Caledonia Mining Corporation Plc

Welcome to the Caledonia Mining Q2 Trading Update. We're joined by Mark Learmonth and the management team. Mark, over to you.

Thank you, Scott. Could we get into the presentation, please? Okay well morning good afternoon to you should we just quickly go to the disclaimer page okay and then on to the presenting team so I'm Mark Learmonth Caledonia's Chief Executive and we're joined today by Ross Gerrard the CFO Victor Gapari another Executive Director who's running the Bilbo's project by Craig Harvey, VP Technical Services. He runs Exploration and MRM. And also in attendance, we've got Maurice Mason, who's Vice President Corporate Development and Investor Relations. Shall we move on? Okay, just in terms of an overview, production was up 18% in the second quarter compared to the first quarter, which reflects improved access to higher grade mining areas and benefits from various operating improvements. Revenue up 16% to $76 million EBITDA up 16% to nearly $46 million supported by stronger production and a robust gold price environment Profit out of tax up 27% compared to the comparable period in 2025 up to $30 million EPS was up 29% to $1.36 operating cash flow was strong 28.4 million dollars and cash and cash equivalents at the end of the quarter was 167.8 million The growth pipeline is going well. We're making good progress at Bilbo's, as Victor will explain. We've got some very exciting exploration results coming out of Matapa, where we expect to produce a maiden resource in the next four weeks or so. And also some quite exciting exploration results coming out of the capits at Blanket. And just for the record, we've declared our usual quarterly dividend of 14 cents a share for the quarter should we move on to the next next slide okay i'm going to counter through these operating results quite quickly i mean really there's one thing that comes out and it's great so if we just move on but before we get to that let's talk about safety an excellent safety performance for the quarter we've had well now it must be over 400 consecutive days without any lost time injury and that's five nearly five and a half million Manow has worked without an LTI so that's a very good performance clearly that's a lagging indicator and the strong safety performance really reflects a couple of things the first is the extent to which we're focusing on proactive and pre-emptive risk prevention so things like you know we've undertaken risk propensity assessments on workers in high-risk areas we're putting a strong focus on near-miss reporting and things like that so trying to preempt and predict where problems might be so that we can address them and what underpins all of this is a a renewed focus on training, culture and readiness. So a very pleasing safety performance and congratulations to the mining team for achieving that. Shall we move on? Right production has recovered in the quarter and that really comes down to improved access to higher grade areas and as we said previously we've been hampered over the last few quarters by some fall of ground incidents in the course of 2025 which locked us out of high-grade areas so we've been effectively running the mine at a very low grade in the first quarter it was two and a half grams a ton in the second quarter it was about 2.88 and we're now targeting about 3.1 for the remainder of the year and we're operating at that level so higher access to higher grade areas we also in June moved the mine on to seven day working week Primarily to address worker fatigue but it also means that we've increased our blasting days by 18% and that is flowing through into increased run of mine production and from September onwards will be processing a portion of that incremental production through the through the Lima plant which will repurpose and then into 2027 we'll be spending some money as you'll hear shortly and to upgrade the main metallurgical plant to process all of that existing run of my material through the main plant This month, the end of August, we will have completed an upgrade to the Aleutian plant which will allow us to process about 40 tonnes of material that we've accumulated over the last 18 months or so at a grade of 600 or 700 grams a tonne. So that will give us an extra 1200 ounces across the months of September, October, November, December. And Q2 was well ahead of Q1 on the back of the higher grade access. So should we move on to the next page? Traditional graphs which we've seen before, I think the key things I draw out here are the top graph, the blue line, the stability that we've experienced now for many quarters and that really is because of the stockpile that we developed and we've been running. Fair to say during this quarter, quarter two, the stockpile was run down to zero and has now been, now we've started to rebuild that. since we introduced the new shift system in June. The bottom line in that top graph is the grade and you can see how the grade came down from Q2 2025 reached a low point in the first quarter and has now recovered. as I say in the second quarter running at 2.88 grams a ton target for the remainder of the year on average is about 3.16 and we're running at that level and then the bottom graph just pulls it all together in terms of looking at the the recovery and the ounces produced and it's fair to say that as the as the grade falls your recovery falls the the tail grade we can't do much better than a tail grade of 0.2 grams a ton and so frankly if the if the head grade is goes down and the tail grade stays at 0.2 that means that your recovery goes down so it is good to see that recovery bounce back again um move on So that's just an overview of the operations. It all comes down to grades. So with that, I will hand over to Ross, who's got quite a lot to cover.

Thank you, Mark, and good afternoon, everyone. Just running through the financial results summary up on the table, you can see the impact of both gold sold and gold ounces produced. So we were down for both the three months and the six months in terms of ounces. but we did benefit from a higher average realized gold price of $4,259 an ounce. So that was a 34% increase quarter on quarter. So we did produce some healthy revenues and as we go through our cost profile, that's one of the impacts in terms of higher royalties driven by those higher revenues. I will take a bit of time to go through our cost updates in terms of where we where we ended up. But the key message is really our online costs were largely in line with where we had budgeted and were managing to. So in absolute terms, whilst those costs are shown to be up, there are some one or four abnormal items that I'll talk you through in terms of why those transactions occurred. But broadly, we're very happy with our mine costs and the teams are managing their cost base very well. Those top line answers really impacted on our unit metrics in terms of an ounce sold basis. So you'll see our oil and sustaining and our online cost per ounce sold were largely up, but there was some quite significant increases on our ounce profile metric, but in absolute terms, we're broadly in line. Going into our financials, we're very happy with our EBITDA that was up some 28.5% for the six month period. And as you can see, some healthy numbers going through in terms of free cash flow and ultimate profit and earnings per share. Probably to highlight and remind everybody our free cash flow number, the comparative period included our solar sale proceeds. So that's probably not indicative of a normal operating cycle but we're very happy in terms of where we ultimately ended up with some 23.8 million dollars worth of profit at the end of the three-month period and close to 40 million dollars for the six months or almost 35 percent up against the comparative period we can move on to the next slide and talk a little bit about the profit and loss You'll see our top line revenue as indicated that was really driven by that higher average gold price, albeit that some of our sales answers were a little bit down, but we're very happy in terms of ultimate gross profit position, which was up some 17.4% for the six months or 16% for the quarter. Royalties were up, but that was driven by that higher top line performance. And also we did have some shipments during the six months. I think there were three shipments over the $5,000 per ounce level, which attracted the higher royalty. But in terms of our production costs, we are up some 15% year to date. And I'll talk to some of those specific items went through and there were some timing differences so as already highlighted by Mark there was a drawdown on the stockpile and obviously the costs that are released in terms of those answers as they are put through it does have a working capital impact. Below the line in terms of significant movements probably the one to highlight is the is the administration expenses. And there were some quite significant one-off costs that have related to our advisory fees, particularly on the senior loan note transaction, but our broader financing facility. And as we go through Bilbo's and our overall strategy, you'll see that we've made some significant progress in terms of our funding initiatives. So it's money well spent in terms of those work streams. I will also highlight the fair value gain on our derivative financial instruments. So that is financial accounting and some volatility that will go through the P&L and it does result in some significant movements but I would ask you really to treat those as separate items when you're looking at the P&L because Mining Corporation Plc The tax expense was down, but that was really around the capital gains tax that was paid on the solar in the comparative period. So I guess our tax rate and effective tax rate is in line and we're very happy with that. Return to the next slide, please. In terms of cash flows, probably the items to note is really the rolling of our various loan notes. So you'll see some ins and outs, but actually there's no movement in terms of our net position there. In terms of pointing out significant movements, you'll see the acquisition of our cap call options. So the $14.4 million in the six month period was a one off item that came through and equally you'll see the impressive $145 million of proceeds in the convertible loan notes that came through and bulking up our cash at the year end position, which closed at just shy of 167 or $168 million closing cash, which really puts us in good stead as we move forward in terms of our strategic objectives. So if we move to the next slide, you'll see our overall liquidity position. And we're very pleased with our cash on hand at $171 million. There was bullion on hand of 13 million, 13 and a half million, which was really the ounces that are held on hand and ready for shipment. There was a slight delay on one shipment at the end of the six month period which was driven by the demonstrations in Johannesburg so there was a timing difference in terms of answers that were held as we got them to the refiner but those were delivered the day after and it was really driven by timing so nothing untoward to highlight there. But overall, very pleasing to have a total liquidity of over $200 million as we stand at the end of the June period. A very healthy position as we move forward with the company and the various initiatives. The next slide, this talks to our capital structure and debt. and we included that in terms of just summarizing basically our debt structure what's held at our Caledonia Holdings Zim level in terms of our loan notes and as I mentioned you know those movements that you see were really the successful rolling over of loans in terms of what was expiring Mining Corporation Plc pay down a large portion of that so that we're sitting in a very healthy position in terms of overall funding and then in terms of the new convertible bond that sits on the balance sheet increasing our total consolidated structure up to that 167 million that I've mentioned previously so that this gives you a picture in terms of overall debt Taking a bit more of a deep dive into those online costs, if we move to the next slide, we just wanted to highlight in terms of online costs of blanket and I think it's very important to pull out a few key, I guess, transactions or cost centers. The first one is salaries and wages. These have stayed broadly in line and you can see a 4% movement year to date in terms of base increases in terms of salaries and wages. So well managed and we're very happy in terms of that overall cost center. What has moved, however, is the blanket employee trust distribution. So previously we've had the facilitation loans. So any distributions that are made from blanket dividends have gone to offset or a portion of them have gone to offset those facilitation loans. and those are now being paid off and under IFRS any distributions that are now made under that arrangement need to be classified as employee costs and sit within production costs. So you'll see a big significant $3.2 million charge going through in this last quarter which has significantly moved our production costs. It hasn't changed any distributions or anything and is actually a reflection of a great operation in terms of distributing funds but unfortunately it sits within our mine costs and has had quite a material impact and will continue to have a material impact in terms of the optics as we as we go forward so that is a standalone item we will be reporting it separately so everybody will be able to see that and and deal with that specific cost for line item independently and the other big movement for the period was the electricity cost where you'll see that's gone up 25 This is in fact driven by increased weeding charges, but our actual consumption has decreased. So again, something that's largely outside of our control where we've done well in terms of our consumption of of electricity but we've been hit with some increased charges there so again another one-off that has hit us in terms of those cost centers so largely when you when you back out those areas you look at the performance in terms of where we we've exited the six-month period it's really driven by lower grades so those reduced answers that have come through in terms of productions really pit us in terms of our unit metrics when you look at that online cost metric and at the bottom right of the chart going up some 46% now for the period. As that flows through onto the next slide in terms of our oil and sustaining costs, You'll see that the higher on mine costs that I've just discussed together with the higher royalty driven by that higher revenue that I mentioned at the start has really flowed through in terms of our calculation of all in sustaining costs. Whilst our capital expenditure has been well managed and in line with expectation, Those costs of the best distribution, so higher royalties and some higher administrative expenses largely driven by those advisor fees and transactions fees for our funding strategy have all fallen into that all in sustaining bucket and driven that increase in terms of our overall costs. So what does that mean? If we move to the next slide, we have had a look and done a whole six plus six exercise and looked at our outlook for the end of the year. And it has meant with those costs increasing the classifications as we look towards the end of the year, we've increased our online cash costs per ounce sold, increasing that by a hundred dollars from our previous guidance range. So the updated guidance range is $1,600 to $1,800. So the 6% increase. and our oil and sustaining cost per ounce sold has increased by some $400 up from $2,100 per ounce to $2,500 an ounce at the lower end and increasing to $2,700 an ounce at the top end of the guidance range. Those are due to the factors I've just discussed, but we've also introduced some new additional spend, which is indicated in the table below. And that's really around how we expect some of the capex to drop this year. So we had previously announced in March that there was 133 KV power line project that had been approved by the board, but we haven't done our costing and quotes, which have now come through subsequent to that announcement and of the 14.2 million, 8.1 million is going to drop in 2026. So we've included that in the guidance, together with an updated number for our ACDC configuration, our central shaft rock windup project, at $3.1 million. And there's also some additional spend in terms of key projects that we do need to deliver. One of them is the housing project, which is fundamental to our core operating activities, which we've included a further $1.3 million. and there's some exciting projects that I'll leave Craig to discuss in terms of cave pits and our underground development, which again are key additional spends that we need to deploy in terms of meeting our objectives. I just wanted to talk a little bit more about the CapEx profile. So if we move to the next slide, you'll see a breakdown in terms of what had previously been guided in terms of CapEx spend against each particular project. So our previous guidance in terms of sustaining capital expenditure was $26.6 million, introducing the three new initiatives, which you can see indicated by reference B and E. It's the new power line, the ACD conversion and the K-PITS projects, which pushes that CapEx profile up to $48 million. But we've also got updates in terms of our growth capital expenditure. And again, going through our Bilbo's development and now having quotes coming through and a better understanding in terms of our, I guess our deposit requirements where previously we had factored in that a large deployment of cash was needed up front in terms of ordering those long lead items. We've got better financing terms. A lot of that cash has reduced and we've been able to actually go with deposits and defer some of that cash into the early part of next year. So that Bilbo's $132 million spend has now been reduced for 2026 to $48 million with the 80 odd million being pushed into the first half of next year. and we also have a new blanket mine plant upgrade which is a new new project of three and three and a half million which is up been updated into the second half of this year so overall our capex number has moved from 162 million down to 103 million dollars but a large portion of that is the billboard spin which is really a reflection of timing i will highlight it's not to do with the ability to finance or positioning in terms of the project. It won't delay the project, but it's just a wise or better use of deployment of funds and has been a very healthy update for us in terms of us moving forward. So if we move to the next slide, please. As mentioned earlier, we do have quite a significant movement in our P&L in terms of the accounting for convertible modes, and we're not proposing to go into chapter and verse in terms of the accounting. But it's just a highlight that we have some significant movement with these convertible notes. It's driven by IFRS. We have independent valuations done and it's just to remind everybody that we have a split in terms of the accounting for the transaction where we have a host debt on one side of the senior notes, which is really treated in the amortized cost basis. And we have an embedded derivative, which is a financial liability on the other side of the transaction, which moves with fair value accounting and it does cause some quite considerable volatility through the P&L. It's fully disclosed. We are across it in terms of where we sit and I'm happy to take a deep dive as we account for it for anybody on the call, but I'm not proposing to go through each stage now, but just to flag that to your attention that you will see some quite significant movements and we'll keep everybody briefed in terms of how that is accounted for. And the last slide is really to remind everybody that we had the cap call option that was also associated with the con notes. If we just move to the last slide, please. The accounting for the cap call is another derivative financial asset, which is also fair value through the profit or loss and provide some volatility and net worth. So it does have an impact on the income statement as those fair values are recognized in the income statement each reporting period. And again, third party valuations coming up with the numbers are fully disclosed and does provide some quite significant movements as you can see in terms of original cost at 14.4 million and the various fair value movements as we sit and carry a net position of 4.4 million on the balance sheet at the end of the period. But again, happy to take a deep dive and explain that more fully for anybody who would like a bit more detail on that. And with that, I will hand across to Victor, who will talk us through the Bilbo's update.