Caledonia Mining Corporation Plc

Ladies and gentlemen, welcome to the Caledonia Mining Q1 results presentation. I'd like to hand over to Mark Learman, CEO. Mark, please go ahead.

Thank you. If we could go to the disclaimer page, please. And forward looking statement. Okay, so the standard disclaimer forward looking statement, which I assume everybody will take note of. If we could just go to the presentation team next, please. Okay, I'd just like to introduce the team. So, there's myself, Martin Leobold, I'm Caledonia's CEO. I'm in Jersey today, and I'm joined by Ross Gerard, who is our CFO. He's sitting next to me. In Ferrari, we have Victor Capari, who's an executive director of the company. Also joined by James Mofaga, our Chief Operating Officer, who's in Johannesburg. And he's with Craig Harvey, who is our Vice President, Technical Services, who will say a few words about our exploration programme and our near-term revenue opportunities. We're also joined by Luciano Tocca from Blanket Mine. He is the Group Safety Health Director. a few words about our new initiatives on safety. Then also in attendance, we have Maurice Mason, Vice President, Corporate Development and Investor Relations, and Camilla on Group Con. So it's quite a large team and we're going to cover quite a lot of ground. So some of the slides I'm going to speak to quite quickly to leave space for colleagues. So if we could just move on to the next slide, please. So I'm not going to go into this. I'm not going to start throwing numbers around because Ross will do that. But it was next in the quarter. Strong financial performance, record gross profit. We strengthened the balance sheet, more particularly after the end of the quarter, so in early April, with the successful sale of the solar plant. But Ross will tell you more about that. Clearly helped by the higher gold price. We realised just under $2,900 an ounce, which helped everything. But then also a good operational performance. Production was strong. We improved. produced and sold 19 000 ounces of gold compared to 17 and a half in the comparable quarter but one thing i would just like to touch on is that final bullet point i just want to draw your attention to some of the steps we've taken to strengthen the board and the management team so recently we've had two new non-executive directors joining stephan base who's a mining metallurgist. He was previously at ArcelorMittal. And Leslie Goldwasser, who's joined us from the States, where she'll give us help and support, particularly in terms of corporate finance and capital allocation. One Ned retired at the most recent AGM last week. That's Johan Holtzhausen. He retired as a non-AZ director and he was also the chairman of the audit committee. I just want to make the point, these changes at the board level, they're part of a structured and orderly rotation to make sure that we regularly change one or two nets rather than have a sort of a cliff effect where we have to change a lot of the sudden all of a sudden so there's nothing untoward there then finally uh ross joined as a cfo a couple of months back and he'll say a few words um just before he he starts to run through the the financial so we're very very pleased to have him could we move on to the next page Well, this is just as a summary, all these numbers will be spoken to exhaustively by colleagues. So Ross will go into more detail on the finance and James will go into more detail on operations. So given the fact we've got a lot to cover, I really wouldn't spend any more time on this page. So with that, I'll hand over to Ross to take us through the financial results. But before he does that, if we could just pause on this page to allow... Ross just to introduce himself and to say a few words about why he joined Caledonia and what the particular attraction was. So Ross over to you.

Thanks, Mark, and good afternoon, everybody. It's my pleasure to talk you through these financial results. And first time for me as a CFO. A little bit about me, Ross Gerrard. I've joined Caledonia after spending just short of the last decade with a company called Sentimen PLC, which was a FTSE 250 dual listed company. And it was taken over by Anglo Gold Ashanti late last year for $2.5 billion. During my time with Sentimen, we achieved many milestones over that time, some good and some not so good. But importantly, in the second half of my time with Sentimen, it was basically navigating the reset of a tier one mine, and that's the Saqqari gold mine in Egypt, resetting that mine for the next decade and beyond. As part of that reset, it was not just looking at production profiles and life of mine, but importantly, lowering that oil and sustaining cost base and setting that mine up to provide or be the growth engine for a multi-asset portfolio. was through consistent delivery, we were able to demonstrate this reset and basically reinforce or make the investment case for a mine in Egypt that was really a little bit of an unknown mining jurisdiction, that being Egypt. And the result exiting was really that we put both the company and the country on the map that could no longer be ignored from a mining jurisdiction or destination. So bringing that back to why I joined Caledonia, I see a number of parallels to that in terms of having a wonderful operating mine and blanket. You know, it's been producing for a considerable amount of time and importantly has a long and exciting future ahead of it. It's running well and with further optimizations and cost reductions, we have every opportunity to turn this into a real cash or a serious cash generator that will underwrite or provide a good platform for future growth and development opportunities. And many of those opportunities are already in the portfolio, which makes it even more exciting. And we operate in Zimbabwe, which is a mature mining jurisdiction and As I said, Blanket's been producing since 1907, and we have a highly skilled workforce to know how to operate in country. Personally, I'm very biased, I'll be honest. I've been born in Bulawayo, so it's great, and I'm really excited about spending more time back in country. But I believe it's an exciting jurisdiction to operate in, particularly when you look elsewhere around the world and particularly throughout Africa. I think we're very fortunate to be able to operate in the country that we do. And it's very much changing this concept of perception versus reality in terms of operations there. So I'm very excited about both Caledonia and the Zimbabwe opportunity. When you look at it, it's both the quality of the asset, the quality of the team that's already there, and the opportunities that we have to maximize this growth. It's really quite appealing and compelling. So that's me. But importantly, let's take a dive and have a closer look at the quarter. So if we can turn to the next slide, please. Our gold revenue for the quarter was up at 56 million. So that was up 46% on the comparative quarter. And this was really driven by good gold production, both in terms of blanket and Bilbo's oxides at 19,000 ounces, which was up 9% on the comparative quarter, with the added benefit of an average realized gold price of just a shade under $2,900 per ounce, which was up 42%. So this increase obviously meant that there was a higher royalty that was paid for the period, which you'll see is up a similar 47%. James Mufara, our COO, will take us through some of those operational highlights a little bit later in this presentation. But basically, it was driven by higher tons being mined and milled, which had the resultant impact on production costs. It was a great volume equation in terms of the deliveries for the quarter. And that's where you see that those production costs are up some 19% at $22.6 million against the comparative quarter. That increase was primarily due to higher labor, power and consumables costs. And we'll go into a bit more detail later in the presentation in terms of that breakdown. But very importantly, as you can see at the bottom right of the chart, we delivered a gross profit of $26.9 million, which was up 95%. And importantly, is a quarterly record. So let's just take a pause and talk a little bit more about that gross profit and trends in a bit more detail. So if we can turn to the next slide. Here you can see on the slide in terms of mapping our profile of profit over the previous periods, both 23, 24 and into 25, you can see consistent and significant increase in the gross profits through that period. What's really important is that we've increased considerably over the post those challenges in 2023, where you can see the difference in the orange line and the blue line, which is blanket standalone. And those were really the challenges in terms of what we termed as the Bilbo's oxide phase. And we no longer have that negative impact on gross profits from Bilbo's coming through. And basically, Bilbo's is able to pay its way and no longer have a negative impact. So it's a really important story in terms of how that's come together. And I talked about resets in my intro, and I think this is one clear example in terms of being able to reset the strategy and re-look at the group and the benefits and seeing that those benefits are actually being realized, both in terms of trajectory of that gross profit line, but being able to mitigate some of these challenges. So I want to move back and talk a little bit more about those production costs. So if we can turn to the next slide, please. You can see in terms of our guidance ranges and blanket online costs of £1,050 to £1,150 per ounce, our costs are slightly higher than that guidance range. And those main increases are shown on the left chart, predominantly in that dark blue colour of labour, consumables and admin costs. Some of those labor and consumable costs are really a result of those additional challenges and the overtime work to achieve the targets during the period and the production bonuses paid that were needed to achieve the quarter. We do, however, have several initiatives in place that will address these costs. And I believe that overall, the annual guidance is still well within range and will be achieved over the year. So we don't have concerns with that as these initiatives come into place. And James, again, will talk about some of the initiatives that we're rolling out. On the right of the chart, you'll see the all-in sustaining costs. And these have been impacted by admin and capital expenditure, which are higher when you're looking back at the comparative quarter. And a lot of those admin costs, again, are one-off costs. as well as having a higher CapEx profile that was scheduled for the year. So again, over the year, we expect these to be normalized and come back to within the ranges that were guided, excuse me. Some of those one-off costs, when we totaled them up, it was almost $2.2 million, or bringing it back into ounce terms, $110 an ounce, or just short of that, when backed out. So if you've backed those out against those guidance ranges, we're well within the range. We're actually at the bottom end of that range. And we'll talk about those costs in a minute. So if we move to the next slide, please. Going into a bit more detail below the gross profit lines, the first one is those foreign exchange losses. And I'm glad to say that we didn't have a big impact of exchange losses this period when compared to the previous quarter of 4.9 million. But while this was a pleasing result, we really are actively trying to manage and mitigate our impacts of any devaluations in the business. And that's an ongoing work stream. But importantly, that exchange loss is both realized and unrealized in terms of what is incurred for the quarter. So while we're well-placed, it is very much a watching brief in terms of impact to the business. You will see mention in terms of the increase in working capital. So we are deploying a lot of our cash into working capital, prepayments, stores, inventories, and the like, in trying to best minimize any impacts of currency. And again, it's been beneficial, but it is a watching brief in terms of how we go forward. Corporate was a big line item, as you will see, at $6.9 million. And again, that was due to a number of one-off settlements that were done in terms of the reshuffle of HR strategy and headcount that came through, and a number of areas in the admin section that came through. One in particular on admin that I must highlight is that the company had previously entered into a series of gold hedges or rather put options that set the floor in terms of gold prices that were to be received. These hedges or put options were basically an insurance policy that would set the floor and wouldn't mitigate or we wouldn't be disadvantaged by any upside in the gold prices. But I'm glad to say that with the gold price where it is and where it's expected to go, that those prices are above the hedge limits, which means that we've fully expensed the hedges and they've been written off in the income statement to the amount of $1.3 million that sits within that category. So it's a good position to have whilst we actually never want to use a hedge. It's like an insurance policy and you don't want to ever dive in and use that. But that has had a consequential effect on the income statement. If we can move to the next slide, we'll have a little look at the cash flows for the period. There were increased cash flows from operations. We're up at 18.7 million for the period, driven by what we've discussed already in terms of the presentation of both gold price production and costs with an increase in working capital. You can see the increase in terms of trade and other receivables that I've mentioned, and that was an active decision in terms of what we paid. Net cash from operating activities more than doubled at 13.3 million compared to 4.9 million in the comparative quarter. And even after the higher taxes, this provides a solid foundation for some internal funding for capital investments and debt production. So you can see that we did have a higher level of taxes, as I mentioned, and this was due to the good performance, but also some timing of payments that were outstanding at the end of the fourth quarter that came and were paid in the early quarter of 2025. And those higher investing spend or activities are again in line with guidance. The net cash position improved, so you'll see at the bottom of the slide, to a negative $4.6 million at the end of the quarter. And that is compared to a negative 14.2 for the comparative period, which is a great result for the three months. So moving to the next slide and talking about what that means for cash flow, we've been really pleased with our results and the ability to capitalize on both gold price or for good production base. And with a focus on costs, we expect this to continue. This slide shows our cash held across the various jurisdictions and how this has evolved over their quarters. But the second graph below is really the exciting one, which shows the consistent increase in cash each quarter, which is really, really pleasing. And that consistent delivery of both ounces and benefited by the gold price, we expect that to continue further on into 2025 and for the full year ahead. However, what you don't see on this graph is that where we sit with our current cash position and following the completion of the solar plant sale in April 2025, our pro forma net cash position improved to $18.6 million, which really provides us some flexibility for growth and the growth initiatives. And we expect this cash balance to build. And we've put that cash sitting in Jersey in deposit accounts and we've tucked that away and we expect that we'll build on that good performance as we go forward. So overall, a really pleasing quarter and it gets our 2025 offer to a very good start. And with that, I'll hand across to James Mufara, our COO, who will talk us through some of the operational performance.