Caledonia Mining Corporation Plc Common Shares

So I think we can go ahead and start. Hello, everyone. Welcome to our Q4 results call for shareholders. So on the call from Caledonia, you have Steve Curtis, our CEO, Mark Learmoz, our CFO, Maurice Mason, our Vice President of Corporate Development, and then myself, Camilla Horsfall, I'm the Vice President of Investor Relations. We're going to need some time at the end for questions. So if you have any, then please just type them into the Q&A at the bottom or raise your hand and we will unmute you. I'm now just going to share my screen and pass you over to Steve and Mark who are going to talk through the presentation.

Thank you, Moose. While you do that, just a welcome to everybody. Thank you for joining this results presentation. very nice set of results to run through with you. And we're going to have the usual presentation, which you would be able to find on the website as well. And we'll run through the presentation quickly between Mark and myself and Maurice. And then, as Camilla said, we'll take questions. So let's get going. I'll just do the first few, and then when we get into the numbers, I will hand over to Mark and let him go through those particular slides. So, Mils, if we can have the next one. So, the disclaimer everybody knows about, so we'll flick into the highlights section. A lot of this people are familiar with already. We must acknowledge that our health and safety record was tarnished by a fatal accident that we had in February this year. So although we're talking to the highlights of 2021, we do recognize the severity of that. Prior to that, we'd had a really, really pleasing run of fatality-free shifts, but this that always reminds us of the industry we're in. So our condolences go to the mine and the family of the deceased. OBS, very excellent performance in 2021, which you're familiar with, over 67,000 ounces. These have already been announced. Costs well contained. Financial performance, very good. 21% increase in turnover. It's a combination of ounces and good gold price. 11% increase in the adjusted EPX and a 49% increase in the dividend that all of you as shareholders or interested parties would have been familiar with already. And then we've been speaking about the new opportunities for quite some time now, and we have already announced the Molly Green project, so that's also familiar territory. The results highlights, just summarized here, as I've said, 67,500 ounces, an average gold price like senior above 2020, revenue benefiting from the higher number of ounces, $121 million. Gross profit, very nicely up at over $50 million, $54 million. Adjusted profit attributable shareholders, 27.5, and adjusted earnings per share, 226 cents. Very, very nice. And the dividends paid out during the period, 50 cents per share to shareholders over the quarterly periods. Generally, health and safety was a good record for 21, which is the last row on this table, showing that in total we had 31 occurrences, but very good to see no fatalities in 21 as we had in 2019 and 2020. Medical age, yes, 21, which was a high number, but we have to recognise the industry we're in. We continue our education efforts in terms of health and safety through Yansi, and that was disrupted by COVID, where we had to do social distancing. That is now fully up and running again, and it will get a high level of attention because a two-year gap where Jansby really wasn't the highlight that it always has been is not good for an industry like ours. So Jansby is really, really a focus area. But a satisfactory and a very happy safety performance, as I've said already, unfortunately, you have to remember that we had a fatality. We cannot take the high off the ball. COVID-19, there's not much we need to talk about here. We've spoken about it a lot. Needless to say, it is still around. We have got a high number of our employees and their families vaccinated, which is very good. Operations are not disrupted. There is a tolerable level of COVID infections in Zimbabwe and operations continue as normal. Transit staying in and out of Zimbabwe is perfectly possible, so we can get specialist skills in when we need, and we can also move material up to the mine. So, yeah, COVID is there, but it is not affecting us. But again, we don't take our eye off the ball. Safety protocols are still very, very high on the mine, and we will continue with our vaccination drive. Operating review. We've spoken about central shafts a lot. Everyone is aware that it was commissioned in March 21 and it is currently being used to hoist waste material and we will slowly migrate across to hoisting ore. But the benefits of hoisting waste material out of central shafts is that it has freed up the capacity on fore shafts and that allowed us to ramp up production in 2021. we would not have achieved 67,500 ounces if we hadn't had the ability to have two shafts running. And as we got towards the end of 2021, Foreshaft was proving that the mining operation was capable of delivering the requisite tons to achieve our 80,000 ounce run rates. And we have successfully hoisted out of foreshaft the 2,200, 2,300 tonnes a day when we needed to. And so we are very happy that Central Shaft is running. There's obviously a fair amount of development work that has to still take place in and around the infrastructure of central shaft, but there are very few operations that actually commission the shaft and immediately put it into some sort of use. So the preparation work that Donner and his team did has paid handsomely for us in the fact that we have been able to bring it into production, utilize its capacities, and therefore continue with deep-level developments that are very necessary to ensure that we open up the production areas that are going to be needed to sustain the 80,000 ounces. These are just some visuals that you're going to get of the central shaft infrastructure. This is obviously drone footage. The central shaft is evident. The genset housings are there. On the left is the white. You've got the main Wyandere House, the big green building in the middle. A very, very nice set up. The village you can see in the background there. And if you would have known, sort of between central shaft and the village would have been four shafts, just to put it into perspective. I think we can move on. So this is a graphical representation of what has happened during the year 2021, and a very nice uptick in the number of tons, very necessary. The grade has delivered in terms of the plant, so that is why we have achieved very good production results. You can see the bars on the bottom graph illustrating our production progress. Record quarters resulting in a record year. So this is the proof of the pudding that Central Shaft is delivering and it was a worthwhile investment and we are therefore confident that we can go forward and ramp up to the 80,000 ounces as we are guiding 73 to 80,000 ounces for 2022. But everything is pointing in the right direction. we will obviously on a quarterly basis be able to represent how the progress is going. We haven't done a 20,000-ounce quarterly yet, but very, very close in Q3 and Q4. So as I said, we are very confident that the round rate that we have been talking about for years will be achieved. Electricity continues to be a challenge in Zimbabwe, and not just Zimbabwe. Southern Africa is very short of grid power. Blanket's primary source of electricity is full grid, although we do have full generating capacity on diesel to augment that if there are shortages. We put in protective equipment, auto tap changes to protect us from erratic supply coming through the grid. And as many of you will be aware, we're also constructing a 12 megawatt solar farm, which will be operational around about mid-year 2022. So as long as we are reliant on the grid power, we do have a risk factor. We don't have difficulty at this point in time getting diesel for the gentes as and when we need them. But obviously we don't want to use them any more than absolutely necessary. It's expensive. It is not environmentally friendly. And I must say, since we put in the auto tap changes, the ability of the mine to manage the erratic electricity coming through the grid has improved dramatically. And we haven't had to use the generators anything like we had to before the auto tech changes went in. So that was money well spent again. But you can see in the first block that the cost to the diesel in 2021, nearly $4 million. That's a lot of money on something we really don't want to spend money on. But it secures production, so we will do it when we have to. I've spoken briefly about the solar project. We visited the site probably two weeks ago, three weeks ago. It is progressing well. Solar panels are there and arriving on mass. And once the actual pilings go in for the support structure, this project is going to progress very, very quickly. We are at the end, pretty much the end of March, but we are still confident that by the end of June, we should have a solar farm that is operational and supplying clean power to Blanket. It is only going to be, just to remind you, only about 27% of Blanket's total needs on a 24-hour basis. because we are not putting in battery storage facilities at this point in time. So it's only available to us during daylight hours, but it is still going to be a massive asset to the Bank of Mind. and will enable us then to plan forward as to how we deal with, let's say, second phase or alternative thinking around securing blankets, electricity supply so that, again, the investment made in central shaft is not hamstrung by anything to do with power. So very excited about that. That will be something we'll be talking to shareholders about during the year and hopefully some very impressive pictures from about June. I'm going to hand over to Mark to do the financial review and enjoy that, and then we'll chat again towards the end.

Thanks, Steve. Just to reiterate a point that Camilla made, you can send questions in by typing in the chat box, okay? The value we discussed is primarily up because of the higher production. Gold prices virtually unchanged. Royalty is still staying at 5%, no change there. A little bit more detail on production costs, which increased from 43.7% to 53.1%, primarily due to higher labour costs and More electricity costs. Depreciation has more or less doubled because don't forget now having brought the central shaft into operation, it's now going to start depreciating it. So that explains that. GMA also up significantly and that's again mainly due to higher wages and salaries. I've got more analysis on that in a moment. The foreign exchange gain, and that foreign exchange gain was markedly reduced from 4.3 million to 1.2, and that just reflects the slower rate of the devaluation of the local currency. Don't forget, the exchange rate is a managed exchange rate, managed by the Reserve Bank. It doesn't reflect the rate of local inflation. Again, I'll be referring back to that in a moment. And there's quite a substantial debt for net other income expense. This year, there was a $7 million net expense. Last year, it was pretty much flat at $0.6. And don't forget, the 2021 number, $7.1 million, includes a $3.8 million impairment on a Glenn Hume exploration asset, which we decided not to pursue. whereas in 2020, the 2020 number included a $4.1 million credit deriving from export incentives, and that was discontinued. So those are the two big factors that explain the swing in other income. Tax remains at about 30%, 38% on a consolidated basis, and I've got some more information about later, but that does include leakage due to withholding tax as we move money around the group. also tax on intercompany profits in South Africa. The non-deductibility of certain costs we incur in Jersey because the tax rate here is zero. The NCI, the minority interest in our language, That reflects the economic interest of the local owners in blanket after taking account of the facilitation loans. So that is the 10% now unencumbered economic interest held by the community and effectively 2.2% held by the government after its effective holding after taking into account the loan repayments. The ownership of the employees is included in production costs as required by IFRF. Adjusted earnings per share, up from 204 cents last year to 226 cents this year. Just a bit more information on wages and salaries. The big increase was wages and salaries, increasing by nearly $5 million, and that reflects online salary increases. higher bonus provision to get the mine to perform well in terms of production and that resulted in higher bonus payments and also we've appointed some additional senior people at the mine who clearly cost more than the average as well as a substantial increase in the on-mine headcount. The on-mine headcount is now just under 2,000 people. also up above the rate of run rate of production and that reflects the cost of the trackless equipment which is very expensive and is used in the declines. During the year we did put measures in place to control those costs better but that was only recognised part way through the year. We are going to live with trackless equipment for quite some time as we continue doing the So that will be an embedded cost in the business. Current consumables reduced substantially as the need to sort of incur those costs diminished. Electricity, as I've already mentioned, that increased substantially, a $2.1 billion increase, and that really reflects the increased use of the diesel generators, particularly towards the end of the year when the incidence of power interruptions arising from voltage surges was substantially increased and that required us to use the gen sets more. As Steve mentioned, right at the end of the year we did put in a further AutoTap changer which protects our equipment from those surges and we have now seen a substantial decrease in the diesel usage from January onwards, which is good. then you'll see online administration, it's not a big cost, 1.8 million increasing to 2.7 million, but that did increase quite substantially. That reflects the fact that a lot of those local online costs um paid in local currency rcgs and the rate of inflation in the local currency is still extraordinarily high and that's just not reflected in the official in the official exchange rate which is what we use to convert those uh local local locally dominated costs back into us dollars and that don't give rise to that increase in in that um in that cost area just in total the cost per ounce of 742 dollars an ounce was within at the bottom end of our guidance range, which was $740 to $815 an ounce. The big component in GMA is wages and salaries, which increased from $4 million to $5.4 million That reflects an increase in headcounts. We increased the size of the Johannesburg office from 20 to 24. And again, the extra employees were at the expensive end of the scale, people like particularly rock engineers, where as we're going deeper, we need to devote more attention to that area. And so those costs have gone up. I don't really think there's much more to talk about on G&A because the main components to that really is wages and salaries. Moving on. Taxation. Just to formalise this tax between the main component being income tax and Zimbabwe. And then the other bits and pieces, which is all the withholding tax. So we've got income tax in South Africa that arises on the inter-company profit. Taking that inter-company profit disappears on consolidation. The amount we have to pay on that profit to the South African revenue, obviously you can't wish that away. So there's half a million dollars of tax there. And then there's various withholding taxes on the management fees, as we pay management fees from Zimbabwe to South Africa. but also on the dividend component. Those management fees are recognised by the Zimbabwean authorities as effective dividends. Again, that incurs a withholding tax in Zimbabwe. The short tax, 5.8 million, that just simply reflects the fact that in Zimbabwe we get 100% capital allowances for capital expenditure in the year which is incurred, and clearly there's no corresponding accounting benefit from that arising from depreciation tax. So that's a temporary factor and will, over time, reverse. Cash flow remains very strong. The number I like in particular is the one at the top, cash flow before working capital. Just to be sure, down to $50 million, nearly $1 million a week. And that really does reflect the improvements in cash generation due to higher production. Below that, you can see working capital increased substantially in the year by $11 million. That was approximately a $4 million increase in inventories, a $4 million increase in prepayments and a $4 million increase in amounts receivable offset by a small increase in payables. Of those three big increases, inventories, receivables and prepayments, the one that we can really control is inventories and we are putting a lot of effort now into trying to manage the inventory level down. I think previously the mantra of just in time has moved to just in case. And we did deliberately increase our stock levels in the course of 2021 to protect ourselves from any interruptions of the supply chain arising from COVID, but also from the sort of insurgency in South Africa in September, I believe. But I think that's pulling them too far now, so we need to put more control on our inventories. In terms of receivables and prepayments, I've got some information on that at the moment, but that's not an area of great concern to us. We invested a lot, $35.9 million in the year. That includes $4 million on the purchase of the Miley Green asset towards the end of the year and $1.6 million spending on solar. So there is a lot of spending left to do on the solar project in the course of the next few months. Financing is 2.4% income. So that's dividend payments, so blanket dividend payments. These are dividend payments that Blanket pays to its minorities plus the dividend payments that Caledonia makes. net of equity releases in 2020 and 2021 and the proceeds of the gold loan which we took out towards the end of 2021. So at the end of the year we had cash of 16.3 and I will warn you that we do expect that cash to be eroded in certainly the first half of 2021 as we embark on quite a high level of term capital expenditure on the central shaft and on the solar project in the first half of 2022. Just a bit more information if you're concerned about prepayments and trade receivables. You can see the prepayments, nearly $7 million of prepayments. The components of that really relate to prepayments for the solar project, so that's prepayments to Vortalia. The rest of it reflects the fact that supply credit in South Africa and Zimbabwe is drying up and we're just being now required to make prepayments for shipments for the mines. In terms of the bullion sales receivable, again, that does look to have gone up alarmingly from $1.3 million to $4.5 million. And so we've actually broken that down so you can see when those amounts were, when that $4.5 million was repaid. Now, the way in which we get paid for each gold delivery is you get staggered payments. So typically you get paid the RTGS component first and then the US dollar component later. And then as they're correcting payments, U.S. dollar payment, which reflects the extent to which our deliveries in a month have exceeded the benchmark such that we qualify for an incremental proportion of our revenues in U.S. dollars. So it's not particularly straightforward, but I think the point of that little insert table is to show you that of that $4.5 million, it had all been recovered partway through January. So I don't want people thinking there was a difficulty with getting our money out of Fidelity. And actually the payment system from Fidelity has improved substantially as 2021 progressed. Balance sheets, obviously, non-current asset, fixed asset goes up because of the continued investment. Working capital goes up for reasons that I've just discussed. The derivative financial asset, in 2020, we had a $1.2 million gold ETF. And that reflects the fact that temporarily we had a cash surplus in South Africa, which we're obliged to hold in South Africa rounds. We knew we would need that cash in South Africa at some time, but getting money out of South Africa and then back into South Africa can take quite a long time. So rather than run the risk of shipping the money out of South Africa so we could hold it in US dollars and protect ourselves from any RAND devaluation, we decided to do the next best thing, which was holding a gold ETF to protect against the RAND devaluation. I think there's nothing really much more to say on the balance sheet. So, in terms of outlook, this year we've guided our production 73,000 to 80,000 ounces. Clearly, we strongly hope that we'll be towards the top end of that guidance range. All of today's costs are between $8.80 and $9.70 an ounce. the capex burden for 2022 is still quite substantial and so what you see there on that table is we reconciled from the capex showing the technical report that was published in May at 15.2 million and then show the extent to which that's increased by an overrun on planned development the additional development at central shaft is due to the COVID delay as Steve mentioned we need to The development needs to chase the fact that the mining areas have continued to go deeper using the declines. That's given rise to $3.4 million. The poor electricity supply, that's going to cost us another $3.2 million in terms of generators and the further equipment to protect ourselves. I mentioned the fact that the number of workers has increased. I think it's gone up from about 1,700 to just under 2,000. They need to live on the village. So that means we need to spend money upgrading the workers' village in terms of housing units and upgrading the water and sewage facility. And also we're increasing the volume going through the plant. And so we need to spend more money on an additional primary mill and a regrind mill and a CIL tank and some more compressors. So all of that, in conjunction with the balance of the solar spend, gives rise to a The total capex bill for 2022, about 37.4 million, and that's telling you that more than half of that, the bulk of that, is front-loaded in the first half of the year. I'm happy to talk about the dividend. We've increased the dividend pretty much quarter on quarter for the past few years. In January, we took the decision not to increase the dividend further. At that time, we were on a yield of approaching 5% and there was an internal discussion to the effect that the market was becoming complacent as to our continued dividend increases. But more importantly, we're now beginning to to pivot the company, transition the company towards being perhaps a more traditional mining company with increased exposure to exploration and development and so that we're really beginning to sort of signal the change that the money that comes out of blanket is now going to be, not all going to go into ever increasing dividends, a portion of it will be retained to create a modest to further developments, particularly in Mali Green. Steve, do you want to talk about any opportunities? Or Maurice, do you want to talk about any opportunities?

Yeah, I'm happy too, and then Maurice can jump in as well. We've looked at many properties and Morris, through his responsibility as business development, has built up an enormous knowledge of the potential that Zimbabwe has. In principle, we don't want to buy large producing assets. They come with big problems. So we feel very much more comfortable and capable of repeating the process that we embarked on in Mardi Gris. Something that has a pedigree in terms of gold and potentially even gold ounces in a resource statement. And then we build and develop our own operations. We are cognizant of the difficulties of various processes in Zimbabwe, but we're also confident that if you sequence events, that you can build a very, very nice pipeline. We are absolutely committed to moving away from being a single asset producer. Work is progressing on Mali Green right now to improve the confidence level around the inferred resource that we purchase. And at that point in time, we will then be able to develop a plan for the next stages. Maurice, what else do you want to mention in terms of new opportunities? Well, just to give maybe shareholders a sense of scale, Steve, I mean, on this slide, you see we toggle a map of Burkina Faso over Zimbabwe. And, you know, it just gives you a sense of this is a big country. It's half the size of Germany. And, you know, that greenstone belt that you see there that runs north-east down to south-west, we're in the bottom tip of that, I wonder. But there's this huge gold-producing or gold belt which, frankly, has probably spent 50 years of being under-export. So we feel we've got a unique competitive advantage and probably one of the last gold frontiers in Africa. Thank you. Yeah, Molly Green, we've spoken about, purchased 100% ownership, an inferred minimal resource of just below a million ounces, and as I said, we're working to improve the confidence around that resource number so that we can then do the next stage of planning. And we also see this, for investors who do want to see that technical report be We're quite excited about Mining Green. It's got a technical report that's been published. It's got quite nice, great signage curves. We think there's definitely potential for a mine there and we're working hard on that.

Just to be clear, we're focusing on upgrading our competence level. And then once we've done that, we can then move to a feasibility study to support an initial mining operation. We're still confident that there is further material at depth along the strike and in a new mining area. It's just our approach to these things is very much to try to turn to account and generate cash from what we know we've already got, rather than take time and money, developing a bigger resource space. The bigger resource space will come, hopefully, in time. Michael?

ESG, I'll talk a little bit about that. Most of you want to put the next slide up. Hopefully most of you will have seen our inaugural ESG report that was published last year. We are very focused on ESG. And the publication of a report really just formalizes many aspects of what the mine management at Blanket has been doing and what Caledonia has been doing. But it is recognizing now internationally that ESG is something that people must talk about, must commit to, and must actually put their cards on the table and show their credentials. So although Zimbabwe is a difficult environment and a very poor environment, we have got a very robust ESG program And really, environmental and social really applies to what goes on at the mine level and the business level inside of Zimbabwe. The governance side of that, yes, the principles that are... applied at the Caledonia level, we have always been very, very high on our governance performance. We've been listed on multiple exchanges. We know what our responsibilities are. And obviously that discipline just flows into the way we do business in Zimbabwe. So governance is a taken and then environment and social, as I've already said, we're working towards the solar farm to improve our environmental footprint. We're very conscious about the water we consume and we are doing whatever we can do because it's a very dry area where the blanket mine is. The principles that are outlined here of the areas and the topics that we focus on, these will all be applied 100% at any new operation as well. This is not just going to be a one-week wonder. This is the way we do business. And we will be very happy and we'll talk about ESG on an annual basis in a formally written report. And this is part of our DNA. Or it has been, but now it's in black and white. These are just some photographs showing the size of the current tailings dam The tailing stand is going to be mothballed during the next couple of years and we will build a new tailing stand to the absolute right standards, but this just shows the work that the management is doing in terms of vegetation on the banks of the walls of the current tailing stand. Very, very successful. We used some very clever botanists to help us with the right indigenous plants for this dry area. And yeah, that shows it is successful.

Sorry, just to interject, the new tailings dam is not because there's a problem with the existing tailings dam. We need a new tailings dam because the vine is continuing to produce and the old dam has outlived its useful life. So the new dam, that's my reflection on the deficiency with the existing dam.

Quite right. Thank you, Mark. Okay, so I should probably let Mark do the outlook because as everyone is aware, I am standing down as CEO at the end of June. Mark is taking over as CEO. And as I've said to everyone and anybody who's asked me why, I've been doing this job for eight years. I thoroughly enjoy it. The period that I've spent in management with Caledonia. But the next phase, the next phase of development for Caledonia in terms of becoming a multi-asset producer, gold producer in Zimbabwe is going to require absolute focus For the next five to ten years, it's going to be a very, very interesting and busy period. And it would be wrong if I thought that I could carry on doing this for the next period. So it's time for me. But I stay on the board. I'm available to Mark in terms of some of my knowledge and relationships that Doug builds up in Zimbabwe. So I, and remaining a shareholder, really, really look forward to the future. So Mark, anything else you want to say about the ARPA?

No, no, no. Just to reiterate what you're just talking about there on behalf of your management colleagues on the board, we'd like to thank you for what you've achieved over the last sort of eight years or so. The next few years are going to be very exciting, but it'll be good to have you still contributing to the board. Thank you. Thanks. In terms of vision, we're clearly chasing this target production from central shops of 80,000 ounces a year, and hopefully we'll get there this year. We have a commitment to return money to shareholders. That's now going to be balanced between returning money to shareholders and retaining some cash to contribute to invest in the company's growth. And we really are very excited about not just Mali Green, but also some of the other opportunities we've been looking at in Zimbabwe. And as Steve mentioned, one of the reasons why we're stepping down is we see the next 5, 7, 10 years as being quite a high energy period for us as we grow the business from being a single asset operator to becoming a multi-project, de-risked business, again, focused on Zimbabwe. So we think having done a central shaft creates a fantastic platform for us to achieve that growth. There's quite a lot of contact for people in Zimbabwe, and I know there are some Zimbabweans on the call. It may be difficult sometimes for you to get hold of people outside Zimbabwe, so I really would encourage you to try and get hold of Deborah in Harare. Otherwise, in North America, Patrick and Paul at 3PB, they know as well. In Europe, there's Jochen Steiger. But also we have our PR advisors and our nomad in London. So I think we can go on to questions. Can we, Camilla? Yes. I do see some questions already, which I'm happy to deal with. The first one is the power supply. Power supply is the most significant operating difficulty we face. but I don't want people getting out of proportion. It's actually a problem that we believe we've got our arms around in terms of first off we have a full suite of standby diesel germ sets so we can and do often run the mine completely using diesel. It has a cost implication and an environmental implication but we can still make excellent money using diesel gen sets. So don't think that the mine is going to sit there not producing if the Zimbabwe grid falls over. Having said that, the solar project does make a contribution, but already we are focusing, we're beginning to look at a second-stage project to increase the contribution from solar further. That will include some sort of battery storage, and so it will be more expensive. So broadly speaking, a 12 megawatt facility is costing about $14 million. the cost per megawatt included batteries will be approximately twice that. So we're not going to go completely off-grid, but we will hopefully, or not hopefully, I do expect that we will reduce our average cost of power by increasing contributions from solar. So I'm reasonably comfortable that we've actually got a solution to solar. Inflation? There's another big problem in Zimbabwe. I think we've dealt with it. Our worker towards the end of the year there, what was happening is because the rate of inflation in Zimbabwe is very, very high, what happened is that the RTGS-denominated components of our labour bill increased by 40%, 50% for a six-month period. But because the exchange rate's only devalued by 10% or 15%, one should translate that higher RTGS salary back into... into dollars, it gives rise to a very significant, I think about a 25% increase in the US dollar salary bill, and that was only for six months. So to lance that ball, we took the decision late last year to pay all of our workers 100% in US dollars. So the question that someone asked was, you know, high local inflation is demotivating employees. Well, they're no longer demotivated. They currently get paid in US dollars. Now they can do what they will with their US dollars, so they're very happy. The workforce has grown more quickly than we expected, and that's because the grade rate was lower than we expected, and so we're having to move more tons to achieve the target of 80,000 ounces and that's also flowing through in terms of needing additional billing capacity and additional CIL capacity. It is at the margin, okay, it's not a significant problem. So I think that deals with inflation.

If people want to ask questions you can just raise your hand and we won't need to try and mute you.

Yeah, I think Howard's trying to raise the question. So I think Howard, if you raise your hand, I think then Camilla will unmute you.

I think David Confucius doesn't have a microphone, so I don't think he's able to speak.

I think Howie should be able to talk now. There you go, Howie, you're in.

Can you hear me?

Yeah.

Okay, good, yeah. I'm joining by both phone and computer. First... a minor question and then a few comments, all positive. Could you save $3 million in electricity once the solar plants? $3 million a year.

Yeah, the answer is supposed to be clear. It's about $3 million a year, which would equate to something between $35 and $40 dollars per ounce, which is about 5% of our online cost per ounce. Yes, Howard, completely right. There's a little bit of complexity in terms of the accounting, which I won't bore you with, but on a consolidated level, that benefit will get recognized, yeah.

Okay. Second, on your comment about the dividend, if you keep some money to grow, people will find an excuse to buy your stock. Just grow the business. They'll figure it out. Somebody figured out Buffett stock and here it is, $515,000. Made one brokerage report in 50 or 60 years. Somebody figured it out. Second, Mellie Green appears to have the potential to grow your production another 65 or 75% per year once you get it operational.

Is that correct? Well, yeah, we can't indicate it. I don't know where you get that from. We think Marley Green could support an asset of 60,000 to 70,000 ounces a year. That's about the same number.

60 over 80 is three quarters.

Yeah, yeah.

Only cost you $4 million.

Well, hold on, hold on, hold on. We've got to build it up for you, Howard. The gold won't jump out of the ground.

No, no, I understand. You have to spend money, but $4 million for almost a million ounces is pretty cheap, even in Zimbabwe. And finally, for Steve, people forget that seven or eight years ago, when the price of gold was $12.50 and Zimbabwean inflation was 4 million zillion percent, you were able to guide Caledonia through production and then plan to expand the business through the best kind of financing, retained earnings. And here we are. So on your way out. Nice job.

Thank you, Howie. And remember, the team that was with me at that time is pretty much still here. And that, I think, shareholders should really remember. There is no disruption. No disruption.

Yeah, I forgot to mention that. The nine-tenths of the team is still there. Yep. There should only be beneficial changes.

Great.

Thank you, Harry. All right. Thank you, everybody.

We've got one more question here. Hi.

Thanks, Mark. It's okay. Yes, Dondra. Just my question. My name is Shroff. Thanks, Steve. Just a quick question on the fact that we're seeing quite a number of international gold players coming into Zimbabwe and acquiring gold assets. What is your view in terms of opportunities going forward? Do you think they will remain as cheap as they are or what do you think will happen?

I think one of the prime difficulties we've faced over the course of recent years has been the quite obscenely ridiculous price expectations that people who hold Zimbabwean assets have as to what their assets are worth. And it's been a real struggle to actually get them to understand that they don't have a producing mind. They often don't have a resource base. They might think they've got gold there, but they don't know they've got gold there. And they expect people like Caledonia to spend the money to prove that the resource base So we found a big disconnect between realistic price expectations and local price expectations and hopefully that's going to moderate. Zimbabwe is a challenging place to operate. I don't want to overdo it because we're very successful at it. But if you're not operating in Zimbabwe, quite brave to jump into Zimbabwe and start developing new mines. So we have seen people come into the sector and they're very welcome, very, very welcome and that's great because it means that finally international investors investors in the gold space are now beginning to recognise the real merit for Zimbabwe in that food. We're in the water and we'd like other people to come in too, it's always nice, but we're perfectly happy to compete alongside other gold producers for assets in Zimbabwe. Perfectly happy.

Maybe just a quick comment from me Mark. We actually think having other internationally reputable organisations in the country would help investors enormously. One of the challenges is that we're the only internationally listed mining company in Zimbabwe. So you take a country like Burkina, where there's a good 10 or 12 internationally recognised reputable operators, I don't think it's justifiable that Zimbabwe is only less risky than Burkina or other countries. Not to knock those countries, but... But it's because there's lots of other people there, there's other benchmarks, there's other comparisons. So, frankly, we think we have a competitive advantage in the country, and so we're not scared of any competition. But a few other reputable players, we think that rising tide will lift all the boats and would be helpful.

So a question about... Thank you very much.

Thank you.

So a question about central shaft. Yes, the central shaft will start hoisting ore towards the end of this year. And then increasingly over 2023, we'll start hoisting more ore. And in the order of course events, the number four shaft would stop operating because number four shaft doesn't really have access to those 750 litres. But we believe that actually a reasonable prospect that we may continue to mine remnants above 750 metres. It could well be that Central Shaft keeps going for longer than we'd expected because it's mining material that we didn't expect to be mining when we set about this plan. But Central Shaft will certainly stop hoisting ore by the end of the year. As I understand it, on the solar project, everything's on its way. in-country, on its way overland or on a boat. I don't think we are at risk of any further supply constraints. I guess what's driving that question is the current news about production difficulties in China as they face another wave of COVID. As I understand it, pretty much everything we need is either on its way or on a ship.

Don't see any new questions, so let me, just on behalf of the team who have been here today, say thank you to all of you for joining. I hope you've enjoyed the presentation. As I said, the slides that we did slip through quite quickly are available on our website. Our ESG report is on our website and look out for the new one that will be published during this year. So thank you very much for attending and we will be in touch with you through our normal communication channels in the near future. Thanks a lot everyone. Bye now.