Caledonia Mining Corporation Plc

Welcome to the Caledonia Mining Quarterly and Four Year Results 2025 presentation for analysts and investors. I would now like to hand you over to Mark Learmonth, who is the CEO. Mark, over to you.

Good afternoon and welcome to this management conference call. If we could move to the first slide of the presentation, please. Just go to the disclaimer. So that's the standard disclaimer. If we could move on to the next slide, please. Presenting teams, there's me, Mark Learmon, Caledonia's chief executive. We're also joined by Ross Gerrard, who will run us through the financial performance for the year. Victor Capari will talk to us about what's happening at Bilbo's. And Craig Harvey will give us an update on the various exploration initiatives. If we could move on to the next slide, please. So just in terms of the summary of the results, it was very strong financial performance, underpinned by a higher gold price and some consistent operating delivery. Revenue up by 46% to $267 million. Gross profit up by 78% to $137 million. EBITDA up by 100% from just less than $60 million to just over $125 million. And the profit after tax up by 200% from $23 million to $67 million. So there's some quite big, quite big numbers there. Ross will unpack those numbers in more detail in a moment. Shall we move on to the next slide, please? Before we go much further, can we just briefly discuss Caledonia's value creation proposition? So from one angle, what we see here is looking at this from the perspective of our distributions in country to government by way of taxes and royalties and also to our local shareholders. Over the course of the last nine years, we've distributed just over a quarter of a billion dollars. So we're making a very, very substantial contribution. And you can see quite how that increased in 2025 as a result of higher taxes due to higher profitability, higher altars due to the higher gold price, but also an increase in local dividend payments to our local minority shareholders as a result of the strong financial performance and the unwinding of certain local ownership initiatives. That's very pleasing to see. But moving on to the next slide, as well as paying a quarter of a billion dollars out to local stakeholders, we've also delivered a very significant return to our shareholders. So the top line shows Caledonia's share price over 10 years with dividends, and we've given a return of just over 1,000%. Over the same period, GDXJ has increased by 464% and Gold up by 300%. So as well as making significant contributions locally, we're also delivering a very, very healthy return for our shareholders. Shall we move on to the next slide? Right, let's just quickly focus on the operating results. Clearly, we had a very unfortunate fatality in September as a result of a secondary blasting incident. As a result of that, we initiated a comprehensive review of our safety practices and our safety procedures, our operating controls and our training programs across the entire business with the objective of improving our risk management and making sure that we operate as safely as it's possible to do in a very hostile underground environment. That includes instilling operational discipline, a proactive forward-looking approach to identifying hazards and avoiding such hazards, and embedding a zero-harm culture across the organisation. We should move on to the next slide. But what we see here is the usual graph. The top graph shows our tons milled and grade. The bottom graph, the bars show the ounces. The line shows the recovery. What's notable really in the top graph is that the tons milled has been stable. We're pretty much operating the plants, the metallurgical plants, the crushing and milling and the CIL plants, pretty much operating that at maximum capacity of about 820,000 tons a year. And that's been very stable, largely because we've been able to make use of the stockpile to draw down from the stockpile on those rare occasions when the mine hasn't been delivering the tons. But also what's clear from the lower line is the extent to which the grade is lower in quarter four and quarter three than it has been historically. Part of that is due to the fact that temporarily we're mining lower grade areas as we're developing into high grade areas that will we expect to reverse into the second quarter of 2026 and the first january february we're still mining relatively low grade areas that has improved in march and also to some extent as we've been drawing down for the stockpile the stockpile itself is relatively low grade The bottom chart clearly shows the ounces, but it shows the drop in recovery, and that is largely due to the lower feed grade. The tail grade that we deposit onto the tailing facility, pretty much it's 0.2 grams a ton. We're not going to get much better than that, so inevitably that means that the difference being that the recovery goes down. Can we move on to the next slide? Craig will talk in a lot more detail about exploration towards the end of the presentation. Our exploration activities at Blanket are really targeted with replacing what we're depleting. So we're effectively standing still. Nevertheless, we've actually done rather better than that. So over the course of the year, over the course of the quarter, it was quarter four, you can see that we... we added quite substantially more tons than we depleted. And as Craig will explain later on, that will give, in due course, result in a revised reserve and resource statement for blanket. Should we move on? Right, I'll ask Ross if he could run us through the financial results. Ross, could you do that?

Thank you Mark, and good afternoon everyone. Before we dive into the financial results, I just wanted to draw your attention to the format of the reporting. And as previously advised, Caledonia is now classified as a foreign private issuer under Canadian rules. So the standard filing requirements in Canada that you've historically seen has changed. We will be filing our full financial statements under the SEC rules, so included in our 20F, which is scheduled to be filed in April. You'll see the full financial statements and controls attestation, and that's all going to be done in April. So I'm delighted to talk you through the financial results today, and you can see on the summary slide in front of you, we've had a fantastic year. The performance was really driven by the benefit of the higher gold price environment, but also delivering the ounces. Blanket Mine produced 76,000 ounces of gold in 2025, and sold 77,000 ounces. The Bilbo's oxide operation produced and sold 1,683 ounces of gold, so together they total that 79,000 ounces on the top right end of the chart. Importantly, to highlight, our online costs were up some 19%. And the unit costs were marginally above those cost guidance ranges that we had guided the market. This was really a reflection of the restriction of access to some of the higher-grade areas, but also some inflationary pressures and our continued investment in development to ensure long-term operational reliability and safety, but also that grade profile. So with grade coming through slightly lower than we had originally anticipated, that did have a flow-on impact on our unit costs, just slightly above what we had guided. The overall result, though, is a very pleasing financial result with EBITDA up 109% to 125.3 million, which was a significant improvement. And after our capital expenditure, which was largely on track to guidance, when you take into account some commitments that will roll over year-end, we delivered on our CapEx profile, and all resulting in a healthy free cash flow of $62 million, which was up some 483% on the prior year. And after our distributions resulted in an earnings per share, which was at $2.83, which again was up over 200% for the year. So a very pleasing set of financial results. Just sliding into a little bit more on production costs, so if we can turn to the next slide, please. You can see on the bottom right-hand pie chart the makeup of our production cost categories, which is largely driven by labor, consumables, and power, indicated with the blue, orange, and green slices, and then a little bit 10% across admin. You'll see in the figures our overall production costs went up 25% across the group. 19% was an increase in blanket. And really those were driven by those three buckets of labour, consumables and power. Our labour costs were up this year, again due to higher overtime payments that were made during the year and production bonuses together with some wage inflation. But really the delivery of the the ounces needed to, was a result of more volume being moved and hoisted to compensate for that lower grade. And as a result, we had to pay that overtime and the various bonuses that came through the system. Our consumer bills were up some 14% for the year. This was driven by some of the inflationary impacts on consumer bills, reagents and the like. But there is a Zig premium in terms of local procurement. So there's been a big push this year in terms of deploying our local Zig component back into the market. With that, there is a slight difference with the ZIG versus US dollar differential in terms of the local market. And I would highlight that it's been a very pleasing year in terms of foreign currency. The differential between the ZIG and the US is very close now. We're not seeing the high differentials that we've seen in the past. But it has been that as we've taken a strategic decision to deploy into the local procurement market using ZIG, we have incurred an additional premium in terms of that ZIG to US dollar differential. And we'll talk a little bit more about the overall Forex loss when we talk through the cash flows. But that has been a driver in terms of our consumables. Our power costs, there have been grid and genset power overruns, which has been really driven by supporting that additional output. We're obviously mining in deeper areas within the mine, driving higher power usage and requirements, and obviously incurring more power. And we do have initiatives in place that we will address these three buckets. as part of our ongoing costs initiatives to ensure that we can at least reduce or at least maintain our cost profiles in those significant buckets. Moving on to the next slide, please. You'll see the results as we work our way through the profit and loss. So top line revenue up at $267 million, driven by those ounces and higher gold price that I'd spoken to. Our royalty this year was up at $13.5 billion. That is driven by the higher revenue number, and I would draw your attention to the change in the royalty rates. As we deliver ounces at over $5,000 an ounce, they do attract an additional 5% royalty charge. Our production costs, as already indicated, are up some 25%. and depreciation charges were largely unchanged. So we were very pleased with our gross profit that was generated, up some 78% for the year, driven by those improved margins and thanks to the gold price. You'll see the net foreign exchange losses was down from $9.7 million down to $3.3 million this year, and again, that was a very pleasing result in terms of the exchange differential that we had historically seen, and we're very pleased with the ability to access the willing buyer, willing seller market. The $8.5 million is the profit on our solar plant. I won't talk to that. We've gone through that in previous results presentations, but it was pleasing in terms of being able to sell that asset, generate proceeds that we could then deploy across the group. I would draw your attention to the administration costs, that $20.48 million. That is higher than historical run rate and general trending that we see going forward. This year we have incurred some quite significant one-off fees, predominantly around our advisory fees related to the convertible, some additional employee costs that have gone through the system. and some other transaction costs that we don't see ongoing, and we think that run rate will come off by some 10%, 12%, more closer to a $17 million type number on a per annum basis. We've incurred a fair value loss on our derivative financial instruments, so those are the hedging instruments that we've put in place to protect our mine and the gold price at a $3,500 gold price. So those hedging instruments are really put through the P&L. We don't do any hedge accounting or anything that is nuanced to that extent. So everything goes through the profit and loss. And we were delighted with the ultimate profit before tax of $106 million, up 162%. The tax expense was higher off this great result. but also included the capital gains tax on the solar plant sale, which pushed up that tax expense a bit more than a normal run rate. But delighted with our P&L result with our overall profit for the period of $67.5 million. If we can move on to the next slide, please. I'll just quickly touch on some of those aspects from a cash flow perspective. So our cash flow from operations was up at $105 million, up 90%. I've spoken to interest in tax payments, which included that solar sale. Our capex was on track in terms of what we had guided the market in terms of expenditures, and the proceeds from the sale, the gross proceeds from the solar sale were able to be deployed into our treasury options where we deployed those into various fixed-term deposits during the year, and were able to allocate central treasury and start our treasury function as we look to bull bows and beyond. Ultimately, our net cash used in investing activities was able to then be deployed across some dividends paid. So the $19.9 million was a result of dividends paid both to our CMC shareholders of $10.8 million, but also to G. Scott and Neif, so our various partners at the blanket mine level in terms of deployment. So they got $5.5 and $3.6 million respectively. Ultimately, a very pleasing close to the period with a net increase in cash and cash equivalents of $32 million for the year, which was a great result. And if we move to the next slide, you'll see our overall liquidity and what it means is that we exited the year with cash on hand of $35.7 million. And if you add in our bullion on hand at year end, plus some gold sales receivables and our fixed term deposits, before utilization of facilities, we had almost $60 million available to us and a total liquidity of just under $55 million. So very pleasing results and a very solid position in terms of our performance for the year. On top of that, in early 2026, we were able to successfully complete 150 million convertible note offering, where after inputting a cap call structure, we received a net $130 million. So post-year end, we're in a very healthy cash position as we look to further development of Blanket, but importantly, as we start our deployment and our spend on our Bulldoze project, which I'll talk to you in a couple of minutes. So moving on, I've mentioned that CAPEX was largely on track, and you'll see our various expenditures that were aligned with guidance, so nothing that stood out in terms of where we spent the money. But ongoing sustaining capital expenditure was really about underground mine development, where we spent 22% of the CAPEX money. And that was really development and looking at new mining areas and underground developments targeting additional reserves and resources. Thirty-one percent of the spend was sitting in the engineering department, and that covered the whole bouquet of electrical, mechanical, and central shaft upgrading and engineering. And then there was 27% that went across the other mining departments in terms of mines, milling, and the MRM department. Our only non-sustaining CAPEX project was the tailing storage facility, and that accounted for 20% of the CAPEX spend. So turning to the next slide, you'll see the slice of where those various spends occurred in terms of sustaining and non-sustaining splits. But we were pleased that we were able to deliver those CapEx projects and continue to invest in the mine for the future with some solid cash flow generation. If we move to the next slide, please. Closing off on CapEx, you will see in the announcement that there's been some additional CapEx approvals by the board. So a total group capital expenditure for this financial year, 2026, is projected to be $178.9 million. The two key projects that were approved last week by the board was a $14.2 million construction of a $34 million power line connecting to the 132 kV backbone. and a $2.2 million allocation against the central winder for the central shaft, converting it from AC to DC. Both projects are great projects with quick payback periods and really underwriting some solid reliability in terms of power usage at the mine. and also some imperative upgrades in terms of the underground mine. So we're looking to the future, investing in the future, and making sure that some of these critical projects are delivered. Over and above that sustaining capex, we have $136 million allocated primarily against Bilbo's, where $132 million is anticipated to be spent against both the feed phase but also some early deployment of expenditures against the Bilbo's project, and then just shy of $4 million, which is further exploration at the Tapa project. If we can move to the next slide, please. We're delighted that the results of 2025 have delivered a solid performance, and we're continually looking at that balance of our capital allocation in terms of both growth projects and shareholder returns. And as you can see in the capex that we've both delivered and plan to deliver, we're looking at growth for the future and investing in that future for the long term, but equally conscious of our shareholder returns. So we're delighted to have another dividend, a quarterly dividend of $0.14 per share, Dividends have been paid since 2012, so we continue with that continued payment of dividends and balancing both growth and shareholder returns. And I'll just draw your attention to the key dates in terms of that dividend payment. So if we can switch to the next slide, please. I'll now take the opportunity to hand it across to Victor to talk a little bit more about Bilbo's.