Q1 2022 Caledonia Mining Corporation PLC Earnings Call
These curtits are CEO Mark Learmon, our CFO . Darryl are CEO , Moir Smith and our Vice President of Court Development and then myself, Commander Horsesvar and the Vice President of Investor Relations.
I'm Mark Lammas, our CFO .
Our roots are CFO , Mark Mason, our vice President of corporate development, and then myself kind of Horsfall and vice President of Investor Relations.
So if you have any questions, please can you either just write them in the Q&A or raise your hand and we will unmute you at the end of the presentation.
So if you have any questions. Please can you either just write them in the Q&A or raise your hand, and we will meet you at the end of the presentation.
So I'm now going to pass you over to Steve and Mark, and they're going to talk through the results.
So I'm now going to pass it put you in for Stephen Mark and Theyre going to see the results.
Thanks Camilla.
Thanks Camilla. Camilla is going good afternoon everybody. We are going to go through a presentation. That's been prepared for the Q1 results. Camilla will share the screen. This presentation is obviously available on our website. And if we go through it quickly, you've always got an opportunity to go back and have a look later.
Yeah.
Good afternoon everybody.
Going to go through a presentation, that's being prepared for the Q1 results in Canada will share. The screen presentation is obviously available on our website and if we go through it quickly you've always got an opportunity to go back and have a look later.
So thank you once again for joining us. Obviously, the disclaimer, as usual, and you'll be very familiar with that.
So thank you once again for joining us.
Obviously, the disclaimer as usual and you'll be very familiar with that.
So.
We've got a mix check here of sort of a summary results and then financial results. I'm obviously going to ask Mark to do the financial result.
We've got a mixture here of sort of the summary results and then financial results are obviously going to ask Mark to do the financial results. You will have seen these results before because we announced production numbers at a particular time and we put out the MD&A in the Q1 results.
You will have seen these results before, because we announced production numbers at a particular time, and we put out the MDNA and the Q1 results.
So.
All of this should be familiar to you, but just to just to reemphasize the quality of the.
All of this should be familiar to you, but just to just to reemphasize.
The quality of the quarter.
Production ounces 40% up on the previous quarter, on the comparable quarter, 2021, my apologies.
Production ounces, 40% up on the previous quarter on the on the comparable quarter in 2021 my apologies.
uh average gold price nothing in our control there but we the beneficiaries of a higher gold price
Average gold price nothing in our control there, but we were the beneficiaries of a higher gold price, which resulted in revenues 37% up.
which resulted in revenues 37% up.
Pleasingly, gross profits 63% up.
Pleasingly gross profit, 63% up and EBITDA, 49% up on the comparable quarter.
and EBITDA 49% up on the comparable quarter.
Also, which blanket is well known for all in sustaining costs, our show a reduction of 7%. Management there continue to do a very good job in controlling costs even as we ramp up production. And then profit is attributable to shareholders up 30%.
Also which is blankets is well known for all in sustaining costs show a reduction of 7%.
Management, they continue to do a very good job in controlling costs, even as we ramp up production and then profit attributable to shareholders up 30%.
And adjusted earnings per share and Mark will talk a little bit more about the adjustments to arrive at that number. 62 and and a half cents for the quarter. Remembering we pay 14 cents of quarter in terms of dividend and therefore you can see that the business is very cash generated, very profitable and we are returning some of that to to share hold.
And adjusted earnings per share and Mark will talk a little bit more about the adjustments to arrive at that number 62, and a half since fourth quarter <unk>.
Membrane, we paid 14 cents a quarter in terms of dividend and therefore, you can see that the business is very cash generative very profitable and we are returning some of that to shareholders.
Moving on to the next slide. Our safety performance, we have had an excellent track record of safety, but as we've reported previously, we unfortunately had a fatality in February . And as ever, we send our condolences to the family and the colleagues of the deceased. This was a very unfortunate accident, and all the necessary follow-up procedures have taken place.
Moving onto the next slide.
Our safety performance.
<unk> had an excellent track record of safety, but as we've reported.
Previously, we unfortunately had a fatality in February .
And as ever we send our condolences to the family and the colleagues of the deceased.
This is a this is a very unfortunate accident and.
All the necessary.
Following procedures have taken place.
but the statistics of lost time injury frequency rates nicely down.
But the statistics of lost time lost time injury frequency rates.
Nicely down.
and we continue to be 100% focused on safety, especially as we get more and more people on.
We continue to be 100% focused on safety, especially as we get more and more people on the mine.
and the higher level of activity, meaning that there are more blasts, there are more open areas, there are more, there's more tramming going on. So safety gets the requisite amounts of time and tension.
And the higher level of activity, meaning that there are more blocks zero more open air is there a more it's more timing going on.
So.
Safety gets the requisite amount of time and attention.
And now that COVID has subsided, and we are able to be in closer proximity to each other, the INEANZVI training program...
And now that Covid has subsided and we are able to be in closer proximity to each other in the honest the training program.
excuse me, and education program that Donna runs at the mine, that is back and it's operational. And that's very, very important to reinforce safety, the disciplines, the culture. So it's important for you to know that Njansvi is back in and running and we are working very hard on our safety performance.
Excuse me and <unk>.
<unk> program that dawn of runs at the mine that is back.
It's operational and that's very very important to reinforce safety the disciplines the culture.
So it's important for you to know that <unk> is back and running.
We are we are working very hard on our safety performance.
This is just the summary of many of the things that you probably are also familiar with. I've already spoken about the answers.
This is just a summary of many of the things that you're probably also familiar with I've already spoken about the ounces.
But importantly, the higher production is due to the increased tons and that is critical for us to achieve I 80,000 ounces and it improved
But importantly, the higher production is due to the increased tons and that is critical for us to achieve 80000 ounces and an improved grade.
which, which was over and above the average mine grade. But we are we are very happy that we are sticking to the mining plan. But you get you get some pleasant surprises and you get some unpleasant surprises in our business. And we are at the moment benefiting from from higher grade and we're very happy with that.
Which which was over and above the average mine grades.
But we are we are very happy that we are sticking to the mining plan, but you get you get some pleasant surprises and you get some ACA business surprises in our business and we are at the moment benefiting from from higher grade and were very happy with that.
The central shaft continues to contribute, although it's hoisting waste.
The central shaft continues to contribute.
Hoisting waste.
that just frees up all the capacity of the number four shaft. And the reason why it's hoisting waste mainly is because there is a lot of development and connecting work between the various levels to the central shaft.
It just frees up all the capacity at the number for sure and the reason why it's hoisting waste mainly is because there is a lot of developments.
<unk> work between.
The various levels.
To the central shaft.
and it is fast, it's efficient.
It is as fast as sufficient we can move the waste into that area and we can then focus on the mining that can be brought with all can be brought up the number for sure.
We can move the waste into that area and we can then focus on the mining that can be brought with or can be brought up the number four shaft. And at the moment to achieve the the tonnages that we need to get 80,000 ounces.
And at the moment to achieve the tonnages that we.
We need to get 80000 ounces, we have we have pretty much got the capacity to two.
We have we have pretty much got the capacity to achieve the 80,000 ounce just using foreshaft. And as you can see, we've built up a significant stockpile because we're actually mining more than we are milling and crushing.
<unk> achieved the 80000 ounce just using four shaft and as you can see we built up a significant stockpile because we're actually mining more than we are milling and crushing.
and that is because we are in a phase of bringing a new, what we call BM10, which is a new mill, into the production process.
And that is because we are in a phase of bringing a new.
What we call <unk>, which is a new mode into into the production process.
So at the moment we are not relaxing on the mining side and we're building up a stockpile. So at any point in time if we have a bad day in some aspects we've got capacity on surface.
So at the moment, we are not relaxing on the mining side and we're building up a stockpile. So at any point in time, if we have a bad day in some aspects we've got capacity on surface.
We continue to reiterate our guidance for 2022, 73,000 to 80,000 ounces. And the run rate that we have reported in the MDNA for April of nearly 6,800 ounces, if you extrapolate that out, that is just above 81,000 ounces.
We continue to reiterate our guidance for 2020 to 73000 to 80000 ounces.
And the run rates that we have reported in the MD&A for April of 86800 ounces. If you extrapolate that out that is just above 81000 ounces.
So we are very proud of a good first quarter and we are seeing it continue as we go into the second quarter. So hats off to our production team. They are really delivering and making the asset work that they've spent four, five years actually putting into operation.
We are very proud of our good first quarter and we're seeing it continue as we go into the second quarter, so hats off to our production team.
Really delivering and making the assets work that they spent four or five years actually putting into operation.
Okay, so we're getting into the financial numbers. So this is an appropriate time to hand over to Mark. So Mark over to you. Thank you. Thank you, Steve.
Okay. So we are getting into the financial numbers. So this is an appropriate time to hand over to Mark Mark.
Thank you.
Thank you, Steve So very briefly.
Revenue is up 36%. That's driven largely by a 28% increase in gold sales and as Steve's already mentioned a 6% higher.
Revenue was up 36% was driven largely by a 28% increase in gold sales of Steve's already mentioned a six percentile.
Gold price, royalty stays fixed at 5% of revenues. Good action cost, I've got a bit more detail on that in the next slide.
Price royalty starting fixed term.
100%.
Revenues.
Cost of goods a bit more detail on that.
In the next slides.
So although the dollar value went up, there was actually a 17% reduction in online costs per ounce. And depreciation goes up substantially because don't forget now that we've commissioned the central shaft.
So overall the dollar value went up it was actually up.
A 17% reduction in.
On my cost per ounce on depreciation in terms of substantially because don't forget now that we've commissioned the central shaft.
Unfortunately, we've got to depreciate it. So that's gone up a bit. So hence gross profit up by 63% from 10 and half million to just under 17 million. GNA out from 1.6 million to 2.4. That's driven by a considerable increase in the in the quarterly challenge for insurance. I've got some more information on them on how the GNA is made up.
Unfortunately, we got to depreciate it.
Come up with it.
Gross profit up by 63% from 10 million to just under $17 million.
One.
6 million to $2 <unk> driven by the <unk>.
Sort of an increase in the quarterly charge for insurance.
More information on how the G&A is made up.
and the slide onto and also higher advisory expenses in the quarter. Net Foreign Exchange Game was just a million dollars, net reflexe a considerable step up in the rate of devaluation of the RCGS dollar against the US dollar in the quarter.
The slide on tool for higher advisory expenses in the quarter.
Net foreign exchange gain was.
Just under a billion dollars and that reflects a considerable step up in the rates of devaluation of the CGS dollar against the U S dollar in the quarter.
Then other $2 million, that includes $1.7 million of market costs on the various hedges, half a million dollars of exploration and evaluation asset impairment. And that primarily relates to the decision to walk away from the common moral and all that set. And about $400,000 of elated costs for the elated costs increased because our share price was quite strong in the quarter.
$3 million that includes $1 7 billion.
The mark to market costs on the various hedges.
Millions of dollars.
Exploration.
Evaluation of it.
Impairment, primarily relates to the decision to walk away from the kind of on and off of that.
For $2000 of LTE costs cost and some increase because of our share price was quite strong in the quarter.
So that profit for tax up by 47%, so the tax expense increased to $4.7 million. I've got a, I've got some more information on that in the moment, but the tax, the tax, the income tax and the withholding tax, sorry, the income tax, the deferred tax on the underlying profits was relatively stable, but there was a higher withholding tax incurred as we moved more money around the group.
Profit before tax up by 47% tax expense.
Increased to $4 $7 million of God.
More information on that in a moment.
Tax the tax.
The income tax and withholding income.
Income tax deferred tax on the underlying profits was relatively stable, but there was some higher withholding tax incurred as we moved more money around the group.
Adjusted adjusted earnings per share increased from 51.6 cents to 62 and a half and that excludes things like foreign exchange gains, deferred tax and what have you. So a very creditable profit loss performance.
Adjusted EBITDA adjusted earnings per share increased from $51, six 7% to 62, and a half and that excludes things like foreign exchange gains deferred tax will help you so a very creditable.
Performance.
We've done two of them.
Good morning Shannon.
On production, which largely comprises wage as a salary is consumable, it's new electricity. Wage as a salary is increased quite substantially from 4.4 million to 5.9 million. But don't forget.
On production, which largely comprises wages and salaries consumables electricity.
Wages and salaries increased quite substantially from $4 4 million to $5 nine but don't forget don't forget we had nearly a 24% increase in head count for the mine. The mine employs about 2000 people now ask.
Don't forget, we've had nearly a 24% increase in headcount at the mine. The mine employs about 2000 people now as we've increased personnel levels to cater for the for the increased rate of production. And also, don't forget that the comparable quarter, quarter one of 2021 was a very poor quarter, only 13000 ounces. So there was no production bonus attributable to that quarter, whereas clearly in the first quarter of 2022, it being a good quarter, there was a 12% production bonus.
<unk>.
Personnel levels to cater for the so the increased rates of production and also don't forget the comparable quarter quarter. One of 2021 was a very poor quarter.
13000 ounces. So there was no.
Production bonus attributable to that quarter, where it was clearly in the first quarter 2020 to it being a good quarter. There was a 12% production bonus so hence the increase in wages and salaries late last year late last year, we took the decision to pay.
So hence the increase in wages and salaries. Late last year, very late last year, we took the decision to pay our online workers entirely in US dollars, which has cut through a sort of an inflationary effect.
Pay online work is entirely in U S dollars, which is.
Come through.
Sort of an inflationary effects, which arises from the fact that although the local currency rates of inflation and probably has an extremely high I'm just running about 100% that's not reflected in the in the rate of devaluation of the local currency and so what happens is if you are paying your workers in local currency.
which arises from the fact that although the local currency rate of inflation in Barbou is extremely high, I'm not telling you about it 100%. That's not reflected in the rate of devaluation of the local currency.
And so what happens is if you're paying your workers in local currency and accepting the local inflation rate, once that higher value has been translated back into US dollars, it shows a very substantial increase in dollar-denominated costs. So we cut through that by now paying our workers entirely in US dollars and we're seeing no appreciable inflation arising from that.
Trapped into local.
Inflation rates once about higher higher value has been translated back into U S dollars insurers, a very substantial increase in dollar denominated in the dollar denominated costs.
Through that.
But now paying on what because it's totally in U S dollars.
We've seen no appreciable inflate.
Inflation arising from that.
Consumables start from 4.2 million to 5.1, that's 21% increase. Partly that reflects the increase in tons of mill, but it is fair to say that during the quarter we did see
Up from $4 2 million to $5, one was 21% increase.
Part of that reflects increase in tons of mill, but it is fair to say that during the quarter. We did see price increases in most of the major inputs being exclusives grew steels in China. It is fair to say that after.
Price increases in most of the major imports being explosive, drill steels and cyanide. And it's fair to say that after the end of the quarter, we've seen further price rises. And I think, I think,
After the end of the quarter, we have seen further price range is nothing income.
along with all other producers, I think we must prepare ourselves.
Along with all other all other producers I think we must prepare ourselves.
throughout the higher input price environment, although, as I hope you'll see from this discussion, that even if we're asking inflation in consumables, that is for a relatively small component of our overall online cost base.
The higher input price environment.
As I hope Youll see from this discussion.
Even if we are seeing inflation in consumables.
That is for a relatively small components of our overall online cost base wages and salaries, we don't expect to see any significant inflation and also electricity. We believe we've got the electricity costs one of the control moving onto electricity demand.
So, we're just as analysts, we don't expect to see any significant inflation and also electricity. We believe we've got the electricity costs, well, under control moving on to electricity then. The even notwithstanding the higher production.
The even notwithstanding the higher production.
electricity increased from 2.1 to 2.3 million. And that's because late last year we spent some money to install some more auto-attacked data andilizations andarded tools.
Electricity increased from $2, one to $2 3 million.
Because late last year, we spend some money to install some tough changes.
at number four shaft, which means that in quarter one of this year we substantially reduce the amount of diesel that we use.
Number four shaft, which means the in quarter one of this year, we substantially reduced the amount of diesel that we used over the course of 2021 the amount of diesel we used increased from about 400000 liters in the in the.
The first quarter to about $1 1 million liters in the fourth quarter and in this quarter it dropped back to about 83000.
uh liters so the offset by obviously an increase in the in the price of diesel
<unk>.
<unk> does it increase in the price of diesel having so having seen the success we are now intending to.
Having seen that success, we are now impending to, and also seeing a further deterioration in the quality of the grid power.
And I'm also seeing a further deterioration in the quality of the grid power. We are now intending to invest about $3 million more dollars to further protect ourselves from the grid to improve the quality of the grid supply we get some therefore substantially reduce the cost of the amount of diesel that we use and therefore.
Reduce our overall electricity cost we feel that going forwards, we've got a very good handle on.
On the electricity cost work in progress just just reflects the movement.
Work in Progress just reflects the movement in gold in Work in Progress and it also in this quarter reflects the build-up of the all-stock art.
And building work in progress I think also in this quarter reflects the.
Buildup of the ore stockpile.
I don't really think there's much more to explain in terms of production costs other than to say right at the bottom of the table. Fred, please to see the online cost per ounce fall from $836 for $698 an ounce.
I don't really think there's much more.
To explain in terms of production costs other than to say rather at the bottom of the table for pleased to see the online cost per ounce from $836 to $698.
Here we see the the G&A. I think we should all recognise that as the world stumbles out of Covid, we are now going to see an increase in.
You will see the G&A.
I think we should all recognize that.
Stumbles out of Covid, we are not going to see an increase in investor relations costs and travel costs.
Investor relations of costs and travel costs as the activity levels return to normal. So that explains the increase in investor relations and travel advisory services. That that increased quite significantly significantly in that relates to legal fees and also executive search fees related to replacement of several senior
Activity levels return to normal so that explains the increase in Investor Relations and travel advisory services increase.
Increased quite significantly significantly amount relates to legal fees and also executive.
Search fees related to the replacement of some of.
Several senior executives.
um and wages and salaries increased from just over a million to about 1.1 million. Again that reflects increased headcounts mainly in Johannesburg as the mines got bigger and more complex we are now having to increase the complement of technical staff in Johannesburg so people like rock engineers to a rock engineer to make sure the roof stays up and people to improve the the quality of our mine planning.
On wages and salaries increased from just over $1 million about $1 1 million again that reflects increased headcount mainly in Johannesburg.
The mine has got bigger and more complex. We are now having to increase the complement of technical stuff in Johannesburg. So people like rock engineers to our rock engineer to make sure the roof space up and people to improve the quality of our mine planning.
Yeah.
Sure Bill.
So that just pulls together the, as I mentioned, the online cost falls from $8.36 to $6.98 and the all-in sustaining cost falls from just over $1,000 an ounce to $968 an ounce.
So I'll just close together the as I mentioned the online cost for some 8066 98 on the all in sustaining cost pools from just over $1000 an ounce.
<unk> hundred 68.
It was announced.
taxation that the the ability to for external sort of viewers to.
Thanks for that.
The ability to.
External sort of view is to to see through the the tax charge for the group in terms of underlying profitability, it's very very difficult.
see through the tax charge for the group in terms of underlying profitability, it's very, very difficult because the main elements of tax being Zimbabwe income tax and Zimbabwe deferred tax are calculated on the basis of local currency denominated accounts.
<unk>.
The main elements of tax beams, Zimbabwe income taxes would probably deferred tax calculation on the basis of local currency denominated accounts, whereas we report.
whereas we report obviously in US dollar accounts, but safe to say that the main components of tax
Mostly in U S dollar accounts, but safe to say that the main components of attacks.
um comprise income tax in Zimbabwe about 2.9 million and also deferred tax with just under one and a half million. If you express that
Comprised of an income tax in Zimbabwe about $2 9 million and also a deferred tax was just under one and a half million dollars.
Express.
income tax plus deferred tax as a proportion of the overall PBT arising in Zimbabwe, it comes out at about 32%.
I think some tax plus deferred tax.
Portion of the overall PBT arising in Zimbabwe It comes out at about 32%.
of Zimbabwean tax, and the corresponding quarter is about 34%. So there is underlying stability in terms of the tax charge in respect of
But we can tax corresponding quarter was about 34%. So there is there is underlying stability in terms of the tax charge in respect of.
of the underlying profitability and then on top of that we incur what are called tax leakage being tax arising in South Africa on inter-company profits and then also tax arising, withholding tax arising on the movement of funds from Zimbabwe to South Africa and from Zimbabwe to the UK.
The underlying profitability and then on top of that we incur.
Tax leakage being tax arising in South Africa on intercompany profits, but also tax horizon withholding tax arising on the movement of funds.
<unk>.
From Zimbabwe, South Africa from Zimbra.
As appropriate to the UK.
So that explains how the overall tax charge arises and what it is.
So that explains how the overall tax charge arises is what it is.
Cash flow was very strong.
Cash flow before working capital increased from £9.7 million to £13.5 million.
Cash flow before working capital increased from $9 7 million to $13 5 million.
Working capital continue to increase somewhat in the quarter, clearly not as not as dramatically as in the first quarter of 2021, which was adversely affected by anomalies in the in the payment system. We are working hard to reduce the overall level of working capital, in particularly inventory levels, and that's going to be a continued area of focus for management.
Working capital continued to increase somewhat in the quarter clearly not as not as dramatically as in the first quarter of 2021, which was adversely effected by anomalies in the in the payment system. We are working hard to reduce the overall level of working capital.
Particularly inventory levels and that's going to be a continued area of focus for management, So net cash from operating activities.
So net cash from operating activities was just over $10 million, compared to, I've got to say, admittedly, a very anemic $2 million in the first quarter of 2021. Net investing continues to be high. We're spending, we spent $10 million in the quarter, both at Central Shaft and on the solar project. And we do expect to have a very high rate of net investment into, in quarter two and into quarter three before it begins to taper off.
Just over $10 million compared to I'm going to say I'm, particularly very anemic $2 million in the first quarter of 2021 net investing continues to be high spending tenant we spent $10 million in the quarter, but the central shaft and on the solar project and we do expect to have a very high rate of net investment into quarter, two and <unk>.
Quarter three before it begins to taper off.
cash position remains strong and I think we've got some more information on cash on the next page.
So the cash position remains strong I think we've got some more information on cash on the next page.
that later on we have some information. The balance sheet very strong, obviously non-current assets increased driven by the rate of capital investment, current assets 35 million, cash and cash equivalents of 15.3, the non-controlling interest of 21 million that reflects the 36% minority interest in blanket mine, and the non-current liabilities of 11.6 that's mainly deferred tax and closure provisions, current liabilities that's mainly trade and tax payables. Including which includes four million dollars of derivative.
Make sure we have some inflation our balance sheet very strong overseas non current assets increased driven by the rate of capital investment.
Current assets $35 million in cash and cash equivalents of $4 53 the.
The Noncontrolling interest of 21 million that reflects the 26% minority interest in blanket mine and the <unk>.
Non current liabilities of 11, 6% mainly deferred tax.
Provisions.
Current liabilities, thats, mainly trade and tax payables, including which includes $4 million of derivative liabilities.
This shows where the cash is. So here we show for the last sort of few quarters or so, the cash split between Zimbabwe, South Africa, the UK. And you can see that at the end of the quarter, the end of March 2022, we apparently have $5.8 million in Zimbabwe, being a combination of US dollars and RTGS. Actually, of that $5.8 million, about $2.3 million was RTGS currency, which.
This shows where the cash is so we.
Here, we show for the last sort of few quarters.
Cash split between Zimbabwe, South Africa, the U K and you can see that at the end of the quarter at the end of March 2022.
Apparently have $5 $8 million.
In Zimbabwe being a combination of U S dollars and all TTS actually of about $5 8 million.
About $2 3 million was.
Our tgf's currency, which is ring fenced.
um against a 90 day letter of 90 day letter of credit so what happens is that um about 5.8 million dollars 2.3 million dollars in rtgs will will be taken out of our bank account in zimbabwe and a corresponding value in us in sorry in the in south africa rams
Against a 90 day letter 90 day metric credit. So what happens is that total $5 8 million to $3 million and our CGS will will be taken out of our bank accounts, and Zimbabwe and a corresponding value in use.
In South African Rand will appear in Caledonia mining South Africa in June so as a new mechanism that we put in place in the course of the year to enhance our ability to move our CGS.
will appear in Caledonia Mining South Africa in June . So that's a new mechanism that we put in place in the course of the year to enhance our ability to move RTG.
into a hard currency being rams, which we then used to procure assets, stuff for the mine. So in Zimbabwe, actually, we were modestly overdrawn at the end of the quarter in in RTGS. So we are not building up a pile of local currency, which is either unusable or unremittable. And we worked very hard to maintain that position. Steve, do you want to talk about the furlough project?
So you have a hard currency being rentals, which we then use to procure.
Sure.
Okay.
After the mine sorry in Zimbabwe actually we were modestly overdrawn at the end of the quarter.
And our TTS, so we're not building up.
A pile of local currency, which is probably their unusable on renewable and we work very hard to maintain that position.
Two of them.
Steve you want to talk about the final project.
<unk>.
You're on mute.
So I guess trying to begin.
Yeah, speaker's on mute. Yeah, sorry. Let's get Donna to talk about the solar farm.
Yes, Steve is on mute.
Yeah, sorry, let's get let's get Donna too to talk.
Talk about the solar farm.
So the solar farm is progressing quite well and we should see during July that we start commissioning and connecting to the mine and we hope to be up and running fully by the end of July , beginning of August . You will see as the video shows, in progress, that the areas that we are going to be working on.
So the solar farm is progressing quite well.
And we should see during July that we start commissioning.
And connecting.
Demand and we hope to be upper running fully by the end of July August .
You will see us to video.
Sure.
Progress that the areas that we were going through.
There you can see the preparation for solar panels in the beginning, and then.
There you can see the preparation for the photo solar panels.
At the beginning.
And then.
Currently, we almost complete all the solar panels being installed.
Okay.
Currently we are almost complete.
All the solar panels being enforced.
I can see it's quite a vast area that we'll see. That video is a few weeks old. I've corrected that, Darla. It's moved on quite a bit since.
<unk> is a global study.
Video is a few weeks old electroactive Donna has moved on quite a bit since then.
You can see the photograph there in the right-hand top corner. Almost completed the installation of the solar panels. And within the next couple of months, we will start using solar panel, which will help us quite a lot.
You can see the photograph.
Barton top corner.
Almost completed the installation of fulfilling the solar panels.
Within the next.
And the next couple of months, we will fold using solar per barrel.
Help us quite a lot.
I just want to remind everybody that these panels will be following the fun.
Just wanted to remind everybody that these panels will be following the fund.
Yeah, so that they tilt so that they follow the sun to improve their efficiency.
Yes.
So they buy from us.
Just a word on the dividend. We pay a dividend of 14 cents a quarter. We've held it. We've increased the dividend quite substantially over the last few years, but now we decided to hold it at 14 cents a share.
These are efficiency just to put them on the dividend.
We pay a dividend of 14 <unk> quarter withheld we've increased the dividend quite substantially over the last few years, but now we decided to hold it up 14 cents a share.
given the the high level of capex this year and also as we begin to position the company to
Given the high level of Capex. This year and also as we begin to position the company to <unk>.
to invest in new projects, of which Marley Green is probably the frontrunner. So the company is transitioning a little bit away from being a sort of one trick pony, focused on blanket, to actually now beginning to look at investing in new projects. And hence, it's appropriate to.
Investing in new projects of which multi greed is probably the sort of the front runner. So the company is transitioning a little bit away from being a.
So one one trick pony focused on a blanket.
Blanket to actually now beginning to look at investing in the projects since appropriate.
over time to begin to accumulate some more cash so we can bring those projects forward.
Over time to begin to accumulate some cash too. So we can bring that project forward.
So Steve we're finished.
Short and sweet. Very, very nice to talk to a great set of results. So thank you, Mark.
Short and sweet.
Very very nice to talk to a great set of results. So thank you Mark.
There are a couple of questions that have been typed into the Q&A session. I'll ask the team just to have a look at those and if anybody else wants to ask a question, please raise your hand and then Camilla will drive the system accordingly.
There are a couple of questions that are being typed into the Q&A session.
I'll ask the team just to have a look at those and if anybody else wants to ask a question. Please raise your hand and Camilla.
To drive the system Accordingly.
Shall I deal with the first one of cash? Increase dividends or pursue expiration? It's fair to say that over the last.
So I'll deal with the first one the cash increase.
<unk>.
Dividends are pursuant to pursue exploration, it's fair to say that.
Over the last seven years, we've probably not dumb blanket the justice deserves in terms of exploration expanded exploration expenditure.
seven years or so, we've probably not done blanket the justice it deserves in terms of exploration expenditure. Exploration activities have historically been focused just going deeper and deeper and deeper, and in the last few years we've just not had the flexibility underground to do that. So we do intend to resume that deep level exploration with a view to improving the confidence level of those existing inferred resources, that depth, but also finding more material.
Exploration activities have historically been focused just going deeper deeper deeper.
And in the last few years, we just don't have the flexibility underground to do that so.
We do we do intend to resume the deep level exploration with a view to improve the confidence level that there is existing inferred resources not depth, but also funding more material this year.
From memory, I think it's in the back end of the year, we were proposing to do 15,000 metres of drilling. Next year, 25,000 metres of drilling. But in addition to that, we also believe there's potential for
And from memory I think it's in the backend of the year, we were proposing to 15000 meters of drilling next year 25000 meters of drilling but in addition to that we.
We also believe there is potential for <unk>.
for drilling in the shallower areas of Blanket, which have been, historically people have just gone deeper and we think there are some areas there that merit further attention. In addition, we feel that there's potential for exploration immediately outside the existing mining areas, so that's to the north and to the south.
Drilling in the shallower areas blanket, which have been historically people just come deeper and we think there.
Some areas that have merit further retention. In addition, we feel that the potential for exploration.
Immediately outside the existing mining areas to the north and to the south.
and then also we'd like to begin to look at something called the Bambid Ironstone Formation which is about 800 meters to a kilometer to the east of the current mining area. So there is actually quite a lot of exploration potential of our blanket itself.
And that also we'd like to begin to look at something called the <unk> formation.
Which is about 800 meters to a kilometer to the east of the current mining areas. So there is actually quite a lot of exploration potential.
which I thought would cost probably two, three million dollars a year.
<unk> itself, which also would cost probably $2 million to $3 million a year. In addition to that we are.
In addition to that, we are looking at Molly Green at the moment, we're reevaluating old drill core with a view to improving the confidence level of the existing resource base, which is about 940,000 ounces at 1.9 grams a tonne.
Looking at multi green.
Moment, we're reevaluating all drove coal with a view to improving the confidence level of the existing resource base, which is about 940000 ounces at one nine grams a tonne.
So we do we do intend to spend more money on exploration and it's going to be a balancing act between how much money we choose to retain in the business to fund those projects.
We do intend to spend more money on exploration and it's going to be a balancing act between how much money, we choose to retain in the business to fund those projects and how much we choose to double back to shareholders.
and how much we choose to divert back to shareholders.
so that, well when I say divert that kind of implies it's not a useful use of the money, clearly it is a useful use of the money, so it's a balancing act. At this stage we're sort of pausing to let the fact pattern catch up with where we are. I think that's the only answer I can give to that question.
So what does that does that kind of implies a useful use the monetary didn't use we use the money. So it's a balancing act to this stage with sort of pausing.
Let the.
Catch up with where we are the only answer I can give to that question Amit.
Okay.
Thank you, Mark. Yeah, how the the increase in the DNA costs, that's not just particular to us. It seems to be reflective from the beginning of the COVID pandemic. Looking across at American listed companies, but the whole market has gone has gone
Thank you Mark.
Yes.
The increase in the D&A cost sets not just particular to us.
It seems to be reflective from the beginning of the Covid.
Pandemic.
Looking across at.
American listed companies, but the whole market has gone is gone.
nuts. And it is it is a huge cost. We used to pay $80,000 a year in premium. We're now paying just over a million. So that is that is
And.
It is it is a huge cost we used to pay $80000 a year in premium we now paying just over $1 million.
So that is that is very expensive.
Joseph, the workforce, as Mark mentioned, is now being paid 100% in U.S. dollars.
Joseph.
Workforce as Mark mentioned is now being paid 100% in U S. Dollars. So they are in the best situation to fund themselves against rising costs and the rising inflation in Zimbabwe is nothing more we can do to make.
So they are in the best situation to fund themselves against rising costs and the rising inflation in Zimbabwe.
There's nothing more we can do to make their lives easier. They already paid above the unionized market rate.
Make their lives easier.
Already paid above the unionized market rate and.
and we pay 100% in US dollars, so they are in a good space from a Zimbabwe perspective, but all of us are being affected by these rising fuel costs and we'll just have to watch the space.
And we pay 100% in U S dollars so.
They are they are in a good.
Good space from <unk> perspective, but all of us are being affected by these rising food and fuel costs and.
We'll just have to watch this space, but it is fair to say it is fair to say that the.
But it is it is fair to say it's fair to say that the, the, the complexity of the.
The complexity of the exchange rates environment in Zimbabwe must be underestimated.
The exchange rate environment in Zimbabwe mustn't be underestimated. So as dollar earners, our workers presumably benefit from the informal exchange rate, which runs at a massive, massive premium, whichever way you want to look at it, to the official exchange rate. So their buying power in local currency is increasing very, very quickly indeed, which is probably more than weighing the effect of genuine food price inflation.
S dollar owners are work because presumably.
From the informal exchange rate, which runs.
Massive massive premium we don't look at it to the official exchange rate so that buying power in local currency is increasing very very quickly, indeed, which is probably going to move them.
Laying the effect of genuine food price inflation.
Mark, if I can just add that currently there's no complaints from the mine site. The fact that we're all paying 100% compared to previously only paying 60%, the workforce is really in a good position.
Mark if I can just add that.
Currently there is no complaints from the Monza.
Fact that we are paying.
And at the same compared to previously only buying 60.
The workforce really in a good position.
They're not complaining, they're happy. And even with some increases we see, they're in a much better position than last year.
But they are not complaining the heavy.
Even with some some increases we see.
Much better position than last year.
I think Don I should talk about some.
Economy.
About <unk>, yes. Please.
So Molly Green, what we found is that there is a inferred resource. And we've got enough information that by re-logging and having a look at a core that's all available, that we can upgrade that into a...
There are multi green what we found is that the ease of <unk>.
Resource.
We've got enough information or re logging and then when we look at a quarter that's all available.
We can upgrade that into into.
Okay.
<unk>.
Yeah.
improved results and also what I'm looking for. Improving the confidence of Gemini.
Improved results.
And also what I'm looking for.
It is up to them.
Yeah, indicated results. And we're busy with that work. It's about 80% complete. And then we will file a new resource and report back to the market. But we are confident that we can actually
Yes.
Results.
And we're busy with that work.
We compete in.
We will following the results.
The report back to the market, but we are confident that we can achieve.
That's right, that's was one of the exercises you can.
Upgrades resourcing referred to.
I guess the idea then would be that with an increased confidence level, we would then proceed as quickly as we could to the feasibility study with a view to making some money out of the mine. The only thing I'd add to that is it may be that that asset could be overtaken by another asset which may be more attractive and therefore pushes Marley Green down the pecking order. We do continue to look at other assets in Zimbabwe.
I guess.
And then would be that with.
With our increased confidence that we would then proceed.
Because we could to the feasibility study with a view to two.
I can make some money out of the mine.
One thing I'd add to that as it may be that that assets could be overtaken by another asset which may be maybe more attractive and therefore pushes pushes Molly green down the.
On the pecking order.
Do continue to look at other accessories above.
Thanks, Mark. I think we've answered the next question in terms of the status of new mining projects. Our projects, new projects are brownfields. They are not mining projects at the moment. So I think Donna has answered that one already.
Thanks Mark.
I think we advanced to the next question in terms of the status of new mining projects.
Ah projects new projects.
<unk> fields.
Our lock mining projects at the moment.
I think Don the results of that one already.
Alan, you ask if exploration reveals increased resource, can plant increase capacity relatively easily? You're obviously talking about at Blanket and Blanket does have some spare capacity, both in hoisting and in the CIL, but we are, we will.
And then you ask if exploration reveals increase resource can plants increased capacity relatively easily you're obviously talking about etch blankets.
And blanket does have some spare capacity.
Both in hoisting and in the CIL.
We are we will.
We will manage that situation because in the ramp-up process, we've got to get tons up to about 2,300 tons a day. We've got milling capacity at that rate once the new mill that is being installed is in operation. And we will have to then look at the cost of any incremental plant capacity.
We will manage that situation because in the ramp up process, we've got to get tons up to about 2300 tons a day.
We've got we've got milling capacity at that rate once the new mill that is being installed.
Is in operation and we will have to then.
Look at the cost of any incremental plant capacity, but.
That is not the big money, so I'm sure if additional resources are found that are economic to get out of the ground, then the right to engineering decisions can be made. Otherwise, the other projects are not contiguous to blanket, they'll be standalone. I forget, how much is BM10? I thought it was about $800,000, wasn't it?
That is not the big money, so so I'm sure.
If the if additional resources have found that our economic to get out of the ground in the right engineering decisions can be made.
The other projects are not contiguous to blanket there'll be standalone I forget how much would be im tenants about apples, but actually the agent $1000.
1.5 million okay okay but it's not big it's not it's not a large amount of money and it's relatively quick
One quick follow up familiar okay. Okay.
Big part of it it's not a large amount of money and it's relatively quick.
in the ordinary environment to get these things. But I just want to add that if we need to add another mole, it will not be as much as the ball mole is concerned. We've got re-grind moles and then we've got our rod moles. And the re-grind mole that we added now...
And the order environment to get these things.
I just wanted to add that if we need to add another more.
It will.
We will not be as much as us.
So as the mobile market is concerned.
We've got three ground more so than we've curtailed locomotives.
And the recurrent mould added now.
um it's actually added quite a lot of capacity um and we will in future if we look at expanding we will add our primary mills which is the road most and mark there you are correct the last one we we added was about 750 000 so it won't be as much as the
It's actually.
Quite a lot of capacity.
And we will in future if we look at expanding we will.
Primary most which is the rightmost.
More visual loss.
Also we added was about seven.
Similar to $2000.
So it won't be as much as to regards more so and it's modular if we want to add another more yes, you're talking about $800000. If we wanted to do that.
So, and it's modular. If we want to add another mole, yes, you're talking about $800,000 if we want to do that. And then if you want to add, give it to the CRL tanks, but roughly we just, you know, with the mole currently, we're adding an extra tank and that's about $200,000.
Then if you want to add.
Thanks.
Roughly we just given what the the more.
Currently we are adding an extra.
And thats about $200000.
So if we need to increase, you're looking at extra 10, maybe an extra primary roadmap. Yeah, but put all of that in the context of the fact that mine's making approximately a million dollars a week of operating cash flow.
So if we need to increase youre looking at extra <unk> extra property broadwell.
Yes.
Put all of that in the context. The fact, this mines, making approximately $1 million a week of operating cash flow.
Yes.
Will asks a question about concerns about increasing consumable costs and possible supply chain issues. Yeah, well, we have to be cognizant of that. At the moment, we are not experiencing any supply chain issues, but we are experiencing certain consumable costs increases.
We'll we'll asks a question about concerns about increases increasing consumable costs and possible supply chain issues, yes, well, we have to be cognizant of that at the moment, we are not experiencing any supply chain issues that we are experiencing certain consumable costs increase.
explosives affected by the international change in pricing, so we are managing our working capital to the best of our ability. We're buying as intelligently as we can, but I think this is a fact of life, and it is something that our procurement people have to watch very, very close.
<unk>.
Explosives affected by the international change in pricing. So we are we are managing our working capital to the best of our ability we are buying.
As intelligently as we can but I think this is a fact of life and which is something that.
Our procurement people have to watch very very closely.
We have the ability to check whether anybody is trying to take an opportunistic approach.
We have the ability to.
Check with anybody is trying to take.
Opportunities stick approach to these rising prices and trying to profit yet and we will keep very very close eye on that but yes diesel we're seeing diesel prices going up already quite significantly and as mark has already spoken.
We do use quite a lot of diesel without Jane sits as a solar farm is very very important to us.
Those things are just wanted to add that.
You can also see is that still the SKU across the quarter.
Our capital projects.
And some of because of what we're testing we see Sunday lunch.
Not a big device, but.
<unk> got a month or so that we see that.
Yes.
Arthur.
The right bar because of the effect of more.
But we haven't seen severe increases yet.
Lower diesel and fuel and then some explosives.
On the question about supply supply chain.
Well intended the spot we were somewhat concerned about.
The extent to which our supply chain reliant on bringing goods up from South Africa through through pipe Bridge, and we were pleasantly surprised all of the virtually everything for the for the solar project came through from the east.
And we were pleasantly surprised all of the virtually everything for the for the solar project.
Came through from the eastern border place through Mozambique.
Actually worked very well.
And also we are beginning to explore whether we can bring in.
Projects from the from the West through <unk>.
So we're trying to create more flexibility to protect ourselves in the event that the South African border suffers from the same sorts of disruption that's happened.
So we're trying to create more flexibility to protect ourselves.
South Africa Board of suffers from the same sorts of disruption that happened last year and that will see the interaction in South Africa.
But it's fair to say most of our stuff does still come through ByteBridge. Yeah. Yeah.
So let's try to spend most of our sectors does still come through by branch.
Yes.
Mark maybe you want to just look at Joseph.
Question on cash flows and new.
Mining assets.
Okay.
Just below <unk> with all the recent approved brokers and customers appear sufficient efficacy.
Australia.
Anything anything anything of any multi multi green.
$1 1 million ounces could possibly supporter of mine.
Of say 50000 to 2000 ounces, that's going to cost about $60 million to $70 million.
There's no way, we could do that from our own.
Our own internal cash resources, even if you stopped the dividend some of them are still going to cover.
Coverage.
When we make any investment evaluation.
Taking take into account the.
The obviously the the money that we expect to come from the project many shares that we'd have to issue from the projects.
And at the moment, we believe if we didn't do anything if we just run blanket for cash we'd be able to distribute northwest. The number today is about $2 75 to $75 a share that would be that will be leaving nothing until just would just run. It. If we just ran this business for cash we could distribute $2 75.
we could distribute $2.75. When we evaluate new projects such as Marley Green, we need to be comfortable that taking everything into account, both the shares we'd need to issue to fund the capital program.
When we evaluate new projects such as multi agreed we need to be comfortable but taking everything into account both feet.
The shares would need to issue to fund the capital the capital program, we need to be confident that the amount of cash we could distribute per share fully diluted must be appreciably more than say $2 75, otherwise, it's not worthwhile to just not worthwhile. So we do take that into account.
we need to be confident that the amount of cash we could distribute per share, fully diluted, must be appreciably more than say $2.75, otherwise it's not worthwhile. It's just not worthwhile.
Mark, if I can take the question earlier, because one of these new projects could go into production, I would say that
Mark if I can take the question on the earlier to one of these new projects could go into production.
I'd say that.
within the next two years, hopefully we will start building a new mine. And then, you know, if it's two years start to build a mine, then it will take about one and a half years that you will start breaking even and start making money.
Within the next two years, hopefully we will start building a new mine.
And then.
Two years start to build in London April think about 100 and all of us.
That.
You will start breaking even and start making money.
So I would say within the next.
Three or four years, you will start seeing.
A new one.
Looking off to itself, but adding to production I would say within the next three years because.
Contribution from our new project, adding to their offices.
Okay. So building on what <unk> just said, let's just following on from what I said it doesn't mean, we would need to raise all the money for a new project by issuance of equity clearly, we would expect to build to raise some debt.
Let's forget let's not forget any new project sort of Citigroup.
So any new project will be that we can we can export the gold ourselves and therefore that means that that project will be capable of debt funding.
So we do expect to make some contribution to the cost through our own retained cash so it's not as though we'd have to go to the equity markets.
All of the all of the required funding and let's face it if if.
For whatever reason the equity markets are closed for whatever reason, we just do the project will slowly just defer it and do it as we did it.
As we did the central shaft, just do it by by <unk>.
Bye bye phasing and so we reinvest the cash that we are generating ourselves.
So thank you thank you to the team.
Just wanted to see if there's one more thing I mean I didn't see.
Some comment somewhere.
Management should.
<unk> put out some sort of guidance about a recent announcement from us about the government relating to trying to clamp down on.
Foreign exchange controls.
So there was I think Bloomberg Bloomberg reported a.
Speech, given gogra, it's fair to say the monarch, what makes these speeches and announce is big picture policy changes.
But the detail invariably doesn't doesn't become clear.
Days, if not weeks after that when the speech.
Speech has been converted into.
This guidance issued by the <unk> under the relevant statutory instruments.
In respect to that particular change in policy at all we believe it means is that.
Our existing overdraft facilities at the mine.
Probably been cancels a $3 million in existing overdraft facilities, probably becomes although we don't currently have a rough right.
Right now, but we are confident that thats, just a timing issue and we will get those overdrafts reinstated.
If you need them, particularly but just understand that it's very difficult for us to respond quickly to those Bloomberg reports because the underlying facts take quite some time to establish.
Yes, mark into to support that even now we are hearing that.
The gold sector will be exempt from from those those new.
Announcements made by the president, but until we see it in the statutory instrument, which is the the legal standing.
We have to we just have to keep talking to the relevant authorities, but as Mark says it only becomes is that it becomes fact.
Once the statutory instrument has published.
And then we adjust accordingly.
Got our finger on the pulse that Mark says.
We are in a position, where we can parallel run, but which is which is very comfortable.
Having said that the.
Is it genuinely is fair to say that the various mechanisms that we use from moving money around the place.
Have stabilized the system, although it's complex.
<unk>.
Better than it has done for many years so we.
We find we're finding it won't say easy, but we're certainly finding a very manageable to work in this environment.
And I think that reflects the fact that just the syndrome just much more in the foreign exchange available in Zimbabwe.
Okay.
And the last quest.
Question come in from Anthony Mitchell.
Okay.
Ti's evening.
Operating costs I think.
In terms of.
No no. Thank you if you have seen.
<unk> net income.
Yes.
In our January .
Our prices are much cheaper than underground.
Because first of all your Workforces looked both smaller and you are talking about CLO paper compared to.
We are employing over 2000 now.
And.
So that's why you can operate in a crude cost months can make money at one gram a tonne to one in Austria.
And.
I don't know if that answer your.
Christian but normally.
Additionally of course market operates at about half the cost of the federal government.
We've got.
Quite a lot of it we use quite a lot of information from.
Technical <unk> technical consultants regarding a sort of ballpark.
Capital costs, some ballpark operating costs for.
Opencast underground operations of a particular type, but clearly before we make any investment decision even if even if we are going to fund the thing.
The internal cash flow, that's more equity into equity.
Do it we would do a feasibility study to get to get better clarity on that.
I think the biggest advantage of our surface operation is that you can get it up and running very very quickly normally you can get it up and running and paying for itself within two years.
The underground mines.
10 years, if Youre Lucky and then you start production.
Our slot less risky.
The product without personnel for his everyone everyone can see mistakes that underground mine.
Yes.
Yes.
Are you finished.
Yes, so that is answered all the questions.
I see no more coming in.
Yes.
Thank you to all the participants thank.
Thank you to the team for answering and.
We look forward to talking to you again, and we're very pleased to have been able to present the results of a very good quarter and giving you an indication that.
The central shaft investment is beginning to pay off.
And therefore, we have confidence to reiterate our guidance between.
Between 73% and 80000 ounces and as you see April is already indicating that the mine is performing extremely well. So thank you. Thank you for participating and we look forward to talking to you all again on our online last night, there's got to be said that this is this is Steve final quarter.
Quarter reporting quarter, as chief executive who will be stepping down at the end of at.
At the end of June .
On behalf of his colleagues who would like to thank him for all the work is donaldson's sort of late 2014 is rehabilitated the company we've made some great progress.
Alright, please handing over in reasonable shape, Steve. Thank you very much.
Thank you Mark and I know the team is going to be.
So going forward and it's very very pleasing that.
That the succession.
Work, we have done is paying off.
The phases are going to be familiar to all of you.
So you are in good hands and I wish I wish the team all the very very base.
So thank you all thank you both.
Thank you. Thank you.
Yeah.