Caledonia Mining Corporation Plc Common Shares

Hello, I'm Mark Learmonth and welcome to Caledonia Mining's Q3 2023 results presentation. We've got some technology challenges today. So the presentation has been driven by Maurice in London. Sophie's going to start sharing that screen. And if for whatever reason I get thrown off, I'll have to look to colleagues to pick this up. Maurice, can you just get through to the presentation team? That's Morris. That's right. Okay. So I'm, as I said, Bart Nibald, Caledonia's CEO, joined by Victor Capari, an executive director. He's in Harare today. Chester Goodburn, the CFO, is in Johannesburg. Maurice Mason, Vice President Corporate Development, and Camilla are both based in London. And Dana sends his apologies. He's traveling in Zimbabwe today. So as usual, we'll go through the slides. There'll be plenty of time left at the end of the presentation for questions. And so let's get going. So by way of summary, the production We'd already previously announced it was 22,900 ounces for the quarter, of which Bilbo's was about 1,000. So production for Blanket was just under 21,800, which was a production record for Blanket. That's a very welcome return to to production form after a very difficult quarter one and quarter two. We had some help from the gold price, which supported the revenue. Gross profit was a big improvement to what it has been in the previous quarters, but as we go through this presentation, you'll see that we do need to pay some attention to two specific areas in the cost line, being our use of electricity and labour costs, both of which we need to pay some attention to. And again, the other thing I'll take away from this sheet here is the very strong net cash inflow from operating activities of $14.5 million for the quarter, which is pretty much nearly a quarterly record. Now, clearly, that is before CapEx, and in the quarter, We were continuing to spend a lot of money primarily on the new tailings facility about which I'll talk in a moment. That's a summary of the results. Can we move on, Maurice? Yes, so by way of an overview, I mentioned that it was a quarterly production record of blanket. Consolidated online costs are better, but we can do work to improve them further. During the quarter we announced some very encouraging drilling results from Blanket and that work continues. Pretty much two thirds of every hole we drilled came out better in terms of width and grade. In due course that will then be fed into a revised resource statement. And then in due course, that will flow into a revised life of mine plan. But we would expect the most positive drilling results to flow through into an incremental resource and an extended life of mine for reasons perhaps we can discuss later. I really don't think blankets. It's probably more likely the blanket will extend its production. rather than increase its production. Perhaps we can come back to that in a moment. Bilbo's was returned to care and maintenance, as was previously indicated, with effect from the 1st of October when the mining contractor's notice period ran out. We expect that to result in a significant reduction in the costs of Bilbo's, from about $1 million a month to $200,000 a month. For the next quarter, the Q4, we're hopeful actually that Bilbo's will be cash neutral as they continue to collect gold from the heap leach. The EIA at Matapa has been approved and so we'll be able to mobilise on the ground in Matapa early in the new year as the drilling season starts. Then we've also received an offer to purchase the solar plant Again, we can discuss that perhaps a little bit later on. Terms not disclosed yet, but we're confident that we can sell it for more than we paid for it. And we don't need to own that solar plant. All we need to do is benefit from the cheaper electricity it produces. We don't need to have our capital tied up in that. And then the tailings facility, the new tailings facility, on which we're spending about $25 million this year and next year. We started pouring on that a couple of weeks ago, which now takes the pressure off the existing tailings facility, which was reaching the end of its useful life as we've increased tonnage throughput from 1,900 tons a day to 2,400 tons a day. When completed by the end of next year, the new tailings facility will have a life of about 14 years. So it's a long life asset. Okay, just in operational terms, there's not a huge amount to talk about. You can see it quite clearly towards the right-hand side of the top graph, the grey line, that's the tons. And you can see from quarter four to quarter one, the tons took a fairly sharp dip and have now recovered. in Q3 to where we expect them to be. The increase in grade is as planned so you know the increase that's not something we went looking for it was that was that was in accordance with the mine plan so as I mentioned the return to tons milled and target grade is behind the return in production to where we expected it to be which is good. Shall we move on? Okay, now we move on to the financial section. So I'll hand over to Chester, the CFO, to take us through these and the following pages dealing with finance. So Chester, over to you.

Thank you, Mark. Our revenues are up 15%. quarter 3, 2022 to Q3, 2023. And actually, there's an increased production from Blanket Mine. Blanket Mine, this quarter has increased its production. It's a regular quarter for us. And that shows a turnaround from Blanket's production side. Overall, we had 2.5% more ounces that we sold during the quarter. And we had an increased gold price of about 12%. Unfortunately, our production cost increased. As Mark said, the production cost at Bulbo's Oxides was reduced to about $200,000 per month. That's $600 per quarter. And we are quite pleased to see that $3.3 million that we spent on Bulbo's for Q3 come down to about $600,000 in New Year. Blanket. On the blanket side, we've increased our costs by about $1.1 million. That was due to high interest usage, as well as overtime spent on the labor. We'll come on to that a little bit later. Go down to our tax expense. We're looking at our tax expense for the quarter. We see a high effective tax rate. That's due to the, predominantly due to Bulbo's oxides that are infested and cannot be deducted against our tax expense. And if we count back the Bulbo's operating costs, you'll see that our tax expense was normalized. So we expect that to normalize to effective tax rates that we've seen in prior quarters. Just the UPS that's lower on a consolidated basis, predominantly due to the higher costs and we'll get on to the production costs on the next slide. Maurice. Looking at our salaries and wages, a blanket that very much increased due to aid count over time. We should be able to look at that over time and utilize our labor force more effectively, like we've done producing the same amount of ounces, similar amount of tonnages in 2022, to reduce that. And we'll get back to the markets and inform you about our initiatives that we will implement for the overtime and the headcount. Additionally, our kilowatt usage has been increasing over the year, and that's predominantly due to the new central shaft that we've commissioned, and we're running three shafts at the moment. We're also looking at introducing our kilowatt-per-hour usage. What's good about these two uses for this is that it should be within our control. We've proven before that we've been able to operate at lower costs, and we should be able to find initiatives to reduce these costs. On the Bilbo's Oxide side, as I've said, that cost should be one sort, but should be reduced to about $600,000 per quarter from next year, and significantly reducing our costs to what we see in our life of mine estimates Can you turn the page, please? From administrative expenses point of view, to highlight the big increases, There were some good expenditures on advisory services fees. We got down to a few and a half million ounce, four body of all those qualifieds. That was paid to the advisory fees on the fusion of that deal. Listing fees increased throughout the year, and that was due to the successful nising tier raise that we had in year one and year two. Wages and salaries increased due to the additional staff members that we've been taking over, that we took over during the Bulbos deal. And they're currently helping us with things like the feasibility study. I'm quite pleased to see that we're making some progress on that. Further, we've added some additional governance structures and introducing our internal audit department and also bolstering up our IT resources. Now, if you look at the TOEFL there, if you exclude the ones of payment to advisory fees on bulldoze, acquisition of bulldoze, we should be able to reduce our administrative expenses to very close to what you've been spending in previous quarters and years. You can turn the page, please. This is an illustrative example of our online costs. You see the contribution of all those oxides and the green block on the online costs to the left. That we believe should come down to about $600,000 a quarter. So we do have a plan for that, reducing our online costs. And we hope to find solutions to reduce our kilowatt hours to what used to be similarly labor that should come out. And if those three costs increases come out, we should be able to get our on-mine costs down to what you've seen in life of mine, between about $8.15 to $8.50 per ounce. All outstanding costs was mostly influenced by the on-mine costs, and if we fix the on-mine costs, you'll be seeing that similar to what we estimate the on-life of mine. Can we turn the page, please? Income tax. We've had a high effective tax rate, predominantly due to the bulbous oxides operation losses being ring fenced and being not deductible against our tax charges. Other than that, our taxes are are calculated in a combination of RTGS and US dollars, depending on what the transaction is denominated in. And that sort of puts it a little bit off from what you expect due to the RTGS devaluations. But if we take out the bulbous oxides costs out of the property for tax, you could see our effective tax rates normalize into what you see in prior quarters. Throughout all of this, the Zimbabwean inactive tax rate remained at 24.72%. Nothing new on the balance sheet. Firstly, our non-current assets, we increased that due to Bulba's acquisition. Our current assets have increased due to the solar sale. We plan to sell the solar plant and that's moved the solar plant about 14.2 million down to the current assets category from non-current assets. and we have to make a good profit on the solar plant and use all the power from the solar plant but not own it. We should be able to use the proceeds from the solar plant and invest in that in our future gold businesses and achieve a higher return. Other than that, the current liabilities have been fairly flat and non-current liabilities increased because of the issuance of the solar bonds earlier this year. So our cash, our cash is in the right places. We expect these cash balances to go up. Currently we are exchanging all our RTGS balances and we have mechanisms to exchange our RTGS balances. We aren't building up any cash balances in Zimbabwe that we cannot promote outside. Can we turn the page?

Yeah, can I interject here? So I just want to, before we go too much further, just reiterate more clearly something that we've said for a long time. We're moving into, well, we've always had to make capital allocation decisions, but as we move forward and with the evaluation of the Bilbo's opportunity, we have to be very clear on how we go through this capital allocation process. And as I mentioned before, our primary objective is to come up with a commercialization approach for Bilbo's and indeed all of our investments, which optimizes the net present value of the Caledonia share. So the net present value of future cash flows attributable to the Caledonia share. And that takes into account any dilution that will be needed to fund the new project. Again, something I said previously, we're not interested really in doubling production or tripling production and doubling or tripling the number of shares an issue, because that just effectively means that we've stood still. I'm going to talk a little bit later about where we are in terms of the Bilbo's feasibility study. As Chester's mentioned, we are fairly advanced in discussions to sell the solar project, which will release capital from a non-core asset at a premium to what we paid for it to recycle into our core business, which is developing and running gold mines. In respect to the Bilbo's transaction, we are considering a phased approach. So refreshing the initial feasibility study is a relatively straightforward exercise, but preparing a new feasibility study for a smaller phased approach is a brand new piece of work which requires new pit designs and all sorts of other stuff, which will take slightly longer. And it's also fair to say that whilst we have an appetite for some gearing in our overall capital structure, we, I suspect, will be relatively conservative when it comes to that. So I just thought it's worthwhile just explicitly saying a few words in respect of our capital allocation policy. Maurice, could you move on to the next page? As I mentioned, the Bilbo's gold update, this quarter, quarter just finished, quarter three will be the last one to be affected by the negative contribution or the large negative contribution from Bilbo's. We'd expect the monthly costs to reduce from a million to about 200,000. And for this quarter, Q4, we'd expect that to be broadly cash neutral as we continue to harvest some of the gold that is on the heap leach. The disappointing production from the oxides has no bearing on the quality of the underlying sulphide resource. We entered into the Bilbo transaction to acquire and develop the sulphide resource, about 2.5 million ounces at 2.3 grams a tonne. The oxides was just purely incidental. And one of the things we'd hoped to avoid doing was having to retrench a considerable number of employees. We'd hoped to avoid that, but I'm afraid we couldn't avoid that. And so we have had to to let quite a lot of people go, which ends in context, especially in the context of the recent elections was. was something we would have hoped to avoid doing, but we know where we are. We couldn't sustain that cash drain for any longer. Work continues on the revised feasibility study, as I've just outlined. The work in terms of updating and refreshing the existing large-scale project is relatively straightforward. The new work on a phased approach will probably only get completed in the first quarter of next year. And we need both bits of information to be able to make the appropriate capital allocation decisions. So we'd expect to be able to give some further guidance early in the next quarter. Could we move on? OK, so in terms of outlook, I've been going to continue producing a blanket in the targeted range of 75 to 80,000 ounces. Pretty much similar going forward. As I mentioned, the encouraging drilling results of blanket will almost certainly flow through into an increased resource base, which will probably result in an extended life of mine rather than increased production. To increase production of blanket will require probably disproportionate investment in things like mills, CIL tanks and non-productive social infrastructure, which means that it's becoming it will become more expensive just to add an extra sort of five or ten thousand ounces. And we could use that money to better effect elsewhere. As I mentioned, the feasibility study at Bilbo's, and having got the EIA approved at Matapa, as we get through the rainy season in Zimbabwe, then that would be the appropriate time to actually commit people, commit resources to the ground at Matapa. Can we move on? I think we're nearly finished. Yeah, so I think that's the end of the formal presentation. We're very happy to open it to questions. Any questions?

There are some questions. Hold on a second. We've got a raised hand.

Hello, this is Ernie Molish. How are you doing?

Fine, thanks, Lenny.

I've got a question concerning the electricity supply. How much is the electricity actually costing you? You said $2.6 million per quarter, and then could you break down how much of that is really fuel cost? in South African Rand, maybe? And then how much is coming off the solar plant?

Okay, well, 25% of the power we use comes from the solar plant. The solar, I've explained this before, it's a little bit complex, but I'll do it again. The solar plant is owned by Caledonia, not by Blanket. So Caledonia owns 100% of the solar plant. Caledonia only owns 64% of blanket. We, Caledonia, funded the solar plant. And so the benefit arising from the solar plant is crystallized at the Caledonia level, not the blanket level. So the solar plant sells its power to blankets at, correct me if I'm wrong, Cheshire, I think it's about 13 cents a kilowatt hour. It only costs about one or two cents if that to produce it. So the profit arising on the benefit arising on the solar is crystallizing at Caledonia and that's reflected in the all in sustaining cost per share, not the online cost. So it's a bit of a wrinkle, but I think you'll understand why we're doing it. Chester, the cost of the grid power, is that about 10.8 cents? Is that correct?

Yes, 10.86 cents.

Now that is, we import the grid power we import through a facility called the Intensive Energy User Group, which was a, let's say, sort of industry, a body set up under the aegis of the president, actually. And that imports power directly from Mozambique and Zambia. Now, which means that we benefit from a cheaper rate of the imported power than we would if we were buying grid power in Zimbabwe. I think the grid power in Zimbabwe just got up. Is it about 16 cents? I mean, Chester or Victor, can you... The grid power in Zimbabwe is now more expensive, isn't it?

13 point something cents. Okay.

I thought I read something yesterday which said it was going to go up even further. So we do get the benefits from the grid power that we're getting at a cheaper rate, but we still suffer a very unstable grid power supply because the Zimbabwe grid is very dilapidated, particularly insofar as it serves blanket which means that we continue to experience power interruptions and voltage spikes and troughs, which then means we have to fall back onto the diesel generators. The diesel generators, I think, will cost about 45 cents a kilowatt hour. Chester, do you have to handle, to memory, the approximate split of the power usage just between solar, grid, and diesel? Do you have that to handle? I know where it is. I just can't remember what it is. If you don't, if you don't, if you don't, we can provide it. We can provide it later. But do you have it? All right. Well, yeah. OK, well, whilst we're talking, there are some very technical things that we could try and do with the solar farm to improve the to improve the quality of the power we receive through the grid. And that's called power factor correction. And that's something we're exploring with the proposed buyer of the grid, which would mean that on the one hand, we would get less direct power from solar project. But on the other hand, it would mean that we can use a higher proportion of the grid power that we get into the IEUG and thereby displace the use of the diesel. So we'd be losing the use of some solar, but foregoing solar for displacing diesel, which would be a very powerful benefit for us. So we're exploring We're exploring that with the purchaser of the solar project. So sorry, Ernie, that was a very complex, long answer to quite a simple question. Did I answer everything or do you have further questions?

Yeah, that answers most of it. Just out of curiosity, is the solar farm already paid for or how much profit do you expect to get off the sale of that?

No, it's paid for. It's paid for in equity. We've not disclosed the price because that's an ongoing negotiation. So it's a very reasonable question, but one that is very reasonably unable to answer. But we are expected to sell it more than we paid for it.

Okay, let me turn it around. Is there a prospect of doing another solar farm if you get another 25%?

Yes, there is. And the buyer for this solar project is interested in developing its footprint further in Zimbabwe. So very much there is the option to do more solar. I've got to say, maybe we have a smaller top-up plant at Blanket. maybe, but it wouldn't be very big, that Bilbo's, if we can get, and there's no reason to believe we wouldn't be able to, if we can get power through the intensive energy user group for Bilbo's, because Bilbo's is in a much better position geographically vis-a-vis the Zimbabwe grid, Bilbo's could probably manage very effectively with imported power with relatively little in the way of power interruptions, And so the benefit of solar power for Bilbo's may be much smaller than the benefit is at Blanket. So it's not altogether clear to us whether we would actually need to put a solar project in at Bilbo's. But again, that will come out in the evaluations. But very much the buyer is the sort of buyer who's there to get bigger. And they're using the purchase of the Blanket solar project as a sort of a starter in Zimbabwe.

Okay, that answers my questions on that. I've got another question on Bilbo's sulfide project. Are you contemplating using other approaches other than biox for processing that? I know there's quite a few projects coming online in Africa where they're having different sulfide projects being exploited, and a lot of the technologies are not using biox. They're using some kind of oxidation method that's cheaper and more effective than biox.

Yeah, Victor, do you want to be able to address that, Victor? Thank you very much. Yes. You know, during the feasibility study, which we did, we did look at the various options and the option which seemed to give us confidence. the least capital cost, and also in terms of treating the material itself seemed to be biox. There are some other options which our consultants have suggested that when we do the feasibility study going forward, maybe we may look at and review, but pretty much a lot of work was done during the feasibility study, and biox seemed to be the most logical one. From a CAPEX point of view, plus also from a proximity of other operations which are using BIOX in South Africa.

It's also fair to say, Ernie, that there'd be very, very limited prospect for us to export concentrate from Zimbabwe. The Zimbabwe government has a sort of a red line, a policy red line in country beneficiation. So our ability to export concentrate, I suspect, would be... I doubt very much we'd get it, to be fair. So we've got to have something in country, which is going to get it to 99.5%. Does that answer your question, Johnny?

Yes, it does.

Thank you.

Okay. Any further questions, Camilla?

Yeah, there are a few. I'm going to deal with the raised hands first.

This is a direct question. Hello, Nick. How's it, Mark? How's it, everybody? Can you maybe take us through any changes in legislation and regulations that might have affected Blanket or Bilbo, I think, over the last six months? And obviously we've been through, you guys have been through, Zimbabwe has been through an election. Has that had any reflections?

Not that I'm aware of. I mean, the elections all seem to... Very calmly, actually, compared to what we were expecting. Victor, do you want to...

Anything that you're aware of, Victor? No, there isn't anything really from a policy perspective which has changed. The election isn't in terms of continuity of policies. We expect the policies to continue. And maybe the one which we may point out is the fact that there was a piece of legislation which said the US dollar regime or the multi-currency regime currently in place would end in 2025. They've actually extended that by another policy instrument which says it will end in 2030. But the way we look at it and also in terms of most of the officials, they're looking at it from a point of view that the day maybe the multi-currency system disappears is when certain economic conditions have been met. For instance, the inflation, the import curve in terms of forex, those are the critical things for the multi-currency regime to end. And obviously the confidence in the Zimbabwe currency.

So, I mean, Nick, clearly you have something in mind because you wouldn't, I doubt you'd have asked that question if you'd have something, you must have something in mind.

Well, what you should have been saying, Mark, is that you may be the first company to get gold through the Fidelity and export.

Oh yeah, that wasn't recent. We did, sorry, I mean, just to reinforce the point, we sell, we've been exporting gold, directly from Zimbabwe since, I think, April. So that's not new. One of the, and actually, I think really, I'd turn it around and I would say that we've seen quite a welcome period of policy stability, actually, in Zimbabwe in recent months. Perhaps I shouldn't say that because that's bound to jinx it, but pretty much we've seen things to be relatively stable. And a long way that continues because, frankly, that's the hardest thing for us to deal with is rapid changes in policy, which in the past have caused quite a lot of dislocation and caused us some headaches. But it all seems relatively stable now.

Excellent. Is this Overtime your go-to solution for shortfalls in production going forward?

No, it isn't. Overtime seems to be the go-to position for people who aren't looking at production bonuses. So no, we've got to be more We've got to have a much, much closer attention to the scheduling of labour so that we get people down the shafts into their place of work more effectively, more efficiently, and minimise the time they spend waiting to get down the shaft. That's scheduling. And again, it's not difficult. OK, so no, we shouldn't be using that amount of overtime.

Thank you.

um howie i'm not sure if i know you had a written question i'm not sure if you've got an additional question that you want i do can you hear me hello howie hi hi mark morris come on um i'm looking at your diluted earnings per share and your regular earnings per share if i take 5.6 million dollars of profit and divided by 19 million that's 24 million a 24 cents a share.

Do we have more than 19 million shares? No, we've got 19.1 million shares.

So how does the diluted earnings become 15 cents? What's the dilution?

That looks like a miscalculation.

Chester? It's the movement between quarters that makes it look odd. If you look at the diluted effect for the nine months, it's a lot smaller.

So it's a sort of quarter-on-quarter presentation, I think. I'm sure Chester will be delighted to take you through it in more detail, Ernie. But I think it's hilarious you're asking that question in this forum.

Even quarter-on-quarter, you still only have 19 million shares, no matter what quarter you take.

Chester, go on. Chester, go on.

Just, I don't believe it's, I don't believe it's, I'm confident that Chester can take you through it on a sort of detailed calculation basis. I don't think he's able to do it sort of quite off the cuff like this, but anyone can do that.

Why don't you send me a note? Yeah. Second, do I understand correctly that by putting billboards on care and maintenance, you're going to save $800,000 a month or 9.6 million a year pre-tax?

That's correct, yes.

Well, that's 45 cents a share after tax. That's a lot.

Yeah, that's why we're doing it. Well, Bill, put it the other way around. It was unsustainable. Cash average was unsustainable and we had to stop.

That's all right. As for the proposed sale of the solar plant, will you pay more in rate to the buyer than your costs now?

No.

no okay the reason the reason it's just purely their cost of funding is lower than ours hence they can pay more there's purely that's all it is only oh that explains it and finally and because it billbows the ore that you thought was there is not there Is there a way for you to claw back some of the sale transaction, the price of the transaction?

No, because... Well, actually, Victor is the vendor, and he's on his call. And I think that would be... Victor, can we claw some money back from you for the oxides?

How... Yes. Most of the ore is actually transitional. What we thought was oxide is transitional. And in the original plan, we were always going to mine the ore. But the issue was when we do the pre-stripping for the calcite project, that's when we were going to mine the ore. So basically it will come almost like a free ore in the sense that the mining costs, the waste stripping, they are already borne by the sulfide project. That's how it was going to contribute. So that ore is still there. We've mined some, some areas, okay, some areas we didn't quite get the ore, but most of the transitional ore or what we thought was oxide is actually transitional, so it is there.

And The other ore, is it oxide or sulfide? I forget which is which.

Sulfide. The sulfide, obviously, between the oxides and the sulfides, you normally get a transitional zone. So is that transitional ore from the transitional zone, you can't really process it as oxide and your recoveries will be poor. But when we actually do the sulfide project, we're able to process that by blending it together with the sulfides in certain proportions so that you get maximum recovery out of it.

okay and the main ore body as to the main ore body does that have what you think is four or five million ounces it's got two and a half two and a half m and i um another half a million at inferred but it's fair to say it's fair to say there is exploration potential but um we're not pursuing that at this stage so three plus at this time yeah but that's m m i and i yeah yeah yeah yeah

Okay. Thank you all.

Okay. Thank you, Ernie.

Thanks a lot. We've got a few written questions. So the first one is, how do you expect Bilbo's and Matapa sites to add to total revenue and profits in the next five years?

Well, it depends very much. It's impossible. Well, on Matapa, I think it's unlikely Matapa will start production in the next five years. I don't know. Bilbo's, that depends entirely on whether we go for a Big Bang approach or a phased approach and until we have that answer it's just premature to I just can't answer that question until we've we've got a clearer route on on commercialization but I mean it's fair to say that when we bought Bilbo's we worked on the basis of a big bang approach and we could still do that but we're looking for we're looking to optimize the assumptions from those which we used when we bought it. So we're looking at a further improvement. There's nothing wrong with the project as it currently stands on a big project approach. We're trying to find something that's better, better than that. So I can't translate, I can't answer that question in terms of dollars revenue. I just want to go back to that comment I made earlier on about our approach to capital allocation is we're trying to find a smarter way to commercialize this asset, which balances growth and minimizes dilution for the benefit of shareholders, not chasing revenue.

Okay. Next question is, can you talk through the rough expenditure on Bilbo's various feasibility studies? And could you go through any planned exploration programs at the various sites?

So just read that again. I couldn't just try that again.

Can you talk through the rough expenditure on Bilbo's various feasibility studies?

Okay, Victor, what's the cost of the feasibility study?

Okay, the work which we are doing now, probably to get to feasibility study, we'll probably spend something, I think just in the budget, we put something just under 5 million US dollars.

Right, Victor.

Yeah.

Okay, and that is a very broad, it includes an awful lot of, it covers many areas, doesn't it? It's quite a complex project, so it does cover many areas.

Yeah, it does cover many areas in the sense that the way we're looking at it in terms of a phased approach, it will be purely a new project at the end of the day. You have to do new designs and things like that. So unlike where we looked at the bigger project, we still look at the bigger project to see whether we can fund it. So there's an update on the course. And also in the last few months as we've been looking at it, there are a lot of areas which we already identified these areas for optimization. So that's the kind of work which we're doing. Optimization in terms of various work streams and also in terms of maybe managing the capital expenditure. Do you want to go into a bit more detail on those various work streams? Okay. I'll just pick a few. For instance, the big one where we're expecting to make quite a big saving on capital will be about the tailings facility, for instance, in terms of how we construct it and also taking a phased approach, which then reduces our peak capital funding when we start the project. So that's the big one. We expect it to be quite a big one. Plus also if we go with a smaller project, obviously we'll go with a smaller tailings facility. also in a first way so that will reduce the capex and then from a mining point of view the way the pits have been designed obviously by managing the way you do your waste stripping when you start we do expect to reduce maybe the capital expenditure at the beginning these are the major wet streams which are going on we've also looked at the issue of electricity If we are doing the big project, for instance, we'll have to build a new power line, which is about 75 kilometers. But we're having to look at that. If we do the smaller project, we're doing some work to see whether the existing line can actually be upgraded or can actually take the amount of power which we will need. We're working very closely with the power utility the Zimbabwe Power Utility on that. I think those are obviously the other issues maybe the contractor will be doing the mining. we're looking at optimizing that in the sense that if that contractor is also mobilized to do the tailings facility, for instance, we only pay one mobilization fee and things like that. His workshops, we'll have to look at his workshops. So there are many areas which we're working on at the moment that we're quite optimistic in terms of maybe coming up with a better capital estimate for this project and also better operating costs for the project.

Okay, so next up, Camilla, anything else?

Yep, there is. What are your thoughts on near-term future capex in 2019-2020? We obviously thought that was going to go down and capex has roughly been the amount of operating cash flows. Do we expect that to decline, free cash flow to increase, and a larger dividend?

No, we do expect capex to go down, but I think to increase the dividend in the context of a very substantial investment programme would be... I can't see how we could possibly justify that. We would expect capex to come down and therefore free cash flow to go up. But I can't at this stage envision the dividend going up given the fact we've got a large and as yet unquantified capex program coming towards us.

And then there's one more which says, when will the current recovery at Bilbo's oxide be completed?

Victor, we've said to the end of this quarter. I mean, that's right, is it? To the end of this quarter? It doesn't trickle on into... I've got to say, first of all, let's be clear. We're not talking material amounts of gold here, OK? So let's put it in context. Victor, my understanding was that we thought that the continuing heat leach would go for quarter four and then not into next year. Is that correct?

Yeah, it should really end at the end of the year. Unless if we... If the... if the recoveries are showing still, if they're showing that we can recover any more gold. But I mean, that has to be balanced with the cost of the loss.

Yeah. Yeah. But I really would encourage you not to start focusing on the bleaching from the oxides. That really is going to be day minimize. Any further questions?

Yeah, there's one more that's just come in. How is the South African rand affecting your supply costs, especially with fuel and materials?

No, it's not. Manchester can probably talk about this better, but the South African suppliers typically charge us in rands, but at a see-through dollar price. And so we're not, and you'll notice actually in the cost analysis that Chester put up, we've not seen any increase in our consumable input costs, which I'm very pleased to see. So the simple answer is that we are not, the answer is not having an effect at all.

And there's one more. Do you plan to increase the spend on exploration at Blanket?

The Blanket, not substantially. I mean, the cost of the exploration programme at Blanket isn't particularly significant. It's more constrained by logistical, just get drilling, excavating the drill cubbies and working from there. It's not particularly expensive a programme. And we're very comfortable that the results we've seen so far and the results that we're expecting to see through the ongoing exercise will give a very substantial uplift in the resource space and life of mine. For us to go, the other exploration area that we could and we do plan to do in due course of Blanke will be a long strike. to the north and the south and also to the east about 800 meters to the east on the banded ironstone formation but again we've got many competing needs for capital and you know there's a limit to how much cash we can spend so it's not as though we've got an unlimited amount of money to spend so at the moment how comfortable that the the exploration activity of blanket is is more than fit for purpose and i think the other area we've had to spend a lot of money at blanket it's not direct on exploration but it's related it is um it is upgrading the um the it systems and the the software the software packages that we're using in the mrm department which has actually paid dividends it's very expensive um but it's paid dividends in terms of improving and making much more real time our mine planning system, which means that we can adapt to changing circumstances as we see them. And actually that we are expecting will probably crystallize in a modest reduction in some of the capital programs that we have planned for 2024, which now using the better mine planning software we've got may mean that we actually don't need to do some of the stuff that we thought we would do So that is paying for itself. So again, it's quite a long answer to a fairly short question, I'm afraid, but I hope that answers it properly. Are there any more questions? Okay, shall we just give a pause to see if anybody else wants to just a minute or so to see if anybody else wants to ask any further questions? Victor or Chester, any final observations you'd like to make based on the the questions that we've received and my attempted answers. Not from me, Mark, thank you. Okay, Chester. Okay, no more questions, Camilla? Nothing else, no. Okay, well, thank you all for attending, and we'll do this again when we publish our next quarterly results, which will be towards the end of March, and the Q4 numbers take a bit longer because the auditors get involved. Okay, thank you all for attending. Thank you very much.