Caledonia Mining Corporation Plc Common Shares

Ladies and gentlemen, welcome to the Caledonia Mining Q4 results presentation. I'd now like to hand you across to Mark Learmouth, the CEO. Mark, over to you.

Good morning or good afternoon, depending on where you are. Welcome to this webinar to discuss Caledonia's results for the fourth quarter of 2024 and for the year. I'm here in Jersey. also in Jersey by Ross Gerrard, our CFO, who joined today. And then in Johannesburg, I've got James Mofara, our chief operating officer, and Victor Gapari, an executive director who is based in Harare, Zimbabwe. And in case I need them, I've got accounting support in Johannesburg and Bulawayo. OK, so shall we get into this? If you could move to the next slide, please, Tara. If you just move forwards, we've got the disclaimer next, which I think we just need to pause on, Daryl. Okay, that's the presentation team which we've already dealt with. Okay, let's move on to the summary. So record gross profit for the year of nearly 77 million. That's up 86% from 2023. That pretty much flowed down to the bottom line with net attributable profit of just under $19 million compared to a loss of $4 million in the previous year. That's reflected in stronger operating cash flow. So that's after tax and interest and working capital before capex and dividends. And that was nearly 42 million compared to just less than 15 million in the previous year. Production of blanket was within guidance, slightly towards the top end of the guidance range. And there was also continuing very small production and Bilbo's oxides, which I'll refer to very briefly. So there's a lot more information on these results as we go through this presentation. Last week, we announced that we're going to extend the period of time we need to look at the feasibility study for Bilbo's. That gives us time to assess some factors, some of which have only materialized within the last month, and to optimize the project economics. So we have a little bit more on that. We had some good exploration success at Blanket and Matapa, which has encouraged us to do more work in that area. So we'll have a slide on that. And just to say that we, on Monday, we announced a further dividend of 14 cents for the quarter, making 56 cents for the year. And it's fair to say also that we've had some fairly significant changes to the board and to management. over the course of the last year or so, with James joining us as COO in May. And that's given rise to a very substantial turnaround in the operating performance at the mine, particularly at the mine, as opposed to the metallurgical plant. And you've seen also that we've refreshed the strength of the board with some recent board appointments. And then we're joined today by Ross, who's taken over from... Chester as the CFO. So Ross is very welcome. So shall we move forward? Next slide. Before we get into this, I just want to touch very briefly on the delay in the publication of the accounts. We put out a press release about a week ago which notified people that we needed an extra week to evaluate an accounting issue that had been identified right at the end of the audit process. The accounting issue really relates to the calculation of deferred tax for the year to 31st December 2019. So this is about five or six years old. And that then flows into subsequent years. Just to be absolutely clear, this was an error relating to the calculation of deferred tax. It also flows through into the calculation of unrealized foreign exchange gains and losses. And then below that, it then flows through into profit after loss. I want to make it absolutely clear that this error had nothing to do with actual tax payments or any submissions that were made to the Zimbabwean tax authorities. And also make it very clear that this has nothing to do with cash. So the accounts that we published this morning for the year to December 2024, they also include restatements of the prior year accounts for 22 and 23. And at the back of the audited financial statements, I think note 40, you will find full disclosure of the various line items which have been affected by this restatement. But in summary, it's deferred tax, it's IFRS profit, and retained earnings. So to be absolutely clear, this has got nothing to do with cash or with actual income tax calculations. Okay, should we just move on to touch on the results themselves? Starting off with safety and production, it's probably best if I hand over to James at this stage, if you'd just like to say a few words about safety and production, please.

Thank you very much, Mark. Good day to you all. So on the safety front, I mean, following the loss of life incident that we had on the 21st of September, which was the previous quarter, which we already reported on, we embarked on a journey to see real risk reduction and to put controls, better controls to make sure that we actually move up the cave with regards to our safety. We wanted to embark on a culture, if a lot of you would remember, I joined on the 1st of May, and we wanted to embark and we realized that there was quite a lot of safety protocols that we legged on, and we had employees basically that... follow safety protocols primarily out of obligation. And the idea is to want to move the dial where employees work, not because I have to follow rules because I have to, but you need employees to have an identity that I need to follow rules because I want to. So, over and above the internal audit that we did with regards to the incident that we had, we decided to also put in place a number of measures, the first of which was to appoint a group shift manager, an experienced group shift manager coming from Harmony, who himself put a structure in place with regards to ventilation, health and safety, and split all the departments into the appropriate departments. You also looked at five other areas that we will be embarking on so that we can actually have a better safety culture on the mine. The buckets would be to strengthen governance and risk management, to strengthen emergency preparedness, to strengthen safety practices, organizational capability, and to look at the whole safety culture and improve it. So the safety culture, in terms of the safety culture, the flywheel has started to move. It's started to turn now. It's a question of getting the momentum in place. And we can already see the massive improvement that we are gaining with regards to that. In the last quarter, which is the fourth quarter of Q4, we actually had 88 out of, you know, 100, you know, exceeding three days, which is a marked improvement or the record within Q4. uh the the safety history in terms of production as well we had a very good um you know production quota and we also had a very good uh you know end of year uh ending up on 19 841 um sort of tons of ounces i mean compared to quarter three which was eighteen thousand nine hundred ninety two uh ounces i will touch um further on production uh with regards to the next slide over to you mark

Yeah, so we'll go back to production in more detail later. But it's fair to say across the board, a substantial increase in performance, obviously helped by the higher gold price. So the average realized gold price in the quarter was just over 2,600 compared to just over 1,900 in the comparable quarter. And for the year, it was just over 2,300. So for those of you who follow the gold market, that won't come as a great surprise to you. And clearly that supports the Substantial increase in revenue also supports the increase in gross profits, so $21 million for the quarter and $77 million for the year compared to clearly lower numbers previously. I already mentioned the increase in net profit distributable to shareholders. One thing I would just draw to your attention, we declared a dividend again, 14 cents, just to reinforce the fact that previously we used to declare dividends on a sort of metronomic quarterly basis. We've disclosed for several quarters now that that's now been changed slightly so that we declare the dividend at the same time as the board approves the accounts. It just sort of streamlines board processes. Now, for most quarters, that doesn't really make much of a difference. But for this particular publication of Q4, it does mean that the dividend that we declared or we used to declare in Q4 and pay at the end of sort of march or something that does get pushed out a bit so there is a little bit of a phasing issue but for the year the the total dividend is 56 cents and that hasn't changed should we just go into a little bit more detail on um on production uh james can i can i ask you to talk to to this slide

Thank you very much, Mark. So as already previously stated, we had a very good end of year and Q4 in particular, ending up on 76,656 ounces, which is a 1.6% improvement compared to 2023. The tons for 2024, which is 797,000 tons, 479, is a record. As you can see from the graph, it's the first time that we actually hit those sort of numbers, which is at 3.5% higher than the 2023 number. And this was primarily as a result of three areas that we saw quite a good improvement. It was better utilization of our central shaft, which is now fully operational after all the work that we've done over the years. It was, secondly, as a result of better equipment availability that we have underground. And thirdly, it was also due to better labor productivity within our sections. As you see that the grade has remained almost the same for a number of years, almost from 2014 to where we are. But if you look at sort of year on year, we actually went down from 3.25 to 3.2 from 2024 to 2023. Although specifically quarter four was 3.18 grams per ton, quarter three, which we have already reported on, We had a fall of ground in one of our hybrid stops called Eroica, which actually exposed our need for better availability, better flexibility with regards to mining space. We have ever since embarked on better development. As you can see, our turnage has been going up year on year. meaning to say that we actually need to open up more areas so that we can have better flexibility. This year's development, which is really, really well improved, and last year's by end of year, will actually help us in the years to come with regards to flexibility. The reserve grade for blanket is sitting around 3.3 grams per tonne, and we will not mine further than the 3.2 grams per tonne, which is where we expect to land in this year. The mine had an excellent production year in 2024. I mean, December month actually summed up. It was the icing on the cake where we added up on 89,727 tons, a record for the month. I mean, we had never reached such a milestone. This actually exceeded our crushing and milling capacity at Blanket. We ended up with a stockpile of 8,487 tons, which we created. And, you know, it is good to report that actually that stockpile has been growing as well, even in this financial year. So if you look at the bottom graph, one of the graphs that you see is the recovery, I mean, which has been significant. sort of taking an up and down movement. However, for the year, we ended up on 93.6% recovery, which is still very, very high, and which is our plan. Last year, it was just higher at 93.8. It was just higher than our plan, which is not really going to be sustainable. But by world-class standards, we're 93.6%. is still quite a high recovery, which we have actually managed to keep there because of the work that we've done with regards to the oxygen plant that we've installed, the Nelson concentrators that we have been replenishing over the years to make sure that our free gold recovery is on point and the tanks that we've also been installing so we can see that production is really stabilized this year we've started off with a huge stopper of 8487 and we expect that this production should stabilize and be better going into the future thanks mark yeah no thank you james i mean the difficulty we've always had or we've had over the last

year or so has been our inability to blast the ore, tram the ore, and hoist it. We had sort of, when I say breakdowns, we had breakdowns in that process somewhere. And so what James has managed to do is he's managed to get this whole operation working much more cleanly, much more efficiently. We're blasting, we're tramming, and we're hoisting, and growth of the stockpile is very welcome. That's something we've not had before. Okay, so thank you very much, James. Should we move on to the next page? What this shows is for the quarter, It breaks down the consolidated results. It shows you what's been going on at Blanket, what's been going on at Bilbo's and other, which is really sort of intercompany eliminations and head office costs. So you can see quite clearly at the Blanket level, revenue very strong. The royalty stays the same. The government royalty stays the same at 5%. Production costs at Blanket, broadly the same, about just $19 million, although we would like to get that down a bit. Depreciation very slightly down a bit. That's for sort of technical reasons. So gross profit is 20 million compared to 11 million in the previous quarter. Quarter on quarter, Bilbo's has had very little impact. So there's a slide coming later which shows how we've cauterized the losses from Bilbo's. So at the moment, we're continuing to re-leach the heat pads at Bilbo's, helped by the slightly higher gold price. And we'll continue to do that for as long as that leaching process covers the direct costs. So it's basically washing its face. Another, as I've said, is corporate and group adjustments. So shall we move on to the next slide? Okay, what you see are two graphs. Left-hand side is the online cost. Right-hand side is the all-in-sustaining cost. And it just basically shows how our costs have developed and progressed from quarter four 2023 to quarter four 2024. So looking at the online cost, you can see we had a benefit, 7% benefit as a result of putting Bilbo's back onto care and maintenance. negligible movement on power, some increase in labor. Part of that in the quarter would be we had to rely very heavily towards the end of the quarter on overtime and a special bonus system that we introduced specifically for December. Because truth be told, the first half of the fourth quarter was very difficult, largely because of sharp deterioration in the electricity supply. So had we not made those interventions, I suspect, at the end of November, I think actually quarter four would look quite sick. But thankfully, we made those interventions and we pulled quarter four around very nicely. And then an increase in consumables, which is largely... costs relating to equipment, underground pumps, LHDs, that sort of thing. So that takes the that walks the cost up from what it was in 2023 to 2024. Then you can see on the right hand side, you've got how the oil and sustaining costs moves. Some increased due to online costs, some faffing around with share based expense and sort of accounting costs. jiggery-pokery, sustaining capex, and procurement margin. It is fair to say that management is very conscious that these costs are higher than we've had historically, and we are exploring ways over the course of the next few years to get down the online cost, particularly focusing on labor and electricity. So use our labor more intelligently and actually reduce our electricity usage. And then at the oil and sustaining cost level, that will obviously benefit from any reduction in the online cost. But also, we're looking at what we can do to reduce our sustaining capex. Sustaining capex does remain very high. 2024, sustaining capex was $19 million, which equates to about $240 an ounce. 2025, it'll be about $30 million, which is about $400 an ounce. And that really goes in, that sustaining capex is going to things like development, which James has explained is important to improve our mine flexibility. It's got to go into things like milling in the tailings facility. The work on the new tailings dam continues, and clearly we need that because we need somewhere to deposit the waste. And we have continued to spend heavily on engineering to increase the robustness and the resilience of the of the equipment at blanket that higher level of sustaining capex will continue for 2025 and 2026 and then we'd expect it to begin to fall away from 2027 onwards can we move on Right, and this really just shows everything below gross profit. So we discussed revenue, we discussed online costs. Below gross profit, you've got net foreign exchange losses in the quarter, which were only $600,000 in the fourth quarter. For the year, they were much higher. So it was very pleasing to see that the... the local currency, the ZIG, has stabilized in the fourth quarter, and that's continued through into the first quarter. So we're not seeing a recurrence of the very substantial FX losses that we incurred in the first nine months of the year. Other is a rag bag of stuff. It primarily includes $2 million of retirement costs. As you'll recall, in the third quarter, we initiated a retirement program which affected just over 100 people who are over the age of 60 for manual work and 65 for non-manual and that's that was a an action that really should have been taken some time ago so we bit the bullets 104 people were retired and i'm also pleased to say that as part of that retirement program you have seen a very significant cultural shift at blanket which has contributed to the very strong performance in the fourth quarter Tax is a combination of income tax, our old friend deferred tax, and also a significant component of withholding tax that we incur as we move money around the group. The NCI, the non-controlling interest, that is the minorities at blanket. That takes you down to adjusted earnings per share for the quarter, which was 44.3 compared to two cents in the fourth quarter of 2023. OK, should we move forward? OK, this graph looks a bit stark. But all I was trying to do here is to show, to split out gross profit at Blanket from gross profit at Bilbo's. So Blanket's in the top half. And you can see that gross profit in 2022 was $17 million. down to 11 million then in that first half of 2023 blanket's performance was really not very good largely because of um of lower production and higher costs and you can see now towards the back end of 2024 we're now getting a gross profit of 22 million nearly 20 million and then just over 20 million so the point of this graph is to show that blanket as a cash generative engine is back where it should be, okay? And then on the bottom half, you can see that Bilbo has incurred losses of 3 million, 2 million and 1 million in the first three quarters of 2023. But in 2024, we've now quarterized that as Blanket is now on care and maintenance and is just running so long as it will cover its operating costs. I just want people to understand that the cash drain that was coming out of Blanket's poor performance and the cash drain that was coming out of Bilbo's has now been dealt with. Okay, should we move on to cash flow? It's quite a dense slide, but... Frankly, I think this is probably the most relevant slide of the whole thing, because really it all comes down to cash at the end of the day. So cash from operations before working capital, that's the first line. 2024, it was 65 million, which equates to about one and a quarter million dollars a week. In quarter four, it was 19 million dollars. So that's about one and a half million dollars a week. So a very substantial improvement in the rate of cash generation in the fourth quarter compared to the previous three quarters. Below that, you've got the movements in working capital. If you look at these closely, you'll see that in the year, we absorbed $10 million into working capital. And in the quarter, it was about $3.5 million. into working capital, quite substantial amounts of money being absorbed into working capital. Really, there's two main areas. One of those is inventories and prepayments. One of the ways we manage our exposure to possible devaluation of the ZIG is to make sure that instead of holding ZIG cash balances, we use the ZIGs to buy inventories. or to make prepayments as a way to reduce our ZIG holdings. So that has given rise to some increase in the inventories and prepayments. And then Receivables has increased largely because of the high gold price, which just means there's more money flowing through the system. So there has been an absorption into working capital. The other area of significance here is net cash used in investing activities, which was 32 million for the year and nearly 13 million for the quarter. That is mainly sustaining capex at Blanket. So of the 32 million spent in the year, 27 million were spent at Blanket. Of that 27 million, that's broken down in, I think, paragraph 4.4 of the MD&A. But that's broken down into the main components, being the continued work on the tailings facility and on development. Bilboza Matapa also absorbed $3 million. and that was largely on the ongoing work on the feasibility study and exploration at Matapa, which actually turned out to be rather good. Then the final thing would be cash used in financing activities. That's a combination of the Caledonia dividend, which is just under $11 million. Dividends paid to the blanket minorities, which is about 1.6. Offset against that will be increases in debt, which includes further modest issues of bonds to institutional institutions. holders in Zimbabwe are movements in overdrafts. So some improvement in cash, but we do intend at this higher gold price to focus on improving our cash position. Okay, should we just move on? And this again, very similar, this slide very similar to the one I showed you about gross profit is intended to show how the quarter on quarter cash generation in the last sort of three quarters or so has improved after the sort of the dip, the sort of hiatus in late 2022 and early 2023. OK, let's turn to the feasibility study. Work on that's progressing well with support from DRA and other technical consultants. And the feasibility study will supersede the PEA that was published in June 2024. We put out a press release last week. The fact that we want to extend the timeline that we need to complete this feasibility study. And that's for several reasons. The first is to give DRA more time to do their work. But we also want to explore some new development options which have become apparent. One of them will be the potential, and I say the potential, to export concentrate in the project Previously, we thought that we'd have very strong indications that that would not be acceptable to the Zimbabwe government and they wanted very strongly to have in-country beneficiation. But now we understand that given the complexity of processing complex gold metallurgists such as Bilbo's, the Zimbabwe government may be more flexible on this. If we can export concentrate, That will mean that we wouldn't need to incur the, whether we can get that for a short period of time or for the entire duration of the project remains to be seen. But if we can achieve that, that would significantly reduce the capital expenditure by removing the need to build a biox plant. It would de-risk the project, particularly in the eyes of North American investors who are probably more wary about BIOX than investors elsewhere in the world. And it may also have implications for the eventual tailings facility. And just looking at the tailings facility, currently the TSF, we intend to locate it on a very flat area in Bilbo's. We may be able to move it to an area at Matapa where we could effectively lean it against a hill and thereby reduce the need for one or more of the retaining walls, which again would reduce some capex. The tailings facility is the biggest component of the entire capital of the project. It's nearly $100 million. So anything we can do to reduce that cost will benefit the project. But also, having seen some good results coming out of exploration at Matapa, we want to continue to do more work at Matapa and potentially one day fold into the Bilbo's feasibility study a resource at the neighbouring Matapa property. So that's the work that's going on at Bilbo's. Just turning on to the next page, just to reiterate, and I think I've said this before, but just to We iterate our approach to funding Bill Bowes. Our objective is very simple. It is to maximize Caledonia's NPV per share. That really includes three elements to it. The first is to optimize the overall project economics. Get the best internal rate of return we can get on the project. And that's why we're looking at areas, things like the potential impact of concentrate and or moving the tailings facility. The next thing we want to do is to maximize the debt funding for the project within the constraints of financial prudence. And the whole point of this is to minimize equity dilution. And so as part of that, we're also evaluating the potential for near-term revenue opportunities elsewhere in the portfolio, by which I mean potential to re-leach heat pads at Booby, which is in the Bilbo's property, and at Matapa. We also think we may have some near-term revenue opportunities at Blanket on an oxide resource that we found late last year. But in terms of debt funding, we think the project, the Bilbo's project, has a very high capacity for debt. We think that non-recourse debt is more likely to be limited by overall banks' lending constraints of about 65% to 70% of the total cost of the project. If it wasn't for that, we believe that actually Bilbo's could carry more debt. At this stage, there's three potential funding sources which are coming into focus. And they're set out there. One of them is African DFIs. The other one will be South African commercial banks working with ECIC cover. And the third is a resource specialist credit or private equity outfits. It could be one or any permutation of those three. But it's safe to say whilst we've had preliminary engagement With all three of these groups, we can't really get down and get dirty until we have a feasibility study completed. But at this stage, all the indications that we're receiving is the project is eminently fundable. And our focus now is on how do we optimize those projects' economics with a view to minimizing dilution. Shall we move forwards? Just a word on exploration. At Matapa, the exploration focused on three areas which have historically been mined. So that's Matapa North, Matapa Central and Matapa South. Very imaginative. But we're very excited to have actually got good results from a new area called Mapudzi. Over the course of the year, we did just over 5000 meters of RC drilling, 4000 of DD drilling. And that shows widespread mineralization over a nine kilometer strike length. So this year, the program for this year is targeting shallow oxide potential at the Pudsey. And then also the deeper, deeper sulfide reserves, which in due course, if we can find anything, would form part and parcel of the Bilbo's project. So that's Matapa looking very exciting. And at Blanket, as you know, in May, we did a resource upgrade. We more than doubled our SK1300 reserves and a very substantial increase in resources. This year, we're focused on increasing the confidence level of those resources to push more into reserves. But then we're also now beginning to evaluate new areas, and that's outside the existing mine footprint. So that's on the banded ironstone formation, which is about 800 meters to the east of the current mining area. And also, we believe we've got potential for some shallow oxide resources at Blanket. So we're beginning to look more expansively at Blanket instead of the traditional areas that we're currently mining. So I think we're pretty much finished. In terms of the outlook, as you can see with James as the new COO, we're focused on maintaining stable production at Blanket. We want to get away from the gyrations that we've had over the course of the last two to three years. We're investigating near-term growth opportunities across the portfolio, Blanket, Bilbo's and Matapa. We continue to advance the work on billbows and how we can convert that into an asset, a producing asset. We're doing further exploration at Blanket of Matapa. And in the next year or so, we'll continue to invest in with a view to achieving longer term cost reductions and improving the reliability and the resilience of the blanket operation. So I think we're finished, in which case we can open this to questions.

Thanks very much for that, Mark. If I could ask people to please raise their hand if they would like to ask a question, then we will bring people in to ask the questions. If I could just... Pause for a second just whilst people raise their hands. Just give us one moment whilst people raise their hands. Okay, we've got our first question, which is from Nick Dinham. Nick, if you could please unmute yourself and ask your question.

Can everyone hear me?

Yeah.

Okay. Hi. Good afternoon. Great. Thank you. Just a couple of questions. One is, what is the status of the solar power project, the sale of that asset? That'll be the first question.

Sometime this week, we expect. Next.

So the second question is to James. It's a little bit about your sense of reliability of what you can produce out of the mine. I know we have a target that's gold related. It seems to indicate that you should be able to pull out 800,000 tons out of the shaft, not necessarily process it in the next year. Is that the right sort of number we should be pegging into our models?

Yes, Nick, that's the right sort of number. 800,000 we should pull out of the mine, yes.

Excellent. Okay. Well, welcome, because that's a very stable number. The third set of questions relates to Bilbo's, and it's back to you, I think, Mark. The tie-in with getting a resource or a reserve out of Matapa somehow gives me a sense that this could be almost like a year or two years to develop a reliable reserve that you could weave back into your feasibility study. That's the first question about the Bilbo's.

Oh, sorry. We'll take as long as it takes to get the best project we can. So if we feel we've got a project that works, that's fundable based on just what's at Bilbo's right now, that's fine. We'll run with that and we can introduce Matapa at a later stage. If we feel that the introduction of Matapa would materially affect the equity and the debt story, we owe it to ourselves to consider that. So like I say, if you go back to what I said, we'll consider things on the basis of net present value per share. And that includes the effect of any delay in the project. Time value of money. So the various sort of competing tensions will be optimize the project in terms of maximizing NPV, minimizing dilution, and doing something quickly or slowly.

Okay.

Sorry, no, that's fine.

Thank you. The second thing was you're talking about maybe a change in the tailings dam strategy because you're looking for a hill. But you also mentioned in passing that it could affect what you do. Now, obviously, the input there is if you are able to get your concentrates treated by somebody else, the nature and designation of the TSF is going to change. Is that what you're thinking about?

Correct, yeah. Now, that really only works if we can get permanent permission to export concentrate. So if we only get temporary permission, that will still mean that we're going to need to set the tailing facility up from the outset so that it can receive material from a biox plant, even if that biox plant may not be in place for two years.

100%. Okay, so finally, the toll concentrate idea is awesome. So I mean, from an outsider's perspective, but there does seem to be a other side of the coin, which you may be limited in scale and volume of those exports, simply because one can't imagine that too many people within the economic catchment area of your concentrates are going to be able to accept what you initially proposed to be your production.

Yeah, correct. And I would just say this opportunity has emerged very, very recently. So we do need time to consider it. And there are swings and roundabouts. You're quite right. So it's something we need to consider. But this has only materialised within the last four or five weeks.

That's great. Thanks very much for that. We're now going to move on to Howie Flinker. Howie, if you'd like to unmute yourself and then start. Talk to the team. Hello, Mark.

Hello, Victor. I have three short questions. One, do I read correctly that your bank debt is down to about $2 million?

No, slightly more than that. We, our net, it's in the slide somewhere. Now, our net cash would be, let me just find it.

I think your cash exceeds that.

We've got more cash than debt, yeah, but the strategy will always be to have debt in country and cash out of the country. That will always be the strategy.

Okay. Second, are your taxes going to be 42% as they seem to be in the fourth quarter?

Pretty much. So if you were to look at... In the MG&A, we break down the tax. We break it down into Zimbabwe income tax, Zimbabwe deferred tax, South African income tax, and various bits of withholding tax. If you look at Zimbabwe income tax plus Zimbabwe deferred tax, and express that as a look at that as a percentage of gross profit, which equates pretty closely to blankets PBT, you will actually find that that rate is about 20 odd percent, 20, 24 percent. So that's the underlying The commercial tax rate in Zim is 24%. On top of that, we incur tax leakage. I think it's about a million dollars of withholding tax as we move things around the group. The management fees that we pay from Blanket to South Africa aren't tax allowable in Zim. But they also incur withholding tax. And then we have all of the expenses that we pretty much incur outside blanket. So that will be in Johannesburg, Harare and here in Jersey aren't offsetable against profit because either here in Jersey, it's a zero tax regime or there is no taxable profit. So you'll find that we're doing the best we can, but you're going to find that our effective tax rate does remain somewhat high because of structural inefficiencies, but not things that we can readily address.

And the last question is probably some technical error. I got a weird announcement this morning that you bought back 11,500 shares at $42 or something like that. Is that some technical error by the service provider?

I got quite excited about that. Yeah, so that's a company called Caledonia Investments, which is a UK investment trust. And somehow, I don't know how it happened, but somehow their announcement ended up on our website. I think it's been rectified.

I thought it was odd, but I wanted to verify that.

I got slightly excited about that as well.

That's all I have. Thanks. Thank you, Harry.

Thank you.

Thank you. Our next question comes from Tate Sullivan. Tate, if you please go ahead, unmute yourself and put your answer to the team.

Great, thank you. Hi, Mark. You mentioned retirement expenses in 4Q. Are you, within your cost guidance for 2025, are you planning more retirement expenses?

No, well, they will be, but they'll be de minimis. I mean, 104 people out of a workforce of 2,200 reflects the fact that we hadn't really, well, we hadn't imposed this policy for very, very many years. And we had people doing pretty much full-on physical exercise, physical jobs. I mean, even if you're in a supervisory role, going underground is hard work. in their mid-70s, and that was clearly inappropriate. So the retirement policy will continue to be enforced, but it will now only affect a few people a year. So it will be nothing like the magnitude that we saw in 2024.

And then you paired, if I might have misinterpreted, but in terms of the 4Q costs, were some of the higher labor costs associated with the lower availability of electricity? And if so, why?

Yes, and maybe James can comment on this, but the first... The first part of the quarter was terrible because we had some really serious electricity problems. It started raining, which meant that the grid collapsed. So we were getting very poor power from the grid. Because it was raining, it was cloudy, which meant that the solar plant doesn't work particularly well when it's not sunny. There was also an equipment failure within the within the solar plant, which we managed to rectify, but it was a bit of a problem for some time. So I think pretty much, I mean, I'll hand over to James in a minute, but I think by the time we got to the end of November, things were looking a bit bleak. So James had to do some fairly fancy footwork to get his team together to raise morale and get them focused on delivering in December. James, do you want to talk about what you did? Because it bloody worked, whatever you did, hey? Yeah.

Yeah, thanks, Mark. I mean, we had a very bleak start to the quarter. I mean, we had, like Mark is saying, we had Zestas infrastructure is not that well equipped. I mean, they collapsed with the rains. We had quite a lot of high rains this last rain season. I mean, so the grid part of, you know, they supply us, you know, The wave fair had not been done, so we actually had to jump in with a lightning strike that actually caused some of our transformers to be banned. We had to run around and get that equipment to start operating again. Solar was not working. But we then regrouped the troops to say, guys, I mean, we need to get what we need to get. We've got a bit of sprint capacity within the plant that we also utilized. And unfortunately, it meant that we had to burn the midnight candle and we worked sometimes through Sundays to try and get the production mission going again. I have to say it worked.

Yeah, it worked. I mean, I don't like to see... People having to work overtime and work hard, but they were paid for it. They were incentivized to do it. And they left. They finished the quarter with their tails up. And clearly, that's now continued into this year. And it's a virtuous circle. The mine's performing well. They're getting production bonuses. Everyone's happy. So it's a virtuous circle.

And then my last question, thank you. Great context. And is for 2025 costs, Mark, is your is the greatest variable? You mentioned slight impact from higher employee costs, but is it higher costs of consumables, unpredictable electricity or another factor?

The one that is least predictable is electricity, because to be honest, if the grid collapses and or we have electricity, the solar plant works very well. The solar plant works better than we'd expected. But when it's cloudy, and I don't just mean super cloudy, just a gossamer thin piece of cloud, that will reduce your power generation by about two thirds. So if we have any interruption to power, that means we've got no choice. We have to run the diesels. They're very expensive. So that, for me, is the biggest cost risk. And over the course of the next two years, you know, we've taken a decision as the board that we must look at ways to try and insulate ourselves further, if not completely, from the vagaries of the grid, because this situation is not going to get better and we must fix it.

Thank you.

Thank you very much for your question. Just a reminder to people, if they'd like to ask a question, please raise your hand. I'd now like to invite Duncan Hay to ask his question.

Yeah, thank you. Hi, Mark. Hi, everyone. Just going back to Bilbo's and the concentrate sales scenario, you mentioned time value of money, which suggests that You don't want to hang around too long sort of waiting for approval. But is the strategy initially to try and get sort of no commit? You know, an ideal scenario would be that you self-concentrate. There's no commitment to put in the biox. Is that sort of preferred? But if you have to compromise, then the priority would be to sort of get moving on the project and try not to, you know, not hold out too long.

Yeah. So, I mean, the lever the government's typically got is they'll allow you to export concentrate for a period of time, say two years, during which or after which you're then supposed to put in a plant that can do the in-country beneficiation. And if you fail to do that, then you'll be hit with punitive taxes. So that could be one option, unless the government just decides that, you know, frankly, they'd rather have a project than not have a project, in which case export concentrate forever.

Yeah, because that's what they've been doing on the platinum side, isn't it?

They've reduced... Yeah, the platinum side, that's where they have actually held out and forced the platinum producers to do low in-country beneficiation. But, you know, I think there seems to be an increasing... pragmatism from government. So we'll explore it.

Yeah. Okay. All right. Thank you.

Thanks very much. We have got no further questions at the moment. So Mark, maybe back to yourself for any closing remarks.

No, look, it was a substantial improvement in 2024 compared to 2023. Very pleased to see stability of the ZIG, and that's continued into 2025. Very pleased to see an improvement in cash generation and much better reliability in terms of mine performance. And we're genuinely very excited about some of these near-term opportunities, which could make a significant contribution to our cash generation. So I think we've come through a fairly difficult 18 months or so. And I'm hopeful that certainly Q4 and then into Q1, you'll begin to see a substantial improvement. So look forward to sharing that with you. Thank you.

Thanks very much, Roddy. That concludes the presentation today and look forward to speaking to you again soon.