found some resources, but they didn't meet the criteria that validated the reason to pay more money and exercise the option price. There is historic information about this property. But the most important thing about the opportunities in Zimbabwe that, yes, we signed up to. We've got one now going to go live, but we are still considering other options in Zimbabwe. We like brownfield opportunities and there are a couple of others that we've been working on for some time. And we will continue to look at them as opportunities to build our pipeline. We are very, very aware of the fact that we've got a single asset company, and we want to change that. So we've got a very successful producing mind. which is going to give us the luxury of having some money to spend on other opportunities. But we are always very, very careful about how we allocate shareholder money. And we think brownfield opportunities are a very good option. And always, always, our criteria are that anything we do needs to be free cash flow enhancing and NPV enhancing. So shareholders... can see that we are spending their money well.

Sorry. Sorry, I got sidetracked.

Usually you're ahead of me.

No, I was looking at the question.

Sorry. Camilla, who you heard earlier on in the call, has been the author of a very, very good ESG report, which was recently published. If you haven't had the opportunity to read it, I suggest you have a look at it. It really takes you under the covers as to the thinking of the mine management and the ethos of Caledonia. We operate a mining company in a poor country, in a poor geographical area. But what we've learned through this report is that many of the things that we're now reporting on have been carried out at Blanket for a long time. And we're now just formalizing the way we report them. It is also indicated to us that there's a need to capture data more efficiently and maybe measure some things a little bit more diligently than we used to measure. There are international standards against which companies are rated and scored. And we stand next to anybody else when we're looking for shareholder money. And we therefore have to put our best foot forward. And we have been able to identify gaps in our processes today versus where we need to go in terms of what is best practice. And you can look forward to an annual report coming out, and I trust that you will see that we are making good progress in this aspect. Just our solar farm alone is a very, very significant move in the direction of this component of our business. So we look forward to reporting back to you in a year's time on the next ESG report.

I assumed you'd finished, Steve, so I moved on to COVID.

Yeah, we're finished. COVID. We can't deny the fact that COVID has been with us since March of last year. It has been hugely disruptive for the world, for South Africa, for Zimbabwe, where we operate. But it is huge credit to our management team in South Africa and in Zimbabwe who have managed to actually keep the operation running all the way through with our own lockdowns, with country lockdowns, with international lockdowns, because we source a lot of raw materials and capital items from South Africa, which we need to bring through the borders and we need to get to Zimbabwe. Dana and his team has managed to complete the central shaft project in COVID times. But let's be very, very clear. The third wave has hurt us more than the first and the second waves hurt us. I'm pleased to say that we seem to have turned the corner in the third wave. And the number of cases, active cases on the mine has now declined to about 10. And we have managed our way through this very, very well. But it has cost us money. It has cost us a lot of anxiety and time, and it cost us time on the actual completion of the shaft. But I think it's just a testament to the quality of the management that they have managed to keep this mine running every single day through this lockdown period. And for that, we're very, very grateful. I think that brings us to the end, Mark. Yeah, that's the who's who. So we've got a number of questions.

Yeah, I can see some questions. Shall we try and canter through those?

We can. Mark, do you want to read them out, or do you want me to read them out, and then we'll allocate?

I've lost them. Where are they? Show me. Where have they gone again?

Well, I've got them.

No, no, I was closing down that presentation. There we go. Right. Someone asked about more detail of the impairment of Glenn Hume. I think I think I've answered that. I think somebody else is asking that.

There's a question later on in Glenn Hume about the that the charge seemed high. And can we clarify what it was as well?

Well, I'll just go I'll just go through the questions as they as they as they appear. So if there's a second question, I'll do it when I get that. Someone's asking if it may be possible to finish the second half of the year with 36,000 ounces, which would then mean we blast through our production guidance. We're not increasing our production guidance at this stage. We're well positioned to achieve our guidance, but at this stage it's too early for us to talk about increasing our guidance. Someone's asking what are our plans to increase the resource estimate now that central shaft is complete? I think Dana should answer that question. Dana, if you can.

Yes.

Can you all hear me? Yeah, got you. Okay. We ran out of exploration platforms with the current infrastructure we had, and we always said that as soon as Central Shelf is completed, as we start the horizontal development, we will create new platforms. And that will obviously mean that we will drill deeper. But also above 750, the current lowest point of the mine before we started the central shaft, there is also opportunities above 750 where we're going to put in exploration platforms. So that exploration plan is currently being put together. And, you know, after that is completed, we can give a better indication, you know, when we expect to have, you know, new exploration data available. But, yes, the plan is definitely to start drilling as soon as possible again after we create these platforms.

And it's fair to say also, Donna, that we've increased the strength and depth of the exploration team at the mine. That's correct, isn't it?

That's correct, yes.

Okay. Okay, someone's asking about what were last year's, Q2 last year's extraordinary items? Well, there weren't actually any formal extraordinary items, but I think if you mean the non-commercial stuff, that was primarily the export credit incentive, which was, I think, about $1.5 million for last year, perhaps even a bit higher. That export credit incentive was some gimmick, and it was a gimmick. sort of dreamt up by the government in the hope that by paying as a premium for the gold price, which was paid in local currency, we'd suddenly go and produce more gold. Now, clearly, we don't run the mine on that basis, but so we just took the money and we just took the money, but that fell by the wayside.

Someone's asking the WHO... Mark, also foreign exchange gains and losses.

There were big foreign exchange gains last year, and clearly that's not been repeated this year. But that's fully set out in our financial statements. Someone's saying the WHO note that was put out this morning forecasts $18 million of capex for 2022. Yes, it will be that high. Just don't forget that also includes the capex on the solar project. And I've just explained that the solar project will cost about $14 million. We'll spend, we've not really spent very much so far. We've spent, I think, about $2 million so far. So there's another sort of 12-ish to go. Some of that spending will take place next year. And then also capex for next year includes the continuation of the horizontal development, the haulages to connect the central shaft to the producing areas. It will start to fall off after that. So that's the answer. That's the answer there. Someone's asking how much of our cash is held at blanket. It's not 19 million. 19 million, I think, was the end of the end of quarter quarter. quarter one it's about 16 million that is that is fully disclosed in the um management discussion and analysis which um i'm happy to find and share with you just a minute um that's that's disclosed we do disclose that because clearly it's a um it's a relevant um it's a relevant bit of information let me let me share a screen and um if i can um So this is all in the public domain. I think people can see this, can they? So of the 16 point – sorry, it's the wrong one. Sorry, it's the wrong one. Sorry, it's the wrong one. So, Maurice, can you just deal with some other questions whilst I – can you see the questions whilst I find the right document?

Yeah, yeah, sure. Yeah. There's a question on grade, Donna. It says that slide six shows that our all grade has gradually declined over the last decade. And can we provide any color on our thoughts on grade in the coming years and whether it will flatten out or perhaps rise? So maybe it's best for Donna to answer that.

Well, with the latest information available, it will flatten out and probably decrease. three, four years' time, there might be a slight increase in grade, but nothing to write home about.

Also, just for everyone's detail, there was a fairly comprehensive independent technical report filed. It's on our website, and that is available for anyone to download and view, and that details capex and grade and tons and recovery for the life of the mine.

Okay. To go back to that previous question, there is a document which we file every quarter. It's called a management discussion and analysis. That may be a document that UK shareholders aren't familiar with, but it's a North American thing. And there is a massive amount of information in there. And I really would encourage you to look at that. So someone says, where's our cash? Well, this is where our cash is. At the end of June, we had 3 million sitting in Zimbabwe. And of that 3 million, of that 3.1 million, I should expect that about 3.1 million were sitting at Blanket. We don't hold cash. Any money that goes up from Blanket to our holding company in Zim immediately goes up to the UK. So if there's any money there, that's only there for a matter of days, really. So that's the money sitting at Zim. And we need that money in Zimbabwe to do things like, you know, pay month-end payrolls, pay month-end creditors. That's a That's a normal amount of cash that we need. It's very difficult for us to, even if we wanted to, we can't borrow dollars in Zim. It's just not available. And so given the fact that it's a reasonably sized business, it's quite lumpy cash flows. We need that sort of cash that we need. We have about 3 million sitting in South Africa. And again, that is to fund largely our procurement business. We've got quite a significant procurement business, which Typically, we've got to pay for stuff up front. And then we've got 10 million sitting in Jersey. To be absolutely clear, we do not have what we regard as trapped cash in Zimbabwe. We work extremely hard and very effectively to get our money and your money out of Zimbabwe. We do that through a combination of loan repayments, management fees, procurement margins and dividends. Um, and it's hard work, but it's something, it's something, it's something that we manage, manage quite well. So I think, I think we've dealt with that question.

Yeah. Mark. And it's important to understand that we, we deliver gold on a weekly basis. We get paid on a, on a weekly basis on a regular basis. And if the timing coincides with the quarter end, um, there may be a lumpy position of cash in zone.

Yeah. Yeah. I think we've dealt with the grade, the grade question. Um, Yes, there are, I think, 12.1 million shares outstanding. There have been difficulties. Someone's asking, are there difficulties getting people, machinery, materials across the border from South Africa? There were difficulties in the early stages of COVID, particularly people, particularly getting specialised contractors across the border. And that was reflected in a delay in the completion of the central shaft. There were, I think there were some difficulties on the border during the recent disruption in South Africa, uh, associated with the imprisonment of Jacob Zuma. But actually I think my understanding is we were the, about the only people who did manage to get our lorries through. So we were actually quite good at getting, getting our stuff, um, across the border. We would, we would like to be able to make more in-person visits to the mine. Um, although I don't think the mine reciprocates that, um, but we just can't do it simply, simply because the, the, um, the difficulties associated with getting tested and, you know, what's it called, having to sort of isolate and stuff. It is a bit sticky, but we're managing quite effectively.

Can I just add to that?

Currently, it's actually quite good as far as getting material and equipment to the mine and no issues. And we did lock down the mine for two weeks because of the increased cases of COVID we had at the mine. But we've got a vaccine drive on the mine as well. And people going to the mine must be vaccinated. And all the contractors working on the mine are vaccinated now as well as our staff in Johannesburg, except for the people younger than 35. And, you know, I would say in about two, three weeks' time, we will return almost to normal going back to the market. So that situation will improve tremendously.

Okay, someone asked… The only thing I want to add there is the cooperation levels we've had over the last year and a bit from governments of Zimbabwe and South Africa to be able to move people and machinery across the border during absolute lockdowns has indicated that they are very keen to keep mining companies like ourselves open and running.

Well, I mean, what happened was when the South African government, immediately followed by the Zim government, closed the country down in sort of April or March 2020, they immediately said the country is closed, but not the gold sector. That must keep going. Right. Someone's asking what internal rate of return we anticipate on the solar project. Our evaluation of the solar project, along with every other project that we consider, is it must increase our NPV per share, taking into account any equity that we issued to fund the thing. And so the NPV per share enhancement coming out of the solar project, I think was about 5%, Morris, is that right?

On an NPV per share enhancement basis, yes, that's correct.

And so the internal rate of return on the project would have been sort of like 24% or something like that?

Yeah, it was in the low 20s.

In the low 20s, yeah. But look, it was done, it made money, and we did it because it makes money. We're doing it because it makes money. But it's primarily a defensive move to protect us or to give us partial protection in the event that the grid just collapses completely. So we've done it. It makes money, but it's something we have no choice. We must do it. Someone's saying that the three and a half million cost for Glen Hume is excessive. We paid, we had to, we spent two and a half million to buy the option. And then we did about a million dollars worth of work. The Glen Hume project is an operating mine. The owner is not a Zimbabwean national. So his negotiating position was a bit stronger and he could digest a larger upfront payment. That compares with the Connemara asset where there is no production and the owner is a Zimbabwean who, if we were to pay him $2.5 million, would immediately lose a substantial proportion of that because of the liquidation requirements to have some of the dollars confiscated in return for local currency. So we're looking at two completely separate sorts of vendors with very different sorts of So that I think that explains why the three and a half million was was for why it was three and a half million for Glen Hume. And our exposure on Connemara is much lower. OK. What expenditure and activity is taking place and extending the reserve reserve and resources are blanking. Well, when will Jork updates be provided? Donna, we've just done a well done. You want to talk about our plans in respect of resource upgrades?

This year, there is no deep exploration because of the reasons I explained. We exhausted our exploration platforms. So you will first see a retraction in our resource and reserves, and that's 43-101 compliant. It's not a JORC compliant. And that will start improving as soon as we've got our platforms in place again. But just a reminder that know with the current resource and reserves um you know we've we've got the possible life and until 2034 so there's there's enough time to to get going again and um update but we will give it a give an update yearly um sort of in the end of the year howard howard's asking what was the export credit um in quarter to 2020 offhand i can't remember it's disclosed in the financial statements um

Morris, if you've got a moment, could you find those financial statements and tell Howard what the actual amount was in 2020?

I'll send it to you, Howie.

Okay. Right, the next question, there's a very good question about VAT receivables. Yes, the VAT receivables have increased since December 2020. The amount and the receivables are due to in both U.S. dollars and RTGS. We are receiving the U.S. dollar bit. The bit that's outstanding is the RTGS component. And it's fair to say that the tax authorities in Zim have pretty much stopped working because of the recent wave of coronavirus. The Zimbabwean idea of working from home means you don't do anything because they've got no electricity and virtually no internet connectivity. It's not a concern because we will simply offset the amount that is due from Zimra in respect to VAT, they're going to start future tax payments, income tax payments. So we recover it that way. So we're not concerned about that at all. It's irritating, but we're not concerned about it. That's the written questions. Are there any other? Camilla, should we open it to sort of verbal questions?

Yeah, if anyone wants to just raise their hand. Howie, I know that you've got a raised hand here. I'm allowing you to talk, although you have You have asked on the Q&A, so I don't know if everything's been answered.

Yes, it has been. Morris is going to send me the export tax credit. The other unusual item in last year's quarter showed $2.8 million, and Mark mentioned $1.5 million, so that was my confusion. Morris will straighten that out.

Yep.

Okay. Thanks. Thanks, everybody.

I think that's it. I don't think we have any more raised hands, so I think that's it. Okay, I can see you. Sorry, we have one more question here from Daniel. Hi, can you hear me?

My name is Daniel. Thanks for the presentation. I think in the UK, people just lump all of Southern Africa into one and we would just like to know a bit more. Is the political situation now stable in Zimbabwe? Has it come down to what it was 10, 15 years ago? That kind of thing.

Daniel, I guess from your accent, are you South African or Zimbabwean?

I'm actually South African.

Okay, well, as it stands at the moment, I would say that Zimbabwe is an infinitely more stable political environment than South Africa, I'm afraid to say. You're quite right. Under the Mugabe regime, it was... completely unpredictable what could or may happen. He was capable of unpredictable and absolutely irrational actions. The difference between that and the current regime is it's much more rational and much more open to constructive engagement. And so our assessment is that the if you ask narrowly about the political environment in Zimbabwe, we think it's much more stable at the moment than it has been for quite some time. And we get regular, regular, regular detailed updates as to what, what is happening behind the scenes politically so that we are as up to date as possible. So Steve, I don't know if you want to add anything, add anything to that, but I don't, I don't feel the Zim is, I think Zim's actually stabilized quite a bit in recent, in recent, recent, certain recent years and months as well.

Yeah, I think so. If you consider the management of the inflation rate and whether we agree or disagree with the foreign currency auction system, let's accept the fact that it has stabilized the official exchange rate. So we're running with an inflation rate of 56% now versus 800% from a year ago. Other aspects that just show the fact that I think we have an administration that recognizes the need for business to survive and thrive is the fact that they've introduced some incentives for the export industry recently, that we can retain more of our dollar proceeds on the incremental sales we make if you participate in various schemes. Those are things we've been fighting for for a long time, but they've fallen on deaf ears in the past. Now they're being listened to and mechanisms are being put in place. You have to be flexible and you have to be able to react and move quite quickly. But considering what Donna and his team has done since 2015 of taking a decision to invest nearly $70 million in into sinking a shaft and effectively building a new mine under an old mine in a country that many people would say is uninvestable and is now demonstrating that they're ramping up production. You can manage the environment if you are in the right business. And I think we're in the right business in a difficult jurisdiction. What it takes from our side, and especially Mark and the financial guy's side, is... very, very close attention to detail. And don't foot fault because you will pay the price. But I think our track record shows we know how to operate there.

There's been a question about a share split. I suspect that comes from someone in London. And we've had queries before about a share split. And the argument being that a share price of sort of £10 or whatever it is, is a There's a disincentive for people buying our shares. I mean, the facetious answer to that is I thought AIM was a sophisticated stock exchange, not the EC2 branch of Poundland. I think that's a facetious response. But I think the more considered response is that to avoid being classified as a penny stock in the United States, we need to have a share price of over $5. And the U.S. is by far our largest market in terms of liquidity. In terms of things like dividend yield and PE ratio, clearly that's completely unaffected as to whether our share price is £10 or £5. If our share price moved ahead very substantially, yes, I think we would consider a share split, but at this stage, that's not something we would do. And it wouldn't, I don't think it would significantly, it wouldn't affect liquidity at all. So no, the answer to that is not something we'd do. We are progressing with a... a listing on the Victoria Falls Exchange. The only reason for doing that, the only reason for doing that is to get access to more US dollars. So the regulation that was announced in early June is that if you, for companies that are listed on the Vic Falls Exchange, they will receive 100% of incremental revenues arising from incremental gold production in US dollars. Now, as we're increasing our production from 58,000 ounces last year to 80,000, that means all of the revenue associated with that extra production will be received in US dollars, which will mean that in overall terms, instead of currently where you get 60% in US dollars and 40 in local currency, that will move it to about 70, 30. And so the only reason for doing that big falls listing is to get better access to dollars.

Okay. Do you have any further questions? I think that's it on the questions.

We've got no more.

No new ones.

No more raised hands.

Hold on. There's a question here. Okay. No, it's just Howard. It's just Howard responding. Yeah, he's saying there are other companies. Howard, the issue about having a high, a big share price is primarily, I think it's a UK issue. It's not something that's ever been raised in the United States. I'm thinking back actually to my first tutor when I was at university who was an old lady who wrote history books and she priced them in guineas because she felt it made the books sort of feel better. And I've got to say, given our sort of situation as a small gold producer in an unfashionable jurisdiction, having a high share price, a big share price might give us a luster of sort of respectability. But anyway, we could debate that.

Right, I think that's it. I don't see any new questions.

Camilla?

No, there are no questions that have come through.

Okay. Unless there's anybody who wants to put a hand up as a last minute, I think we're done. And just want to say thank you. We had a very nice turnout tonight. I hope we've answered your questions and provided the detail that you needed. You know where we are. You know where Camilla is. You can contact her if you've got any personal questions you want to ask, whether we can answer them or not will depend on whether it's public information or not. but thank you for participating. And, um, you know, we will, we will be making our normal quarterly announcements, production update after the end of September, and then the Q3 results, dividend announcements. So keep watching the space. Um, this is an exciting second half of the year for us, lots of work for Donna and his team, but so far so good. And, uh, Thanks for running the course with us. All the best to you. Thanks a lot and good night.