Caledonia Mining Corporation Plc

We're going to run through the presentation as always, and we will leave time for questions at the end. What we do ask, though, is if you do have a question, if you could just raise your hand and we will unmute you. We find that's a better format than the written Q&A. Okay, I'm now just going to pass you over to Mark and Chester, who can run through the presentation.

Thank you. Thank you very much, Camilla. I'm Mark Learmonth, Caledonia's CEO, and I was going to get a few opening observations and comments before I hand over to Chester. It's fair to say 2023 was a challenging year. Most of the difficulty was encountered in the first half of the year with a difficult situation at Blanket Mine and also the Bilbo's Oxide problem. Both of those are resolved and Q3 was a good quarter. Q4 started off reasonably well, it was sort of sideswiped towards the end of the quarter by a couple of unexpected things but pretty much the the the bad news relating to 2023 was dealt with in the first half having said that let's just let's just run through this so annual gold production that blanket was just over 75 000 ounces which was in line with guidance Gross profit for the year was 41.5 million compared to nearly 62 million in the previous year. And that decrease was largely due to higher production costs, in particular at the Bilbao's oxide mine in the early part of the year. It should also be noted that 2023 performance, particularly the Q4 performance, was adversely affected by higher work in progress. That was gold in a bar that hadn't been sold at the end of the year, just over 3,000 ounces. So that represents about $6 million of revenue and about $3 million of gross profit. And that was sold in the first week of January. So it's just purely a timing issue. In terms of operating costs we had expected higher labour and power costs but they were somewhat higher than we'd even expected. We are looking at measures to reduce our electricity consumption and to improve our labour efficiency and certainly on the labour side that's gone reasonably well since December 2023. On the electricity side, the issue is purely one of highly expected usage. It's got nothing to do with pricing. In fact, actually, our average unit pricing for electricity has come down. um on the good side we've the the drilling program of blanket has yielded very positive results we've put out two news releases one in july i think and then the other one in january um buried deep in the financial statements you'll find a reference to the fact that the um on the back of that drilling the life of minor blanket has been extended from 2034 out to 2041 um and that will be that statement will be followed up in in due course with a um a revised resource and reserve table. We maintain our quarterly dividend payable in April this year, which reflects the good start to 2024 and our confidence that the remainder of 2024 will be strong. We've received some preliminary feedback from the various consultants who are working on the bill about feasibility study. management and the board are evaluating those results so that we can make a capital allocation decision and we're pressing now very hard to get that work to a state of finality where it's capable of being published. Then as previously announced, the Chief Operating Officer stepped down with effect from the end of February and we're now very close to announcing the appointment of his replacement. So just in terms of summary, I've already mentioned production. You can see here for the quarter, just under 21,000 ounces compared to just over 21,000 ounces in Q4 2022. We benefited from a higher gold price, which fed through into higher revenues. Gross profits for the quarter were within touching distance of what they were in Q4 2022, because as you can see for the full year, 41.5 million compared to 61.8 million. And unfortunately, there's a lot of damage below the gross profit line, which meant that the attributable profit to shareholders was a loss in the quarter and the year. Chester will give you more information on that. So that's just some sort of headline numbers. Could we move on? So just to give you a longer-term view of what's been happening at Blanket, these graphs go back to 2012. The top graph that shows grade and tons, you can see that the tons has increased pretty much steadily from 2012 to 2023, but you will notice In the first two quarters of 2023, tons mined and milled did show a fairly sharp contraction for reasons we've previously discussed, but pleasing to see that that recovered quite well in Q3 and Q4 of 2023. Grade has in general declined, but one of the things I think we're optimistic about as we do more exploration is that the grade will stabilise and may somewhat slightly improve. Shall we move on? Okay, it's probably best if I hand over now to Chester to run through the more detailed analysis of the financial results. Chester? Thank you, Mark.

Yeah, it's good to see the revenue going up from the quarter. It was a comparable quarter. I'm asking you to increase the ounce of salt, as well as the iron-utilised salt prices received. It's marked that number as about 3,000 ounces of golden work in progress that was sold early in January. And that's mostly just for the cattle fishing. The world's needs have pretty much been flat at 5%. The tax and the new movement in Zimbabwe for several years has been fairly unchanged and inconsistent. But I think for us that's been up for the quarter, this is a comparable quarter, and it's predominantly due to the higher electricity usage. uh from when we we we added the central shaft in 2023 and we started wasting some time just with that now as we go forward with our life and mine plan we aim to move our production centralize our production to below 750 meters we're currently being online above and below and that synchronization below 750 would allow us to to shut some shafts down. The shafts down are likely to be much larger, four shafts and six ones that should reduce our kilowatt hours going forward. Now the sequencing of that and exactly how many kilowatt hours we will save, that decision is in the process and we are evaluating our various options on that. of the mass overtime has been high in october and november our initiatives has paid dividends in december and months going forward so you won't see an increase in the overtime that's been solved and we've incurred some unforeseen maintenance costs late in december of approximately 1.1 million dollars and we don't expect to incur that going forward The depreciation number has gone up, and that's where you can see the shortened useful life of some of the charts that we estimate. And going forward with this significant increase in the life of mine to 2041, we will probably see that depreciation number now coming down, but does include that shortened life of the charts going forward. Under the gross profit line, we've seen a lot of one-stop-fire costs, so if you're only searching for it, it would relate to, well, let's say $1.7 million of that would relate to the settlement payable to the former CMO. We had 1.5 million non-cash impairments on battery symbols and oxides mining utility repair. And we, for the year, we extended 4 to 1, $3.1 million on acquisition fees of all those, and that's required human analysis resources. Our next significant items would be $2.5 million of foreign exchange losses that are in that other box. So, all in all, we shouldn't see the overtime cost repeating. We don't expect the unforeseen maintenance. That's why it's unforeseen, and we should not see that going forward. Our production is looking good for Q3 and Q4, and that's carrying through to Q1. And we won't see these wants and costs that I'm just mentioning. So I'm looking forward to sharing these results with you in Q1. All in all, you can also see the blanket mine numbers remaining robust in a very tough year for us. And a blanket mine, which is underlying business cash generated, that remains strong. A tax expense, a blanket mine, has approximately an effective tax rate of approximately 37% to 42%. And while we have such a high tax rate, it's effective tax rate for the group because of a lot of non-deductible expenditures within the group, like the bulbose oxide losses. These bulbose oxide losses, they were $2.3 million for the quarter. We expect that to come down to approximately $200,000 per month. And you should see that additional costs of $13.1 million for it. When we look at the detailed cost breakdown, operating cost breakdown, our wages and salaries has gone down quarter on quarter and has seemed to reduce the action bonus. Consumables has very much stayed in check, and that's due to our inflationary environment that we've seen globally. Our procurement department has really done well to keep our prices in check with the modest increase in consumables. Electricity, we've seen the solar plant producing some of the high usage that we've experienced on our utility use, and solar plant has very much been producing a lot better than what we expected initially. We're looking at some solutions to reduce our electricity bill going forward. All those oxides, that's been placed on Theron Mountains from 1 October 2023, and as I said, that's reduced to approximately $200,000 per month. Advent expenses, that's filled up. during the 12 months, and that's also due to a few one-stop costs. We mentioned the $3.1 million we sent to our non-advisors to do our planning and provost, and our salaries and wages costs also include that $1.7 on the settlement payable to the CIO. Additional wages and salaries that we've incurred was mostly on our NYN fees, and that's to do some of our feasibility studies and also evaluate our whole body. And we've seen that paying some dividends by the increase of life and life. Taking out the 3.1 and 1.7 of the settlement, you will see that the general average cost is very much in line with inflation from 2022. Cost per ounce, you can see the effect of Bobo's in yellow. We've got some power increases. I'll explain that. we don't have to see that those are side costs coming through again and um our labor like these we reduce going forward with overtime initiatives that has paid off Looking at the ordnance standing costs, standing CapEx shoots up, and that's mostly due to a different allocation. Now that we've hit steady state, most of our CapEx moves from a non-standing place to a standing capital classification that does push up our ordnance standing costs. In all, CapEx pretty much remains the same in total. That's just how we allocate it. Taxation, I've mentioned, but we've got a high effective tax rate. That's just due to some of our losses being reinvested in things and with our taxable income improving going forward with losses like with all those off-site projects not being reincurred going forward. We should see that number improving. A slight increase was made to an active tax rate, 25.75% on 1 January 2024. Our balance sheet, our non-current assets has increased as due to the acquisition of Borbos and our solar plant that came online. If we look at our non-current liabilities, that has increased due to our overall facilities have increased, predominantly due to higher working capital needs at Blanket, with Blanket going to 75,000 to 80,000 hours producer. That's very much to fund some swings and roundabouts on our working capital and we've also issued some bonds locally to improve the local financial markets and be more resilient. Cash, currently we're sitting with a negative net cash balance of $11 million. We've got a negative 13.8% in-country in Zimbabwe, and our cash balances, the positive cash balance, remains outside of Zimbabwe. Now going forward, it should be all-out production, which you can see in our end-to-end earnings as well for Q1. The gold, the higher gold prices, we should see that negative number improving as 2024 progresses.