Caledonia Mining Corporation Plc Common Shares

Good afternoon and welcome to the Q2 2025 results presentation for Caledonia mining. Today we are joined by Mark Lerman who is the CEO and he is going to introduce the webinar and start his presentation. Mark, over to you.

Thank you Scott. So yeah, welcome to the Q2 2025 results presentation to Caledonia. Can we just move on to the forward-looking statement or disclaimer which I Trust you will read and digest. So it's two minutes on. Okay, let's move forward to the presenting team. As Scott said, I'm Mark Limon, Caledonia's CEO. I'm here in Jersey today, joined by Ross Gerrard, a recently joined CFO. He's in Johannesburg and will run us through the financial results. We've got James Mofara, Chief Operating Officer, who's joining us today from Blanket Mining. Victor Capari in France will briefly update us on the Bilbo's project. And Craig, Vice President Technical Services based in Johannesburg, will talk to us briefly about the ongoing exploration at Bilbo's. And Morris, Vice President Corporate Development and Investor Relations, will deal with any other tricky questions that may arise. So should we just move forward? Okay, well look, it was a very strong financial quarter, underpinned by excellent production. So the financials were strong, revenue up 30% to $65 million, and net profit attributable to shareholders was up by 147% to just over $20 million, and just earnings per share was up by 155%. On the figure, that was some very strong operating cash flows. Operating cash flows rose to $28 million and we closed the quarter with $8 million of net cash. In addition to that, we had another $18 million of fixed-term deposits. So if you would go on fixed-term deposits of cash, which that's what I do, that's about $26 million of cash. From an operating perspective, Blanket Mine is an excellent production quarter. just over 21,000 ounces in the quarter, which is a record for any second quarter. On the back of that, we've increased full year guidance to a range of 77,500 to 79,500 ounces. And all of this was really underpinned by a stronger gold price. We realised just under $3,200 an ounce. As you've been aware, in the quarter we closed realised 22.4 million. I'll be clear, we never intended to own that solar plant, we only had to own it to get it built. It was always the intention to sell it. Part of the sale is that we've secured a long-term supply contract for Blanket, so we've just released the capital for use elsewhere in our core business, which is developing and running gold mines. And as you'll be aware, we've got a very strong growth We're looking at cost-saving options and a phasing approach to try and minimise the upfront capital cost of the project. Victor can update you on that shortly. We've got a $2.8 million exploration programme proceeding at Matapa, which is going well. It's also fair to say that the exploration of blankets is also going very well. The exploration of blankets has got two aspects to it. The first is just simply resource replacement. So just making sure that we replace the resources that we're depleting. But also probably with some excitement is new areas within the blanket lease, which we've never had the money or the management debt to do. We're now turning our attention to that. We're getting some quite good results out of that. So just a bit more detail, just turning on to the next page. James will talk to us about safety and production, but it's pleasing to see An improvement in our safety performance, the total injury frequency rate for the quarter and for the half year has improved. Clearly there's always further work to do, but it's good to see the general direction of travel is in the right way. James will also talk about production, which I've mentioned. I've mentioned the average gold price, revenue up from 50 million to 65 for the quarter, up from 88 to 121 million for the half year, and gross profit of 33.8 million for the quarter, adjusted earnings per share for the quarter were about 114 cents for the quarter. That includes about 44 cents from the profit on the sale of solar, so that equates to about 70 cents from operations, and that compares to approximately 40 cents that we made from operations in the first quarter. So even stripping out the benefit of solar, it's been a very good quarter. Shall we just move forward then? You know, a lot of people, as we look forward, look at how far we've got to go in terms of climbing the hill to deliver the Bilbo's project. It's also worth looking backwards to see how far we've come over the course of the last 10 years. And so all we see here is a 10-year graph from Bloomberg, which shows the gold price, the VanEck GDXJ index, and our share price, including dividend reinvestments. And it shows you that over that 10-year period, the gold price has gone from 100 to just over 300. The TDXJ has gone up from 100 to just over 400. And Caledonia Mining has gone from 100 to over 1,000. So it's a great performance over the last 10 years. But during that period, all we've done is take blackouts. The growth trajectory ahead of us is even more exciting. I think what underpins our performance over the last 10 years is two things. First of all, minimizing dilution. That is, we say that in terms of funding billboards, our objective is to minimize dilution. We really mean it. We delivered great returns over the last 10 years by keeping a very tight lid on equity dilution. There's no reason why we're going to depart from that now. The second is the importance of dividends. of a dividend payout, but we really understand the importance of dividends in terms of shareholder returns. And in certain markets, particularly Zimbabwe, which is a good source of equity for us and great support, the dividend is crucial there. So the dividend is, again, baked into our appreciation of how we run this business. Just moving forward, I think it's also worth making a few comments about Zimbabwe. We operate in Zimbabwe every day, and when you're so close to the cold face, it's sometimes what's been going on there and frankly over the last five years or so we really have seen some very encouraging signs in Zimbabwe. Physical security which has never really been an issue in Zimbabwe remains but it's become much more of a serious issue in other jurisdictions in Africa. It's just worth noting that whilst many other places have got worse, Zimbabwe has all got worse and in some respects is getting better. Foreign exchange, the foreign exchange environment in Zimbabwe has historically been super turbulent to liberalize the local market, the local exchange market. Clearly there's further work to do, but we are seeing increased liquidity for selling the local currency of the ZIG in the willing buyer, willing seller market, which is good. And we're also seeing more stability in the ZIG dollar exchange rate, which is underpinned by continued financial rectitude on the behalf of the Reserve Bank of Zimbabwe, so long may that continue. We wouldn't have achieved the results we have done without a high-quality local workforce. One of the things that's happened behind the scenes over the course of the last year or so is that we've substantially changed our management team, relocating people or taking people on in Zimbabwe. local management, and so it goes without saying that the management team in Zimbabwe really has got experience, they've got quality, and about 50% of the current management, senior management team at Blankew, that's the top 25 senior managers, out of those top 25, about half of them have been with us for a year or less. Clearly the electricity problem is in several initiatives to try and alleviate that situation for people like for big users like Caledonia or Blanquette we were a member of what's called the intensive energy user group which means that we can import power from the South African power pool, or the Southern African power pool, where there was no shortage of power availability, so we can actually import that. It's also fair to point out that the Zimbabwean authorities have been very quick to fast-track the permitting for independent power projects, be they solar or standalone coal-fired power stations. I think all of that's reflected in the Zimbabwe's ranking in the Fraser Institute's recently and that showed that Zimbabwe has come up from the absolute bottom of the table and it now ranks eighth out of the 17 African countries which are covered by the survey. So we are seeing encouraging signs in Zimbabwe and we hope that that progress continues. So with those introductory comments I'll hand over now to Ross who will run us through the financials. So Ross over to you.

Thank you Mark and good afternoon everyone. It's my absolute pleasure to talk you through the financial results for this quarter and reiterating what Mark said, it was another excellent quarter. So if we can turn to the next slide please. Just talking out through some of the headline numbers that were referred to. Gold revenue was up at 65.3 million which is up some 30% on the comparative quarter. This was driven by that good gold production, up to 21,000 ounces, in addition to the benefit of a really good realized gold price of $3,186 per ounce, which was up some 38% on the comparative quarter of 2024. This obviously meant that there was a higher royalty during the period that you'll see on the right hand side of the table, and importantly the delivery of those ounces which was really driven by higher grades and plant recoveries, and James will talk to those a little bit later in the presentation, but that did drive our production costs were up some 18% for the quarter. We will do a bit of a deeper dive into those production costs in a moment, but the end result to the high level was that gross profit number of $33.8 million for the quarter, which was up 48% and another quarterly record, a fantastic result. If we turn to the next slide, we'll just talk about that gross profit. I love this slide and it's a very simple slide with a great trajectory, but the two key messages to take away is the change in Bilbo's and the fact that it's no longer having a negative impact, so that's indicated by the orange line, and importantly the trajectory of Blanket where you see that significant increase in profit all heading on in the right direction and I guess we've got to keep that trajectory going, so really great delivery across the year and looking forward in terms of a gross profit profile. But if we turn to the next slide we'll do a deeper dive into those costs and you'll remember from the first quarter result where we spoke around our guidance where we're sitting from a cost perspective slightly above our guidance range. And you can see on the left-hand side, we're now bringing that back within range, albeit still at the top end of the range. So costs are very much still part of our focus. And, you know, we've got a number of key initiatives that we've got in play that will address that. And overall, we believe that the full-year guidance range is still on track and will be achieved. But you'll see that the three key pillars of our... in terms of labour, consumables and power indicated in those slides. I guess from a labour perspective, the key changes are really around the payments of higher production bonuses. A key component of that labour cost was an almost $2 million cost that went through in terms of bonuses, overtime and holiday pay. It's really around delivering those but also addressing certain breakdowns during the period that we had to address, and well done to the team to get on top of that. Consumables was really above budget by around $3 million, and a large portion of that was around those ZIG purchases where we've spoken about mobilisation of ZIG purchasing items like lime, mill balls, some construction materials, so there was about a million dollars that we spent in terms of accessing the willing buyer, willing seller market there, but also some overruns in terms of spend in terms of our TNNs and also some of the engineering and repairs and maintenance and electrical engineering works that got within that consumables packet. This was partially offset by the power savings that you see in the lighter blue column there, and again, credit to the team. initiatives that we've articulated very clearly in terms of having a stated objective or a project in terms of addressing a certain area and you can see the benefits for some of those power savings coming through. So well done again in terms of a key delivery. Moving to the right in terms of what it means for all the sustaining CAPEX. You know, the online costs that we've just spoken about, those flow through, so you'll see a 7.4% increase in terms of comparative quarter there. But the big bucket was that sustaining CapEx bucket, and again, that CapEx spend is on track for our full-year guidance. Traditionally, our second and third quarter are bigger quarters in terms of spending from a CapEx profile perspective. It's probably fair to say that the previous quarter in terms of comparing to this time last year was probably on the lower side just because of funding constraints. But I guess the overarching message here is our CAPEX profile is on track. We're sending it in the right bucket and we believe that full year guidance profile will be met. So great performance in terms of our individual cost profiles and if we move to the next slide we'll look at some of those costs below the gross profit line. That meant for an exchange loss line item, that's obviously a big area of constant focus for us. We are managing to deploy our SIG balances and a key position in that is being able to access that willing buyer, willing seller market. That run rate is lower than the comparative quarter. You'll see that that's dropped, and that is a combination of both realized and unrightly realized losses. So it's about a one-third, two-thirds split in terms of the full six-month period. But we're pleasantly pleased with the results in terms of where we sit for the half year, but it is an area of constant focus in terms of deployments and managing our exchange risks. The corporate line item that you see there, a lot of that includes some one-off costs in terms of restructuring that Mark had alluded to that has come through in that first half, but also some additional equity share-based payment expenses that have come through, and that was based on the metrics and the performance to date. The big items are the sale of the solar and the profit coming through. So you'll see $8.5 million as an individual line item coming through. And then equally down at the tax expense line, the good performance, the good revenues and activity that's occurred has obviously resulted in a higher tax expense. but we've also included the tax on the solar sale in that line item. And whilst that number has increased, I think it's very important that, you know, paying away and paying taxes is very important. So it's a pleasing result in terms of good performance and actually across both royalties, taxes paid, We're certainly a major contributor in terms of Zimbabwean economy and paying our government share, our fair share to government, so it's a pleasing result. But overall, a great performance, you know, ending with a profit for the period of $23.6 million, and you'll see the earnings per share there of 113.9 cents per share. And adjusting for the solar, as Mark has indicated, you're back out approximately 44 cents from that. So comparing just shy of 45 cents for the comparative quarter against 70 cents for this quarter, it's a great step up in terms of performance. So if we can move to the next slide, we'll talk a little bit more about the cash flow. Our cash flow from operations is, you know, we've really done well. We've generated some strong There has been a net increase in the working capital. You know, there's been that deliberate increase in working capital, particularly around stores and prepayments, where we've deployed and tried to use our ZIC balances and have local purchases. There are some changes in that net line in terms of timings of shipments of payments and receipts, but overall there's a deliberate position in terms of working capital to make sure that we can be robust with our operations. But the key areas that I want to speak about are our capital expenditures. So you'll see from that operating activities or cash generation, We've been able to deploy our funds across investing in our capital expenditure, so some almost $21 million for the six months in terms of capital expenditure. We've received proceeds from our sale of our solar of $22 million and equally we've been able to deploy those funds into fixed-term deposits and some derivatives. So it's been a very solid quarter and in fact six months in terms of both generating cash and closing the period with some $8.2 million of cash with that further $18 million sitting in terms of deposits. So effectively a $26.2 million cash balance. So if we move to the next slide, you'll see the breakdown of that $26.2 million on the right-hand side of the slide, both in terms of where that cash sits across the various jurisdictions, but importantly the build across the comparative periods in terms of our trajectory in terms of treasury and cash. I would highlight that the balance, the $4 million sitting in Zimbabwe, that's the abnormally high. It was really around timing and deployment of funds. So it was really timing of that. But overall, the $26 million, And actually, if you exclude the overdraft facilities, so on a gross basis, we're actually just shy of $40 million in terms of cash balances. And post the half-year result, we've been able to continue to build that $26 million up to $30 million in terms of our pro forma net cash position, basically this last week's cash balance position. The graph there shows that build-up of cash is very important and I think the key takeaway is that we try to build that cash balance to a $50 million plus number by the end of the year in terms of really having a solid treasury position. We move to the next slide. The one thing that we would like to highlight and you'll see in the published results is We'll be taking advantage of some applicable exemptions. So in terms of our quarterly reporting, we'll be following a reduced disclosure regime or reporting disclosure. So for both first quarter and third quarter going forward, we'll have a much reduced financial, both MD&A and financial set of results coming out. We are fully committed to our transparency and timely disclosure, so we'll give you all the material information and select financial results coming through, but you won't see the full sale set of MD&A financials and financials that you've historically seen. That is only for first and third quarter. For the full year and obviously half year, it'll be part of the normal cadence and you'll get the full deep dive and narrative that's going forward. So with that, it's a very solid quarter and half year and I think we're well set to enter the second half of the year and deliver on a continued good performance. And with that, I'll hand over to James Mufara, our COO,

Thank you very much, Ross. Thank you very much, Mark, for the opening remarks as well. Good afternoon to you all. If we can move to the next slide. As Mark and Ross have already alluded to, we have had a very good and solid, you know, half year, and this quarter was particularly very good. We brought to the market area that we had a very, very stringent look at our health and safety programs on the mind as part of our value of care, and we've always said we would want to improve in terms of our performance thereof. Quarter two delivered a marked improvement from quarter one in terms of our health and safety criteria that we're looking at. The number of accident-free days actually increased in the quarter from 83 to 85. And the total injuries themselves actually reduced. The lost time injuries went down as well from four to one. And the significance of the lost time is showing the severity of the accidents that we are having. They are of low energy accidents that we're actually having, witnessing. In the quarter, we also had quite a number of portals that we actually completed so that we could look at all the significant amount of defense that we want to deal with, and 52 of them were actually completed in the quarter. As part of our culture journey to see that employees work safer and better with time at Blanket Mine, we started to profile our employees for risk propensity, which is their propensity to take risks, and we started the supervisors, and we will look at this journey going forward so as to look at, you know, continuing to improve health and safety. But as we would appreciate health and safety is like sipping water up here. If you may go to the next slide, please. So in terms of the grade and the tons, which is our traditional reporting line, you will see that the orange line is the grade and the blue, the top line, the dark blue line, represents the tonnage. We're pleased to report that we had a record production in terms of tons that were milled We actually ended up on 204,915 tons for the quarter against a plan of 193,000, which is actually 6%, 11,000 tons or 6% above what we set as the plan. We also realized that in this quarter, we actually had a welcome improvement in the grade from the last quarter, ending up above planet 3.31 grams per ton, representing This was a welcome, you know, improvement, and it's a result of our continued focus on the increase in flexibility and our look at the development that we've been increasing over the years. In terms of the bottom graph, which actually represents the ounces and the recovery, You will see that we produce the record ounces that Mark alluded to, which is in record production for any second quarter. And that was underpinned by a record recovery of 94.41%. We've actually managed to get this number by three key initiatives that we actually introduced in the quarter. The first one was the introduction of tent number nine to optimize the residence time so that we could actually recover better. and optimize that so that we could have efficient leaching and efficient adsorption. We also started to have enhanced process control through short interval controls with the new management team that we've actually put at the plant. All these initiatives resulted in a record quarter two production in terms of this as alluded by Mark earlier. If you may take to the next graph, please. So, this graph shows how we actually achieved the ounces, that this was not a once-of-all, this was not that we did right at the end of the quarter, it was that we produced consistently throughout the quarter, feeding the plant with consistent growth and consistent time. and thereby producing the record production. You can see that the top line, the orange line, is the cumulative, the adjusting, what we actually did, and the bottom line, the line which is deeper, purple, is actually the line for the budget. You can see that from the first month, which is the April month, we actually, while we had a budget of 5,818 ounces, we already superseded that. We continued at a steady rate throughout the whole quarter, ending up on 21,070 ounces. This supersedes the quarter two ounces for last year, which were sitting on 20,774 ounces, and also better than the same quarter two ounces for 2023, which was sitting on 70,400 ounces. So this is really, really a record production. and done the right way consistently throughout the quarter. We may turn to the next graph, please. So this is a very nice graph which actually points out to how well the team is doing all around. So while the team has actually achieved record production on this They have also done it in a very responsible way. You can see that in terms of reserve generation, we actually added reserves in terms of the reserves that we actually generated. This is as a result of data development, which was done by the team, and then thanks to, you know, for doing this massive development being over the development targets over the quarter. And this is the results, actually, us putting back some reserves back into the iceberg. If we may go to the next slide, please. Thank you. I will hand over to Victor.

Thank you. Thank you, Jim. Thank you, Mark. Can we move to the next slide, please? What we would like to do today is to update you on where we are with the Billboards Feasibility Study. The work on the Billboards Feasibility Study is continuing at a very satisfactory pace. The work has confirmed that the project has robust economics with a high debt capacity. The main areas which we have been evaluating include our consideration of moving the tailing storage facility to Motapa, to the Motapa property, which is just next door to the Bilbo's property. Really, the benefit of this would be lower construction costs because of the topography. Whereas at Bilbo's, it's rather a flat piece of land where we would need to put the tailings facility, at Motapa we would benefit from the topography. So it will reduce the earthworks, which we have to do there. The other consideration which we have been looking at is really looking at a phased approach to the project, starting at a smaller level, at a smaller scale level, and then ramping up to full capacity. This really looks at the issues of financial prudence at the end of the day, just to make sure the amount of capital we are raising is not excessive. We've also been exploring short-term revenue opportunities across our asset portfolio. This would actually help in terms of the financing of the project. With regard to the funding, as usual, our aim... I think we've lost Victor.

We seem to have just a minor issue on vectors.

I don't know if Victor can hear me, I think we should put Victor on mute because he's lost his linkage. Yes, so Victor was saying in terms of funding, our aims, we've said this before but we mean it, is to maximise net present value per share and that is balancing growth and minimising equity dilution. That's why I started off with that graph, which shows the extent to which we've outperformed the GDXJ. That's largely because we've not diluted shareholders, and that's in our DNA. So Victor said that the reason we're looking for a smaller scale phased approach is to minimise the amount of debt we take on and hopefully to avoid completely any equity dilution, but with a prudent level of gearing. So in terms of the funding options we're looking at, the non-equity funding options, we're looking at non-recourse project finance, So there's a handful of African development finance funders who've expressed interest. We're looking at a modest amount of mezzanine funding on the basis that it is substantially cheaper than our cost of equity, and also asset-backed loans. So the final funding decision will clearly follow the feasibility study and will depend on funder timelines. Some of these funders may not be quick, but we'll do the best we can. I don't know if you can hear me.

Yeah, now I can hear you. Can you hear me now? Yeah, but we're just finished.

We're just finished.

Yeah, okay. Oh, yeah, I could hear you at the end.

That filthy French wife I could actually have got on the side. Shall we move on and talk about... We'll go to the next... Yeah.

I'll hand over to Craig, who will take us through the Butapa Exploration.

Thank you Victor, thank you everybody, good afternoon. Just while we're on the slide I just want to touch briefly on Blanket for people that are not aware. On the 23rd of June we published a Blanket deep learning press release, so that's why there's not much about Blanket actually in here. continue with our deep drilling program, we continue to get expected grades, in some cases much better, carrying on with the works and the whole intention is to maintain our resource base and kind of the 3 million ounces which delivers a mining reserve plan of about 10 years. So that's kind of what that drilling is focused on. The CEO alluded to the fact that we also have other opportunities. I haven't got results to share with anybody, but one thing that I want to leave in people's minds is that if you visit the blanket property, the one thing that you won't see a blanket is an open pit. If you go visit a number of other mining properties in Zimbabwe, well guess what, they all started off with open pits and progressed underground. So if you can go on to the topic, if you can go to the next slide. A reminder of what we are doing for the year. So we have a $2.8 million budget for the year that's mainly comprised of about 21,000 metres of reverse circulation drilling and just over a thousand metres of diamond drilling and why that weight is like that is that the previous year it was about 50-50 of diamond drilling versus reverse circulation. We now have, we feel, enough information on the geology to actually put the weights of the drilling to reverse circulation. The targets are Matalpa North and it's and is predominantly to define a sulphide resource below historical oxide pits. There's about 16,000 metres of drilling there in total. A second target is Merpuzi. The intention there is to have a look at predominantly the oxides going into the upper sulphides And why this is the case is simply at Mapuzi there is no historical open pits on site, so we do believe that if all the work is done and it is amenable to heap leaching, that the potential is there to define an offside mineral resource that can come onto our books in the near future. A little bit of further exploration at Matapa South. And to date, we have drilled about 50% of our budget. We're just under 10,000 metres. All of this drilling will be updated once we have sufficient assays coming in. So although we've drilled about 50% of our budget, from the assays that we've submitted to the local labs, the Zimbabwe labs, accredited labs, We've only received about 40% of those assays back. And so, I mean, it's very frustrating for us. But in kind of a Zimbabwean context, it's actually very encouraging. The reason for the slow turnaround is it's not just us that are submitting hundreds of samples. There's a number of other companies that are on the scene and quite clearly in a higher gold price environment have pulled the trigger on exploration, which I think both well for Zimbabwe. I think it's completely underexplored, maybe not well understood, but there's significant potential for the country. If we can just go on to the next slide, it's just a brief overview of the Tarpon North. It's made up of those open pits that you see, the pluvious pits, the boom gate, Jupiter and shore. The blue line boundary or the blue line that you see there is the Borbos property to the north. It's about 200 metres away. All the red dots is all of the first pass drilling we did during 2024 and all of the yellow dots represent the drilling that we have done and completed to date. So there will be about 50% more of those dots. The targeted aim here, and so as I said, so as we receive the assays in and we have a bulk of results that we can release, we will put out an update, but the main goal is by year end we want to have defined a sulfide mineral resource that we can declare and we can move into quite probably a study phase. If we go on to the next slide, which just shows the Pudley area. So the picture is a bit blurry, the Google Earth is not very good on that imagery, but you can see there's no open pit mines or open pit holes. Once again, all of the red is what was the first-class drilling in 2024, a bit of wider space drilling. All of the yellow is what we've done to date, And Mapudze is slightly different to the other Matapa areas because it's focused mainly on abandoned iron formation. It's got a bit of shearing. We're getting some good grades, we're getting some good widths, but we'll update the market on that as we go forward. So with that, I'll hand back over to Mark for any closing comments.

Thank you Craig. Shall we just move to the last page? So in terms of Outlook, the objective of Blanket is to achieve the target range of 75,500 to just under 80,000 ounces. Keep doing the investment to modernise and update the mine with an increasing focus on cost containment and eventually cost reduction. Continue with the investment of Blanket. We'll continue the work on the feasibility study at Bilbo's, looking at ways to... The project's a great project, just to get ways to make it better. And typically in Zim, we've always had to battle against bad things that are caught as sort of unexpected. I think in this situation, we're actually trying to make the best of good things. So build on good things that are happening for the benefit of investors. And then clearly, as Craig outlined, continue exploring at the top and looking at oxides and sulfides. So, you know, there's a lot happening. And I've got to say, these results give a very nice sort of launching pad for further activity. So with that, we'll pause for any further questions.

Thanks very much. If people would like to ask a question, if you'd ask them to please raise their hand. We'll just pause for a few seconds to wait for people to raise their hands in order to ask a question. We're going to start with our first question, which is from Ian Jocelyn. Ian, I'm going to enable you to talk. Ian, if you could please ask your question when you're ready.

Is that too heavy? Okay, good. My question related to the fact that you're generating large amounts of cash, your performance last quarter is to be commended. I also like the idea of you're trying to improve on the joint Bill Bowes Mataba project. You're trying to find ways of making it return greater, greater return on a given capital. And I also like the idea of you being totally anti-dilution. I'm absolutely in favour of that. So obviously there's an old equation, the more equity you have to put into a project or the more cash you've got to put into a project, the less you get shafted by various financial institutions. So if it comes to it, you're getting close to pulling the trigger on the project. What would your view be on suspending dividends in order to ensure that you had more cash to offer the project and therefore had to borrow less, therefore had to even raise equity less and therefore not get, what's the word, future profits expropriated by institutional organisations?

I'm going to say you've got a very drawn, differentiated view about the investor community. We'll put that on one side.

Supporting his experience.

Well, yeah, okay. The dividend, as I outlined at the outset, the dividend is very, very important, particularly in Zimbabwe. And you're right. I mean, purely objectively, if we were short of money and had to raise money, the only thing to do would be to or cut the dividend. I've got to tell you, we're working towards an outcome where we can not dilute our raising equity. Now that's still a work in progress. But the other imponderable would be the adverse effect on the share price if we did cut the dividend or impair the dividend. And frankly, you don't know what that impairment would be until you've done it, by which time it's too late. So what I can say to you is that we've worked for I don't know, 10 years or so, to build up a position as a trustworthy, credible dividend payer. And everything you say is right, but for us to throw that away would be unfortunate. So I can't give you a straight answer to that question. Minimising equity dilution alongside maintaining the dividend and eventually growing the dividend, they're two irreconcilables, but our job is to try and reconcile them.

That's all I've got. Like me, like me. point wasn't that you should do it but that you would be what's the word you're clearly open to the idea and I fully understand that I accept that There could be an adverse share price, although it wouldn't be rational because you'd be using the foregone dividend, hopefully, to a project that would yield greater returns.

The difficulty with this conversation is that people may walk away from this conversation feeling that I'm hinting that we're going to track the dividend or cut down the dividend. I'm absolutely not saying that. The other side of the coin is we never give a dividend guarantee. If you want a guaranteed revenue stream, go and buy a Swiss bond. So, you know, I'm trying to sort of navigate between those two, the silo and fringes of those two outcomes. And I'm not just going to try and do a great job of it. But, you know, the dividend is super important to us as a management tool. We know it's important to certain of our target markets. And that's all I can say. Okay. Understood. Thanks.

Thanks very much. We're going to go to our next question, which is from Mike Kozak. Mike, please unmute yourself when you're ready to ask the team a question.

Yeah, very, very good. Thanks. You guys hear me okay? Yeah. Yeah, okay, great. Yeah, good afternoon, Mark and team. Congrats on the very good quarter and the solid cash flow bill. It's nice to see. I had two questions on Bilbo's. The first one, if you've already answered, I apologize, but the first one was the feasibility study. Do you have an approximate timeline for when that is going to be completely released?

Not really, because the ongoing work about the smaller scale option is an intermediate period of time. That's why I can't help you on that at this stage, I'm afraid.

Okay. And then, okay, my second question, which I was kind of curious to the extent you can comment, You did mention, I know it's scaled down or kind of a slight change of scope. What kind of quantum for reduction in initial CapEx are we talking? I think the PEA was, I think it was $310 million. Is that, is the number now closer to $200? Is it a $250?

I think you've got to accept that the, up. Capital costs have gone up across the industry. So again, I can't really give you guidance on that. We've got a number, but I mean, to start dribbling out information, peace needle isn't going to help anybody because anything I give you is going to be inadequate and you're going to want more. But one of the things that's clear, and you'll understand this, is that the capital intensity is higher than for a bigger project and that's something we've got to bear in mind okay but the other side of the coin is do we lose do what we lose on higher capital intensity do we gain in in respect of um reduced financial jeopardy from taking on a high amount of debt and reducing or ovulating completely the need for equity dilution there's a lot of balancing to take place here that's the problem got it okay fundamentally what we're talking Just be clear, we're not talking about how to make this project work, okay, from like, no, we're talking about how to make this project the best it can be, which is a different thing.

Got it. Okay, I appreciate that, Collier. I'll jump back into you. Thank you.

Thank you.

Thanks very much. And we're going to take our next question from Harry Flinker. Harry, please go ahead. I'm going to unmute you, ready to ask your question.

Can you hear me? Yep. First, there's a typo. In the printed income statement, the four columns say six months ended. The two left-hand columns should be three months ended, and the two right-hand, six months.

Yeah, you said that a few minutes ago, which we've got, so thank you on that.

I wanted to point that out. Second, what is the tax rate on the capital gain of the solar plant?

I wish I hadn't asked that question. It is lower than we'd expected.

But there is some tax.

There is some tax, but it's not what we'd expected it to be.

Okay, but not zero. I thought it might be zero. And finally, if you were to cut the dividend in the future, you could expect your stock to drop 20% or 25%. You have to ponder that.

Well, I've passed the point I was making. Yeah. Yes, and you don't know what the effect will be until you've done it. By the time you've done it, it's too late. I can think of some fairly faulty sort of analogies, which I use internally with the management team, which I don't really use on this call, but it's one of those things you can't do without full and careful consideration. And frankly, even when you do it, you don't know where the outcome is going to take you.

You're in a great position of having future growth in Matapa or Bilbo's and producing gold at $3,300 or $3,400 generates a lot of cash inflow.

Correct. It's a great position to be in. And that's the point I was trying to make earlier. I mean, what we're looking at now is how to make this project the best it can be, recognizing the fact that the gold price is higher, therefore our organic cash generation is better, but also with an eye to the potential for near-term revenue opportunities, which are as yet indistinct but are coming into focus, which would further... further enhance that. What we're trying to avoid is a situation where, you know, we rush ahead and frankly over-dilute, and then in three years' time we've said we've raised equity, which frankly we didn't need to do, because no one's going to thank us for that.

Agreed. All right, that's it for me. Thanks. Nice job, guys. Thank you, Hans. You're welcome.

Thank you, Hans. Just a reminder to people, if you'd like to ask a question, please raise your hand. The next question is going to be from Nick Dinham. Nick, please go ahead.

Come on, Nick, don't be shy. I'm saying faintly, faintly.

Okay, I'll try to speak up here. Okay, thanks very much. Yeah, congrats, awesome. Just a couple of questions. You've been building stockpiles. I haven't yet got to the detail of what those stockpiles look like now, and it obviously underpins your production expectations. What is your stockpile strategy going forward?

I think, to me, the stockpile is slightly irritating erasing it, because it's what? It's about 30,000 ounces, so A two-week stockpile is even on the skinny side. So the fact that we're actually talking about having a stockpile that size is a source of some embarrassment and it kind of highlights where we're coming from. So the idea would be to build a stockpile in the ordinary course of events of up to six months and then leave it. But there's no intention... The rates of blasting, tramming and hoisting, if this is where you're going to go, isn't sufficiently above thing to justify further investment to increase production. It's just ordinary course of business to have a stockpile.

Okay, thank you. And the other, you're obviously getting some surprises on the great side. Maybe you can elaborate, somebody can elaborate a little bit on that. I'll probably hand that over to Craig before I reconfirm myself.

Craig?

Good afternoon, Nick. Yeah, so kind of the deeper we go on some of the blanket ore bodies, specifically around BEQR and our old favourite, Eroica, the grades that we are drilling out, and can't remember that in 2023 we did our first real big resource update. So we may have been a little bit conservative on those grades because it was the first time that Caledonia was actually doing it. But we are finding that on the ground, the in situ grades tend to be a little bit higher. And so we've got quite a big drive on dilution controls on, you know, mining guys have heard this before, on quality mining and things like that. So all of these things add up together and give us a bit of a grain sweetener.

Thank you. So when next you do your reserve estimate, which is going to be post the end of the year, we can maybe expect to see some great improvements for the reserve as a whole. Is that where we're going with that, Craig?

I don't think it's untoward to maybe see a slight uptick. It will, of course, depend on if we have mined all the high grade, you know, then you've got no high grade left to raise the reserve grade. But I think it's going to be maintained or with a slight uptick.

Thanks. The last question or two here is back to blanket. What dividends has blanket produced in this first six months period.

Ross, I guess, do you have a final thought?

Yeah, so there was a 9 million dividend declared, but that included both the Caledonia side and the Blanket side. So, yeah, there's a 10.7, so seven net to Caledonia that came through after that. the NCIs or minority distributions.

Sorry, I didn't get you.

It's just over 10, just short of 11 million or I mean it was 10.6 million from a blanket perspective.

From blanket, 11 million came from blanket. Okay. And then obviously linked to that question is the one I asked previously in the previous quarter, when will your NCIs be, do you now think your NCIs will be fully repaid, fully drawn down?

hopefully by the end of the year or very early in next year.

Okay. Thank you. And then final question for Maurice. There's some discussion about alternative sources of energy. What are you thinking about and how will this be? Will this be within, do you think, within the blanket side of things or do you think this will be Caledonia doing this?

Okay. Can I intercede that? Our thinking has evolved. We took on a very good local chapter on capital projects with enormous experience in the Zimbabwean power sector. Initially we were thinking about solar's not great, I mean the solar's fine but it only works when the sun shines and really you need a backup facility which is pretty much the grid otherwise you run the risk of losing production. So solar I'm afraid is not the answer. We were looking at other forms of captive power but actually the solution we of the power that we're getting and actually go a long way towards addressing some of the problems we're facing. So in terms of alternative sources of power that's been overtaken by a proposal that we're working on now which is to put in a sort of a 17 kilometer 10 million dollar connection to the 132 kV backbone which should materially address our problems.

Will that go in Canada? Would that go into blanket accounts?

Yeah, because blanket would benefit. Yeah, just blanket.

Okay. Well, thank you very much.

Okay. Thank you. Just a reminder, if you'd like to ask a question, please do raise your hand. Next question is from Yuen Lo. Yuen, please go ahead.

Is that it? Yep. Very good. First of all, congratulations on record-breaking quarter for breaking records. Questions for James. James, or maybe for all of you, can you give us a steer as to how quarter three production is going today? And in particular, are recoveries being maintained at around 94.5%? Hold on.

I've got to say, you are naughty. in that we've just upgraded our guidance to between whatever it is and whatever it is. We've just told you what production is going to be for the rest of the year, so I don't know why you think we're going to give you a different answer from what we've put in the press release two weeks ago. Having said that, James, what's your answer?

Yeah, so production is going pretty good, I mean, for the third quarter. And, yeah, we've got a very good metaversical team. I mean, so, yeah, we are sticking to our guidance that we put out.

Okay, thank you for that one. Let's see, just going down the list of my questions, Nick has already asked several of them. um are you able to speak more uh just to trade about uh the new discovery at uh the bank is that the one at that um is that another quartz reef or is that uh disseminated reef another the terminated reef it's part of the blanket all bodies so we have we have what we call blanket one two three four five six and so now this one has been termed blanket seven

So it's early days yet. It was a triangle of holes that picked up the zone that had good grades. So now obviously we've got to grow it and see where does it go. You know, we've got to start pinning it out.

Okay. Thank you very much. That's all my questions for today.

Thank you. Thanks very much. We have no further questions at the moment. So what I'd like to do is pass back to Mark for any final and closing remarks.

Thank you all for joining us today. It's been a good performance from the entire team, and I thank them for that. We look forward to doing it all again in mid-November, so thank you very much.

Thanks very much. That now concludes the webinar.