Q4 2019 Earnings Call
Hello, and welcome to the Caledonia mining fold year missiles coal. Please stay connected to the coal will be beginning shortly thank you.
[music].
<unk>.
[music].
HM.
[music].
Hello, and welcome should this kinda junior mining full year results coal.
So the duration of the cold your lines will be under Snow me I was at least in their cold you will have the opportunity to ask questions, which will be done by pressing star one when your telephone keypad 70 point you need assistance. Please press star zero and you'll come through to the operator, I know lifetimes avatar host steep touches to begin the call. Thank you.
[laughter].
Thank you very much and a welcome everyone and thank you for joining this call well no. This is a 29 gene annual result school.
And we very happy just you.
As an opportunity to present to you and then.
Patients at the end.
Joined on the on the call by Dawn I reached out Chief operating officer.
Chief Financial Officer.
Makes sense.
The in charge of Investor Relations and business development.
So thank you very much for joining this call and that's a nice progress.
We will then we will.
You bet you got to connection to the.
Presentation.
It up onto our website and that's what I'm getting to be talking too and we'll be sharing the conversation between us as a team and a then we'll take questions at the end so without a anymore do that's a that's good cracking.
The disclaimer, it's Dave for all the normal purposes that you're very familiar with and then the can change about a presentation is shown on.
Page and I've got you immediately jump into each of the full stage.
Hi.
Most of you all familiar with the story and a they floor.
Do you still that I'm going to talk about I can go through then it should be quickie is quite a lot of detailing because a.
Lots of interesting sector, that's going on in our business and in the.
Let me and isn't a general world environment, as you're well aware.
So we talk about onshore conceptually how long that.
Sure.
Up to switch to which is an absolute cycle point for us to kids out production rates up 90000 ounces.
The finalization of on your single shops, which you didn't need and the pricing should be quipped sports and time and towards the end of this yet it will be commissioned.
So what's the substantially quoting and we Gotta just any gross production increase also but this year, obviously because of the commissioning process is that you didn't manage prices.
And a set of 2021, we're looking at about 75000 ounces.
Well be D. Thompson targets for the balance was a loss of mine, which takes a subject when she said she pool.
[music].
We just recently announced that quarterly dividend was increased in in January twentytwenty by 9% subpoena static dividends for a number of years, we'll always deployed a cash into the self funded central shopped project, a and manage vintage indicated that.
Capex declining free cash.
We'll be well be larger than it is today and therefore, we made an indication of out of our ability to increase the dividend.
A lot of what I will talk about is on a.
Solid state basis, we're obviously going to talk about.
Doesn't 19 virus in the implications for our business, but when I talk about our intentions or strategies.
So that's that is a that's taking into account that caused that didn't exist.
Putting these documents together to the extent that it does now and we'll obviously put in more detail about.
Longer term a as I've already said, we're going to have a large castile being generated by the but I said mine.
That makes falls old from.
Where do you want and going forward.
The major stay engaged us yeah, a they will still be some some development expenditure in 21 22, and then essentially declining just mentioned stagnant Kathy send an exploration capex environment.
Which will enable us.
Now, it's just a general sense Street Josh.
Looking at least we said to the market's a.
Looking for other opportunities in Zimbabwe, and we continue to do so he believes that we know how to operate in the region.
It has been a very very nice ignore.
In their lives.
For change that yes, and we would be excited to be able to fund other opportunity.
To sort of brownfield stage that.
But then you could.
And how to see one day developing other operating assets that will no longer a single asset that continues to be up or longer term strategy.
We're obviously looking for a unable to scale and target there's little super on the million ounces and let's see first stupid used about 60000 ounces for and then maybe initially and then ramping up.
So any investments needs to be NPV enhancing.
And ultimately do they didn't didn't on seeing pushing holders otherwise you're not data catching shareholders' capital the intelligently and that's not the intention or we've worked very hard to generate good.
Future cash flows out of the blanket mine and our intention will be to deploy that's a meaningful.
The slide on page five it's just to show probably something that is relatively familiar to you a it just shows the rate, which is the new infrastructure central shops, and the green, which is the old infrastructure. It shows as we gain eat that we got anything to do mineralized areas and that is made the future.
Mine Collins with a life of mine going into two said before.
We now going to get into some of the challenges said they have existed through 29, cheat and a that exist currently and.
You know a number of them off our operational a number of them all economic and financial so just a just a lead us through I'm going to AWS, Mark Maki amongst to pick up some of this and ER as and when necessary he'll pull daughter in two games to give them an opportunity to to make some comments. So thanks Mark.
<unk>.
Thank you see plenty on page seven what you see this fall before.
Problems that we faced in the course of.
29 to you.
Just like to those problems was on the business we've done.
Over the course of 29 team to address those comes it's fair to say I suppose towards the first off of the it was extremely difficult was the result of these problems by the end of the.
We got a long way to to address these problems not really reflected in the very good performance.
[laughter] tissue was a safety.
I need to be reminded.
<unk> 28 T. we.
Safety performance. It was frankly were disappointing folks like Loxa.
What we've done over the course, the last 18 months as always we substantially increase the management attention. We give too. So you see that the key element to that at some of that we call the young the initiative, which.
The.
First formal program, where we work with the workforce, we mobilized workforce or to take ownership of the m. So so the idea that was good.
People will work much more effectively to implement a solution works like participated in creating raws and then just be told what to do.
The safety performance in the course of 20 onto one was much improved the other should we faced was.
No no at great.
Right delivered to the to the middle or that was really due to a mining dilution wasn't it was no less because it was not and any difficulty with the geological model and so it doesn't reflect the sub gold wasn't just looks like mixing.
Hi below with.
I have a waste a lot clearly another what's your thoughts on production and because the cost of a certain amount.
To lose a minor Telemundo told the process itself, if we get it was less golden uptime because of dilution or the price.
On the financial profitability.
Yeah, we address stuff in the course of the yet by improving the.
Moving to train the do it looks pretty much more disciplined.
On the pleasing results towards the end of the yet when you can see the great improved quite substantially quarter for significantly does not have proven out sort of close to me I'm you know slugs true into January and February of Twentytwenty. So we're optimistic about though not so solution as a as well.
Electricity was a big problem no two aspects electricity during the first was instability. The good supply. So we're getting peaks peaks and troughs and voltage are those pools trip out in the you know electrical equipment or the we don't see spend some money in previous years to put in our own equipment Super.
The games, but is the most peaks, but thought equipment was itself damaged, but the just the ship the sheer volume if you're a number of.
I've incidences, how to deal with such a possibly parts of the early closely we will not come protected even though these these things can under this reflects the second the trip the equipment and by the time to go the other thing backup working again, you can easily lose.
40 minutes and if you've got a succession of six or seven of these events the course with single shift.
I didn't talk just so that could it was about three or the big problem.
The other issue that we faced particularly from a pretty early July into the middle of August lots, a little bit liquidity was just good old fashioned load shedding light shedding just just something that's what it's been.
Under the quite soon in South African to load shedding simply means that because the liquid canned.
Meet consumer demands less electricity was not enough electricity available to meet demand people just simply get to adult.
For a long time, the definitely went a little light to.
Shield the gold industry.
The fiber, there's just not to the power available, but weeks buildup gold industry is so important to develop a government because they need the goals could produce or they could earn the foreign exchange from the sale of that goes inside the government bent over backwards to tighten the gold industry that really from July into the middle of August.
Just the just couldn't protected any longer and we what we were.
Having quite substantially.
Outages clearly had an effect on production and also like to progress on the central shops. So to address that we did two single system. That's working with government <unk> the chain type of bonds, we entered into a new power supply agreement, whereby we pay it U.S. dollar bonds, so ring fenced imported.
Oh I'm.
I'm not actually a little away towards addressing the problem. There any difficulty is the most of that power comes from South Africa, Lesser extent, Mozambique and everybody on this call was told US affiliate with the difficulties in the South Africa.
And so that's what's the status of stuff in the REIT election, it's not a solution because or what.
Because of its own problems somebody is second thing we did as we.
What do we put in place or about six megawatts of additional diesel jumpstart capacity. We're still means that the mine is completely independent.
Conduct boasts mining and milling operations.
And the capital on the capital elements operations through through power outages now that works, but the problem is that is the quality use of sub quite large amounts of diesel so whatever the gen sets are running I think we're using about one liter de luck second.
Just to put in context that means that in the fourth quarter of 29 to you I think we used about 60000 liters of diesel in the quarter. That's got to its got a cost issue. This gold price, we can we could cook.
Problem.
But really comes down to logistics getting it handles all large amounts of dealer short notice a particularly if the outages in the outages at a blanket are rising because the difficulty in south Africa that means and so that's what was also in the bulk kids, who bring a large amounts diesel so youre competing with us coal.
Limited to diesel.
So the real answer that comes in in the form of of solar panel and we all are well advanced evaluate too.
But to say several opportunity alone.
What about this time next year.
I think I'd decline.
We put in place the first phase of a solar power project, which will provide all of blankets baseload power not a second so I guess would provide its peep out equipment.
The final issue that we really felt and faced an assistant suppose pops. The year was just the general deterioration in the bump into Colombia.
Particularly with the workers so six weeks of the bump to though because the buying power.
Substantially affected by the by the Middle of February.
Purchasing power was probably on the attendance and what it was the beginning of January but obviously it slows suing too poor all we're able to address stuff from the mid February onwards, when they governments excuse to interbank exchange rate, which means that on a month to month on month places week, just the the local currency earnings about work.
To shield the from the the very high level of inflation.
Did not that nobody likes other issues with the constant changes the monetary environment really very complex to to prepare for pets and actually counts and How's your launch will talk about the.
So that's not some of the number that have come to us an entre counts as a result, since the staggering deep devaluation of these but with all those.
As a catalyst somewhat interesting to read that that's not the highlights somebody's those four key problems subsequent pages page eight.
Page nine page 10 seconds or with the screen there subsequent pages.
Little bit more detail I wouldn't proposed to go start ditto less less people want to come back to listen to form of questions. So that really takes us to.
To the operating people on page 14, and I guess at this point I should have started to talk about sub.
To give an overview of the operation in the course of and of course, the 2029 things at Dawn or if you could just talk to exporting.
Well, it's if you can it get page 14, and you're going to the Drydock tons.
You will see that you know, we sort of obese loading in January that would reasonably small major.
And then the second quarter, we started turning it around bought upping the B B tongues.
And then we ended very strong the end of the.
No just put them on that the the first three quarters.
For your we've got lease ships.
And then a SP it'd be a than previous or due to the second to all of the year, we have more shows.
No no what we achieved the beginning of deal was about 40 ounces per day and we in the fall by achieving above I'm, assuming <unk> ounces per day, so a very nice improvement and that's all the reasons that Mark mentioned, mainly.
Culmination of everything comes together with doing arms, you earn young to be program, which focus on behavior and going to people working together to do you and also focusing a lot on the daily Daus. What are you shoot that you've learned daily daily basis.
And with all those control systems in place and whether that you had we put a are you, saying because keep in place that keeps the the good teams going are mostly by the good news because it didn't seem to ski a with everybody. Good the same we changed at Fordham honestly, a monthly scheme and.
Being from supervisor level up to quarterly scheme.
So that they have a bad thought the year for example, the first quarter and I'm going to choose the rest of the newest bogot.
They can now look at the new quoted installed start from scratch again, and the forget about a bad quarter behind them. So so that's the keep didn't going and it does.
She that everything just came together and we got a t. if I took and brought him going again, we saw that we maintain them through if you go to.
Slide to the bottom or if you look at a ball the that that to win momentum carried on through to the first quarter in including between PC and if you look at the ball of April quota for the ounces <unk>.
[noise] ease load and again be goes all the the amount of days, we've gotten to put this quarter, but we kept asking them Nathan <unk> ounces, but they that's the mine into full quota. So are we getting exactly the same houses movies that then we got into law school could but date and that will make them its toll on.
Going and.
Bought from the Corona bought us that piece is unknown, we had a very good start to the.
With that overdone, and then I'm back to a two more.
Okay. Thank you Donna quickly come through the financials page 16.
Revenue was up.
68 million 75.
Last but not bulk of the increase was due to the gold price.
All to remain.
Revenues for the picture and stuff.
Production costs come down quite nicely from $14 million to $36 million.
Largely driven by although a electricity cost in the for.
Let's talk for the Oh, we were paying for electricity in local currency and that's not currently devalued.
The U.S. dollar.
<unk>.
Cost of electricity, so the way very sharply.
Then in effect in all three years, we were paying at U.S. dollar the beat the U.S. dollar right that we're paying slightly cheaper than the right. We've been paying 2019, but for all those things together contributed to lower overall electricity cost notwithstanding the fact, we out to you significantly more deals what would your choice.
Getting calls from it so definitely see she and I also down a bit that's a that's a continuation of.
Two or three d., so today cost.
EBITDA all 2019 of just under $13 million not really is a genuine reflection of the.
The underlying business I took $60 million compared to $19 million 28 treat bodies. So very very very fair reflection of a very strong financial performance and the business, but someone getting is really happy with the below that which led to talk about the minutes like depreciation is what it is a $4 million a depreciation will go up in future years goes we.
I want to bring into production some of the somebody development concepts that other income.
20, new entry was $1.6 million I'm 28 to get it was $6.7 million, that's crazy, but we think the export credit.
Replaced clinical support <unk>, we replaced by the goal for poor price.
Definitely an extra payment or extra payment that we received from the thing about the government, which is just going to encourage us to produce more gold I'm sorry, it's a matter of government policy. They exercise and then how long. It continues for so that's why we recognize it as if I could like no other income being a couple Mcgrath.
Likes gain is a huge for us going that far it's going to be everything so Canadian dollar.
About the cost with the devaluation that you can bump we'd all love we started off the year.
Parity with U.S. dollar a by the end of 2019 or for them talking 16.66 importance.
Color.
So a lot the looks is denominated in.
Local currency became smaller in the U.S. dollar terms the two big the two big component for that.
So tax a term loan a $6 million.
Okay. So tracks a content of it it does get quite complex automotive do it talks about it.
Oh, sorry, although it's about $4.8 billion or hopper twentytwenty towards 90.
I mean, mainly the the profit a rising CEVA, yes thing it looks like what they.
Well is a.
So Goldman.
South Africa, holding gold card makes sense.
For many years after a very low very low process. We're very pleased to get rid of it. So you can see the operating profit of $61 million you.
Compared to $21.1 million 2080, that's very distorted, but mainly by the Oh I see foreign exchange gain on to a lesser extent body the profit almost like sling and.
Right.
I P T 16 million.
Good point, Sixmillion patient looks quite high up to $10.3 million.
But I forgot the significant components about is <unk> deferred tax.
Deferred tax simply recognizes the the difference between the <unk> tax treatment of capital expenditure under accounting treatments that for tax purposes, you get 100% hundred percent deduction like little capital allowances I'm going to hundreds on to the Capex spend deducted from our taxable profit.
Let me spend it whereas for accounting purposes, clearly the <unk> corresponding GAAP depreciation doesn't happen for many years waiver.
So that's what it means is that.
And then 20 or 20, guaranteeing 2018, 2017, 2016, well do it spending about $20 million a year on Capex, we got to get it media from tax benefit to that which is reflected in the which will get pulled back in due course, one digoxin for bought into production, but because it denominated in dollars.
Don't know me.
Okay.
Uh huh.
See the deferred tax charge.
So I prefer not to tax $50 million noncontrolling interest that he 16.2% attributable to the to the minority interests and I'm like Boeing gets you down to attributable profit of $42 million, which you're going to share I wrote.
So just under $4 a share if you got to stripping out the foreign exchange component.
$3 80 becomes the becomes about $1.60, so still quite a reasonable uplift from previous years gross margin.
41% compared to 32% previous year EBITDA margin is 39% compared to 28 cents. The previous yet again very strong margin and return on capital employed so if you're going to somebody can get if you strip out the benefit of the foreign exchange dentists to its still a very very creditable, 21% 20 taken so so.
Good results Oh look I was on page 17 is it just simply walks. The shows you how the revenues moves from the gold revenues up from 68 million in 2018 to 75 point, taking 2090 minutes as you can see for not show the.
I think it's come true contribution to that was really the gold price, which which has like a bad thing on what people want to expect to see and Twentytwenty given the size of the gold price really appreciated in January February and the kids come back a bit but it still appreciably even today, it's going to pre should be Hollywood and the average that we realized in 2019 of warm.
$2002 now.
Hijacking doesn't a little bit more detail on production costs breaks down into labor.
Labour cost was up a little bit notwithstanding the fact that we've increased headcount from.
It's important to 60 for life in 2018 to about 1570 variations in but really arise from.
Well the production, but I don't know.
See bubbles up about a million dollars not reflects the increase costs running the larger fleets of like Steve underground, which are quite expensive.
40, 40 explained to the electricity cost, which came down by about us.
Well I point $3 million to $6.3 million.
Ah that's sort of income I've already mentioned studies, the export incentive or we should then be placed by the gold support price.
Then I have the gold price the the real gold price moved moved above the goal support price. The the amounts I think we're getting some of the multiple price so.
Operator them, so that they didn't push up multiple process needs.
It's a gold price rose through it.
Foreign exchange gains or dimension, we can see that the of the <unk> 29.6 to 9.7 billion before there's a foreign exchange traded the because I spoke about cadence from deferred tax.
When you see anybody and that's why we take things.
The.
The relation the U.S. dollar cost of the.
<unk>.
Especially when you mention sell for the 10.3 million you can see quite a significant portion about as deferred tax little bit of withholding tax which are rises as we lose money around the group.
Which is on.
Oh Gosh personal sound takes 22, you can see the.
The cash.
Talk about this is the the cash flows before working capital movements in the yeah 20 million.
The 20 to 26, just $26 million the 2080, so very strong operating schools.
Although we thought that it was there was another that's working capital movement 2019 about $4.2 billion I'm not that reflects two trends, which I think we're going to see more often is involved with first is the deep sea carry a lot of stocks. She protect ourselves from <unk> to see eventualities say, the holding cost stocks. So.
Diesel or because of the the difficulties with the looks to supply. We've also increased all stock holdings of critical parts of the particularly for the other use drugs, which are quite expensive the working capital absorption in 2018 was slightly different.
Legs to the normalization of.
The the amount we added over electricity company. So that's a different nothing that's a different reasons about working cap. It jumps all at once you take it doesn't move forward as Twentytwenty onwards, I would expect to see some multicast well just sort of increases in and working capital.
We're finding that some supply credits in Zimbabwe is it pricing because of the light right to the inflation, so increasing that we're having see but looks like credit, but actually pre pay for equipment to pre type of stuff a $20 million of capex in the year similar to previous years or we'd expect a similar level of capital expenditure.
<unk> Twentytwenty pretty about front loaded so that's sort of six or seven months of the yes.
What do you see on page 23 is just extracting the 333 big components of of operating cash flow. So the blue ball that reflects the operating cash flow gosh, Luckily for working capital. This quarterly basis. So you can see on the right on the side the the size of the Blue bar in quarter in quarter four Clench 19 was very considerably.
Almost well she got shows the strength of the underlying performance of the business.
Then offset against that.
The cash flows before working capital.
I'll just working capital movements on Capex are going forwards, whether they expect to see is blue bar to growth.
The gold prices going up.
Later on in the into next year once we begin to increase production, but expect the besides the green ball thing of the Capex to diminish as we run off the high level of capital capital expenditure, but on a sheet again, there's not much to talk about whether its strong balance sheet. We.
Just on doubling but it doesn't cash the and see the ended the year.
Not surprisingly house the.
We've had good production Oh, so disclosed to the first couple amongst those those twentytwenty on that's continued like old place you wouldn't be surprised to see it's not cash goes up somewhat.
But then it two things I'd say would be just on page 25. It's all had you we hedge and we have hedged we all hedged because we still continue to spend all the money on capex.
The cash flows a strong.
Lets catch plays a very susceptible to.
Other variations in production.
Volatility the gold price. So we felt it prudent to most we should be able to control our production, we don't control gold prices that's.
Once we finish this capital investment program.
I expect us to to need to hedge skews already mentioned the dividend up total dividend distributions last year about 3.4 million. If you look at than in the context of the but the catch that was generated from the business is biased, but I mean.
<unk>.
So <unk> <unk> <unk>, you get more accidents that.
Business comes to the end of the significant Capex program, but as we move into increasing or increasing.
I suppose I mean tonnage to continue to increase on dividends.
So that's that's all for me I've, just talked about the Steve to talk about outlook and I'd like to type questions.
[noise] lockup Donna.
Yes, hi.
<unk>.
Yeah.
So.
Well maybe.
I think it's important to so just to reiterate.
Production costs.
I think 80000 pounds.
We anticipate that has to be in the center day.
Announced the or does that.
And Ah you take on Friday or is that margin is launch and Ah. It just demonstrates that they will be a good.
I'll just cash.
I will tell me out in this business for us to deploy either in a routine shale must be confident anything that just to do with it or to put it into another opportunity that will vessels.
A acceptable return for shareholders, who bean oil over the.
The last few yes.
Yeah. The next two to four years, you'll see a declining capex situation as our self funded project comes to an end and or the <unk>. The shops in the development that Doner has managed has a gauge and sit this mine up full for the next a 10 to 15 years and maybe even longer.
The.
One shot that I did show you that shows the three horizontal levels of development.
There's if a plan for level that will be executed bar a decline, but that 75 to seven years down the line.
Let's see bedded down the 80000 ounces, so declining Catholics is definitely the side or the day.
In the sort of the range of four to eight years is for us to find the next opportunity all opportunities to changes from a single asset operation into a multi use a multi asset operation was focused and we can match. It just staying in gold and certainly at this stage we.
We're committed to looking in Zimbabwe, because it has been so ignored and it is well endowed with a goal or gold prospects.
You know if we can find a couple more blankets or we could easily see and I think we have demonstrated that we know how to expand operations or through daughter and his experience money teams and are we going to have some financial resources, we can see ourselves growing today a large.
Gold producers to hopefully get over the hurdle cells or the under 100000 ounces and get back up get into the <unk>.
The realm of up a couple hundred thousand out there and producer.
So that's pretty much all I would like to say and the team and a very happy to take questions from from anybody who has a who has got something that they'd like to chat to us about so I'll hand, it back to the operator at this point each time and thank you once again.
Thank you very much. So if you wouldn't I'd like to ask a question on todays call. Please press star one on your telephone keypad and please ensure your line remains a muted locally. So once again, if you wouldn't I would like to ask a question on today's call. Please press star one on your telephone keypad I'm pleased and show you don't line.
It's remained I'm you said locally.
Thank you very much we do have office question. The question comes from the line of how it to sleep something drink Cup. Please go ahead.
Oh everybody.
Oh hi.
Hi.
When you specify hedges when you state has just you should specify that you thought puts.
The most.
Companies in the industry to them hedging means selling calls to buy pause or they call them quote Costless unquote.
So that I ask.
If they're costless as investment banker get no fee your your.
Youre directly hedging by buying puts so yes, you actually.
We do actually started out in the we do actually say, though.
Next we decided that I thought that yeah, yeah, yeah yeah.
As some people might Miss I understand and so that's why I pointed out okay.
All right. Thanks.
Thank you we do have aside the question. The next question isn't the line also missed a show cease go ahead.
Yes.
Good afternoon to its Chris funding from Australia, I have one question for Mark and one question for Steve I will start with Mark Mark Some years back you did a share buy back off the small.
[noise] shareholders 50 to 100 chase, what you're doing anything in the future huh.
We did drop.
We did.
It was worth more than it was done the for technical reasons.
To get be kept the share price to a level, where it qualified for inclusion will be oh, the NYSE. The American excuse if you. If you go someone's things like was like here's what I'd characterize as they.
Split and what I meant we had to take out those people, who got traction but didn't sort of start up. So it was it was a purely technical a mechanical buyback.
But I forget if we go forwards.
The running there should be no doubt that we're going to we're going to generate more money I gotta should be no doubt to anyone that aren't about written it down but how could you explain it sounds like I forget what level, but it was only three things we can do that money other investor New projects will give you about to show doesn't get thing about the shoulder thought about what dividends.
<unk> share repurchase share buyback.
Yes, it is only agenda customer immediately.
But it really really is one of these one of the leaves a can pull for up to the Obsoleting, Yeah, [laughter] I've a question for Steve.
You booked some properties GE GE and mascot would you consider find them up in the near future Oh pardon a roasting Ivan four to one of those mine.
[noise] Oh, we we've.
We have a we have spent some money on GTN mascus and some of the satellite properties over a number of years. It all comes down to capital allocation and that as you can imagine the central softest consume genome bus amounts of capital a number of those properties, we've actually put out to attribute so that they are.
Being they are being worked by people who have an obligation to us.
That's an appropriate point in time looking at our own portfolio all saw of assets would be something that we would do.
In the in that in the context of looking for new Brown field operations. So yes. Those are some of those all close to home.
Some of them all under tribute to ready or two to people, who want to operate them and maybe under the tribute they would they would want to take them all finance.
They need they need to meet the criteria being a in TV, enhancing and ER and depending on seeing into longer term and are based on the work that we've done on GTN mascot. So far Oh, we haven't been able to allocate sufficient capital to actually warrants doing more so.
Chris that is something for down the line, but at this point in time some of them are being worked under tribute.
Thank you very much so.
You can always just today.
So they do Uh huh.
What were what we are currently we have a concerned with what we can worse than how much waste development, we can do.
And wants to see themselves operational we believe actually there's some virgin.
He is in the banking operations. So we will talk a bit more <unk> exploration and we think that the things will be better than you do in my script.
Okay.
Interesting.
Oh.
Thank you.
Thank you Matt.
Thank you as the fed the reminder, if you on I wishing to ask a question. Please press star one when your telephone keypad I'm pleased to ensure your line remains on muted locally.
Our next question comes from Ian just Sling fun, Ohio. Please go ahead.
Hi, guys. Thanks for the presentation.
Just wanted to do all.
General question look back couple of what does have a quest.
I I noticed you account you got some way sections on operational cash flow and they all went up and.
Are you summarize the fixed assets and the the long term liability I. Just wanted is it possible Libya and you accounts to basically to get them all detailed breakout for these figures.
And my second question was a much more general question. It. So it just relates to overstate with with the whenever you invest in a place like in bubbly ore body or somebody like that expropriation is always a possibility.
By times in there.
I just wondered what is the situation in Zimbabwe clearly.
But there's no a bunch of Angels <unk>, what are the things driving them to the coal plant.
Within this to the.
Temptation is exposed patients. So it just means the here about the dynamics of that.
Yeah.
If anything off the happened.
Oh I'm afraid.
<unk> yeah.
For me Mark if you if you [laughter] sure. Okay. The yeah. There was there was no accounts they told us that account syrup, although website.
They're awesome I missed some sort of so the breakdown of of a lot, but this isn't the most of those accounts.
Well its address the logical.
I think Steve heard the Hoodie question, but the answer the question towards.
There's been a voice significant change in the <unk>.
In the type of in Zimbabwe slowing following the the disappearance of all the the Elster and some of my goal being bringing in mother Douglas.
Let me go very clearly understand but to the bubbly needs foreign investment to get himself out of the mechanism at the moment.
So the understanding Todd if the government just how I'm going to capacity financial any capacity to solves a bolt was problems that's what they need they need it would investment and they see gold as the that's one of the so the flagship somebody but then plank of.
Economic recovery.
So we don't feel we don't feel that were at risk of expert friction exact.
Quite the opposite happen so the 51% Digitization threshold was was.
That was legislature tonnage, we take advantage of that so you got seat in the.
In this first in January this year that generally Twentytwenty, we announced a transaction whereby we bought back another 15%.
A blanket mine.
From people to whom we sold it so that's probably a digitization deal or the government government is I'm anxious as part of the anxious desperate its very anxious that gold production increases because they need desperately need to see.
The foreign exchange income that comes from the gold gold industry. The plot to the minister was as much bigger lots of them is it's all exported in concentrate and set the government really can't get access to the to the dollar revenues from Platinum's Gold frankly is because its next best next best social Foreign exchange. So we.
See a very positive Oh, we have a very posted positive relationship with the government.
Steve in particular, we have.
Regular dialogue with the minister of mines the.
The government there is a bank and also with a precedent they understanding exactly what we've done over the past five years invested considerably to grow to grow blanket nine increase employment.
I understand that didn't make the very short period of time now, but we're looking at a significant increase in taxable income.
And that's what they're anxious that we take all we couldn't you Bonnie.
All right blanket to invest and so the project hopefully sex they see if they see AWS parts of the I'm, so to that problems and I actually think of the risk of expropriations Adobe has.
And she is not punishing small.
Let's talk about it.
I don't know the composition of the gold industry in Zimbabwe, but.
As far as you will place in the industry is concerned all you.
<unk> is more than one I'll play through in Zimbabwe, Oh, you one of the main all Platos. Yeah. We couldn't we think that we think we think were the biggest would we may not be quite the biggest.
But we're pretty much all but that's something like 2000 ounces <unk> would be the biggest but more to the point, we all probably by far the most profitable looks like government will be receiving very very substantial.
Income streams coming from the Bill just looking to roll to the payroll tax on the income tax.
And then we have the capacity we have the financial capacity to take.
Take on new projects. So so what were important to that lives yet.
And George I Hope you a bit but the solar power project that youre thinking about it sounds like on paper pretty good idea.
Clearly has to meet you internal revenue that makes a ton projections what are they what are the parameters that you judging you. Okay. Thank you Ben.
The money if it's a mining project. The if it was a might was appeal mining projects would be about we wouldn't we wouldn't want to look at it if it was less than 25% to talk about right.
Okay, that's actually that infrastructure projects.
Which lends itself to slightly different that's slightly different something structural so you could put much bunch more debt in a.
Much lower risk as well because for some places of the risk isn't something shot on goal I can tell me that sometimes quite love them and then the full at the time, if we have to.
During this thing around balance sheet. So now we'll do it because it just looks like an insurance policy. It protects the business, but in the full at the time, if we could.
So it off to someone who has got like is it more purely focused on or money infrastructure would do it. So we're prepared to tolerate to slightly lower slightly lower to all the solar project because it's a it protects the business.
Did you need smoothes out another show production.
Yeah.
Yeah.
You're touching batteries to it or is it purely just do it absolutely small very small very small battery to to sneak things after the by but by no means but by no means that we gotta be.
Two batteries and so he can rather than 24 hours a day would be prohibitively expensive.
So you'd have to you'd have to kick in these little electricity doing to not only how do we have we have full diesel diesel backup, but typically the the outages the power the load shedding happens during during daylight hours.
I can tell him it's less of a problem.
That makes sense and how much of the capex on that's roughly.
It's about it's about a million dollars Poland put megawatts.
60, <unk> something like <unk> project will cost about $7 million approximately.
Okay, but they should save you over the time okay.
Thank you very much that's being very informative.
So just just briefly on that Mark we.
Also this commissioning of central soft, we reckon will be somewhere between 20 and 25%.
Oh, the formal gold sectors, and so a pretty big fish in a relatively small point yeah.
The other places all about that.
Well the could run because otherwise nighttime.
That's a that's free to Rebecca which is part of so I say resources like used to get on gold price and I used to run at about 70 70000 ounces nothing has been smaller there, but does a private company cool metal on.
Which is owned by it and see commodity they have a suite of assets.
Redwing, how mind, how might east of the basket of course, it probably thought there's very little information as to.
As to how successful about it but they would have been there would have been the two biggest operators who doesn't pencil.
We have been but I got to revisit nothing because and producing loved it used to say.
The other the other competitors.
Trouble difficulties.
We were kind of going against the flow that's what that's why we sampled because in government.
Takes a play take somebody Blake to best if someone like the bubbles on now.
HM.
But but also going into two I suppose that.
Thanks, Mike.
Thank you we do you have one follow up question from the line off Howard Flinker. Please God.
Hi, guys.
Considering that dharamsala.
Wants to.
Invite foreign investment is there any chance he can open for investment to other.
Other fields and the next 10 or 20 years or is that a pipe pipe dream.
Oh, you mean, another another area. So it's like yeah, yeah, Yeah, I can tell it sure, but we don't know person telecommunications goals, what we do.
Gold is suffering.
No.
Yes, that's very very much so they want to.
I want to encouraging with investment across the whole industry.
Well, if they do that they will change.
They will change the whole economy and also.
As a view of outside investors about Zimbabwe.
<unk>.
He was a phrase of a guy with on air that could be a game changer.
Yeah.
Thanks.
Thank you very much all questions have not been onset so I'll hand, it back to you Steve If I may.
Well, thank you and Ah. Thank you to all the participants a it's probably a along the list than we've had in the past a we appreciate your interest I think the numbers speak for themselves and ER, Although some Bob we it's a challenging environment Oh, we have we have.
And that if you stick to your nothing in your run to a success a well managed mining operation.
In these times with with the gold price doing what it does.
We're able to generate some very healthy returns for shareholders and I think the one exciting thing about the blanket operation is that for many many yes. It has been a baby.
Very well manage cost controlling operation through all the is of hyper inflation and ER and or the difficulties. We have shown that we can run in operation in this in this part of the world that consistently generates enough money, which.
This enabled us to invest probably maybe $70 million on the shaft and yep are they the economy in the country has got a very bad reputation, but let's let's look at the fundamentals of the business.
And we are we are very confidence that said, we will deliver the 80000 ounces at a very acceptable cost and we are very excited about the future. So we will be looking forward to chatting to you again and telling you that we've done what we said we would do and ER. Please watch this space, but thank you again for.
And for joining us and a good not for me.
Thank you very much for joining todays kinda junior mining fold use results cold you may now disconnect. Your lines speakers. Please stay connected.
[noise].