Caledonia Mining Corporation Plc

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,