Q1 2025 Caledonia Mining Corp PLC Earnings Call

Mark Learmonth: Ladies and gentlemen, welcome to the Caledonia Mining Q1 results I'd like to hand over to Mark Learmonth, CEO. Mark, please go ahead. Thank you. If we could go to the disclaimer page, please. Okay, so the standard disclaimer for the statement, which I assume everybody will take note of.

Mark Learmonth: Shall we just go to the presentation team next, please? Okay, I'd just like to introduce the team.

Mark Learmonth: So myself, Martin Learmonth, I'm Caledonia's CEO. I'm joined, I'm in Jersey, I'm in Jersey today. I'm joined by Ross Gerard, who is our CFO. He's sitting next to me.

Victor Gapare: In Parare, we have Victor Gapare, who's an Executive Director of the company.

James Mufara: Also joined by James Mufara, our Chief Operating Officer, who's in Johannesburg. And he's with Craig Harvey, who is our Vice President, Technical Services, who will say a few words about our exploration programme and our near-term living opportunities.

Mark Learmonth: We're also joined by Rossi Arnott-Soccer from Blanket Mine. He is the Group's Safety, Health and Environmental Manager, and he'll be saying a few words about our new initiatives on safety. And also in attendance, we have Maurice Mason, Vice President, Corporate Development and Investor Relations, and Camilla from GroupComm. So it's quite a large team, and we're going to cover quite a lot of ground. So some of the slides I'm going to speak to quite quickly to leave space for colleagues. So if we could just move on to the next slide, please. I'm not going to go into this, I'm not going to start throwing numbers around, because Ross will do that.

Mark Learmonth: But it was an excellent quarter, strong financial performance, record gross profit. We strengthened the balance sheet, more particularly after the end of the quarter. So in early April, with the successful sale of the Selma plant, but Ross will tell you more about that, clearly helped by the higher gold price, we realised just under $2,900 an ounce, which helped everything. But then also a good operational performance, production was strong, we produced and sold 19,000 ounces of gold compared to 17 and a half in the comparable quarter.

Mark Learmonth: But one thing I would just like to touch on is that final bullet point, I want to draw your attention to some of the steps we've taken to strengthen the board and the management team. So recently, we've had two new non-executive directors joining, Stefan Bass, who's a mining engineer in the, he was previously at ArcelorMittal, and Leslie Goldwasser, who's joined us from the States, where she'll give us help and support, particularly in terms of corporate finance and capital allocation. One Ned retired at the most recent AGM last week, that's Johan Holtzhausen, he retired as a non-executive director, and he was also the chairman of the audit committee.

Mark Learmonth: I just want to make the point, these changes at the board level are part of a structured and orderly Rotation to make sure that we regularly change one or two NEDs rather than have a sort of a cliff effect where we have to change a lot all of a sudden. So there's nothing untoward there.

Mark Learmonth: Then finally, Ross joined us as CFO a couple of months back, and he'll say a few words just before he starts to run through the financials, and we're very, very pleased to have him. Could we move on to the next page? Well, this is just a summary, all these all these numbers will be spoken to exhaustively by colleagues. So Ross will go into more detail on the finance and James will go into more detail on operations. So given the fact we've got a lot to cover, I really wouldn't spend any more time on this page.

Ross Gerrard: So with that, I'll hand over to Ross to take us through the financial results. But before he does that, if we could just pause on this page to allow Ross just to introduce himself, and to say a few words about why he joined Caledonia and what the particular traction was. So, Ross, over to you. Thanks, Mark. And good afternoon, everybody. It's my pleasure to talk you through these financial results. And first time for me as the CFO. There's a little bit about me, Ross Gerrard. I've joined Caledonia after spending just short of the last decade with a company called Sentiment PLC, which is a FTSE 250 dual listed company.

Ross Gerrard: And it was taken over by Angelo Valdachanti late last year for two point five billion dollars. During my time at Sentiment, we achieved many milestones over that time, some some good and some not so good. But importantly, in the second half of my time at Sentiment, it was basically navigating the reset to the tier one mine, and that's the Sakkari gold mine in Egypt, resetting that mine for the next decade and beyond. As part of that reset, it was not just looking at production profiles and life of mine, but importantly, lowering that oil and sustaining cost base.

Ross Gerrard: and setting that mine up to provide or be the growth engine for a multi-asset portfolio. was through consistent delivery, we were able to demonstrate this recess and basically reinforce or make the investment case. For a mine in Egypt, it was really a little bit of an unknown mining jurisdiction, that being Egypt, and the result exiting was really that we put both the company and the country on the map that could no longer be ignored from a mining jurisdiction or destination. So bringing that back to why I joined Caledonia, I see a number of parallels to that in terms of having a wonderful operating mine in Blenheim.

Ross Gerrard: You know, it's been producing for a considerable amount of time and importantly, has a long and exciting future ahead of us. It's running well and with further optimisations and cost reductions, we have every opportunity to turn this into a real cash or a serious cash generator that will underwrite or provide a good platform for future growth and development opportunities. And many of those opportunities are already in the portfolio, which makes it even more exciting. And we operate in Zimbabwe, which is a mature mining jurisdiction. As I said, like it's been producing since 1907. And we have a highly skilled workforce to know how to operate in country.

Ross Gerrard: Personally, I'm very biased, I'll be honest, you know, being born in Zimbabwe, so it's great. And I'm really excited about spending more time back in country. But I believe it's an exciting jurisdiction to operate in. And particularly when you look elsewhere around the world, and particularly throughout Africa, I think we're very fortunate to be able to operate in the country that we do. And it's very much changing this concept of perception versus reality in terms of operations there. So I'm very excited about both Caledonia and the Zimbabwe opportunity. When you look at it, it's both the quality of the asset, the quality of the team that's already there, and the opportunities that we have to maximise this growth.

Ross Gerrard: It's really quite appealing and compelling.

Ross Gerrard: So that's the end. But importantly, let's take a dive and have a closer look at the quarter. If we can turn to the next slide, please. Our gold revenue for the quarter was up at $56 million. So that was up 46% on the comparative quarter. And this was really driven by good gold production, both in terms of blanket and bilbo's oxide at 19,000 ounces, which is up 9% on the comparative quarter, with the added benefits of an average realised gold price of just a shade under $2,900 per ounce, which is up 42%. So this increase obviously meant that there was a higher royalty that was paid for the period, which you'll see is up a similar 47%.

Ross Gerrard: James Mufara, our CEO will take us through some of those operational highlights a little bit later in this presentation. But basically, it was driven by higher tonnes and being mined and milled, which had the resultant impact on production costs. It was a great volume equation in terms of the deliveries for the quarter. And that's where you see that those production costs are up some 19% at $22.6 million against the comparative quarter. That increase was primarily due to higher labour, power and consumables costs. And we'll go into a bit more detail later in the presentation in terms of that breakdown.

Ross Gerrard: But very importantly, as you can see at the bottom right of the of the chart, we delivered a gross profit of $26.9 million, which is up 95%. And importantly, is a quarterly record. So let's just take a pause and talk a little bit more about that gross profit and trends in a bit more detail.

Ross Gerrard: So if we can turn to the next slide. Here you can see on the slide in terms of mapping our profile of profit over the previous period, both 23, 24 and into 25, you can see consistent and significant increase in the gross profits through that period. What's really important is that we've increased considerably over the post-dose challenges in 2023, where you can see the difference in the orange line and the blue line, which is blanket standalone. And those were really the challenges in terms of what we termed the Bilbo's oxide phase. And we no longer have that negative impact on gross profits from Bilbo's coming through.

Ross Gerrard: And basically Bilbo's is able to... pay its way and no longer have a negative impact. That's a really important story in terms of how that's come together.

Ross Gerrard: And I talked about recess in my intro, and I think this is one clear example in terms of being able to reset the strategy and and relook at the group and the benefits and seeing that those benefits are actually being realized, both in terms of trajectory of that gross profit line, but being able to mitigate some of these challenges.

Ross Gerrard: So I want to move back and talk a little bit more about those production costs. So if we can turn to the next slide, please. You can see in terms of our guidance ranges and blanket online costs of 1050 to 1150 pounds, our costs are slightly higher than that guidance range. And those main increases are shown on the left chart, predominantly in that dark blue colour of labour consumables and admin costs. Some of those labour and consumable costs are really a result of those additional challenges and the overtime work to achieve the targets during the period, and the production bonuses paid that were needed to achieve the quarter.

Ross Gerrard: We do, however, have several initiatives in place that will address these costs. And I believe that overall, the annual guidance is still well within range and will be achieved over the year. So we don't have concerns with that as these initiatives come into place. And James, again, will talk about some of the initiatives that we're rolling out. On the right of the chart, you'll see the all-in sustaining costs, and these have been impacted by admin and capital expenditure, which are higher when you're looking back at the comparative quarter. And a lot of those admin costs, again, are one-off costs, as well as having a higher CapEx profile that was scheduled for the year.

Ross Gerrard: So, again, over the year, we expect these to be normalised and come back to within the ranges that were guided. Some of those one-off costs, when we totaled them up, it was almost $2.2 million, or bringing it back into ounce terms, $110 an ounce, or just short of that, when backed out. So if you back those out against those guidance ranges, we're well within the range, we're actually at the bottom end of that range. And we'll talk about those costs in a minute.

Ross Gerrard: So if we move to the next slide, please. Drilling into a bit more detail below the gross profit line, the first one is those net foreign exchange losses. And I'm glad to say that we didn't have a big impact of exchange losses this period, when compared to the previous quarter of 4.9 million. But while this is a pleasing result, we really are actively trying to manage and mitigate the impacts of any devaluations in the business. And that's an ongoing work stream. But importantly, that exchange loss is both realised and unrealised in terms of what is incurred for the quarter.

Ross Gerrard: So while we're well-placed, it is very much a watching brief in terms of impact to the business. You will see mention in terms of the increase in working capital, that we are deploying a lot of cash into working capital, prepayments, stores, inventories and the like, in trying to best minimise any impacts of currency. And again, it's been beneficial, but it is a watching brief in terms of how we go forward. Corporate was a big line item as you will see at $6.9 million. and again that was due to a number of one-off settlements that were done in terms of the reshuffle of the HR strategy and headcount that came through and a number of areas in the admin section that came through.

Ross Gerrard: One in particular on admin that I must highlight is that the company had previously entered into a series of gold hedges or rather put options that set the floor in terms of gold prices that were to be received. These hedges or put options were basically an insurance policy that would set the floor and wouldn't mitigate or we wouldn't be disadvantaged by any upside in the gold prices but I'm glad to say that with the gold price where it is and where it's expected to go that those prices are above the hedge limits which means that we've fully expensed the hedges and they've been written off in the income statement to the amount of 1.3 million that sits within that category.

Ross Gerrard: So it's a good position to have whilst we actually never want to use a hedge it's like an insurance policy and you don't want to ever dive in and use that but that has had a consequential effect on the income statement.

Ross Gerrard: If we can move to the next slide, we'll have a little look at the cash flows for the period. There were increased cash flows from operations were up at $18.7 million for the period, driven by what we've discussed already in terms of the presentation of both gold price production and cost. with an increase in working capital. You can see the increase in terms of trade and other receivables that I've mentioned, and that was an active decision in terms of what we paid. Next, cash from operating activities more than doubled at $13.3 million compared to $4.9 million in the comparative quarter.

Ross Gerrard: And even after the higher taxes, this provides a solid foundation for some internal funding for capital investments and debt production. So you can see that we did have a higher level of taxes, as I mentioned, and this was due to the good performance, but also from timing of payments that were outstanding at the end of the fourth quarter that came and were paid in the early quarter of 2025. and those higher investing spend or activities are again in line with guidance. The net cash position improved, so you'll see at the bottom of the slide, to a negative $4.6 million at the end of the quarter, and that is compared to a negative $14.2 for the comparative period, which is a great result for the three months.

Ross Gerrard: So moving to the next slide and talking about what that means for cash flow. We've been really pleased with our results and the ability to capitalise on both gold price or for good production base. And with a focus on costs, we expect this to continue. This slide shows our cash held across the various jurisdictions and how this has evolved over their quarters. But the second graph below is really the exciting one, which shows the consistent increase in cash each quarter, which is really, really pleasing. And that consistent delivery of both ounces and benefited by the gold price, we expect that to continue further on into 2025 and for the full year ahead.

Ross Gerrard: However, what you don't see on this graph is that where we sit with our current cash position. And following the completion of the solar plant sale in April 2025, our co-former net cash position improved to $18.6 million, which really provides us some flexibility for growth and the growth initiatives. And we expect this cash balance to build. And we put that cash sitting in Jersey in deposit accounts, and we tuck that away and we expect that we'll build on that, that good performance as we go forward.

Ross Gerrard: So overall, a really pleasing quarter that gets our 2025 off to a very good start.

James Mufara: And with that, I'll hand across to James Mufara, our COO, who will talk us through some of the operational performance. Thank you very much, Ross. I mean, for that introduction.

James Mufara: Good day to you all. is already stated by by Ross and Mark at the beginning. Blundell achieved record quarter one production of ounces. And if you can just go to the next slide, then please. You will see that is depicted. First, I just want to start to talk about the graph at the bottom, which shows the ounces. This record production of ounces was a result of, you know, intentional decisions that we took as management of Caledonia. For the key decisions that we took, I want to bring them to your attention. The first one is improved focus on health and safety, which I'll allow at the end of my presentation, Oceana Tsoka, to talk to and detail a little of some of those initiatives.

James Mufara: The second decision that we took was to decouple the mine from the plant, and we had two initiatives to make this happen. The first was to have a forecast management team that just produces from underground, and a forecast management team that also does production in the plant, since these are two businesses that are not necessarily the same. The second thing that we did to decouple the production was to create a stockpile. I mean, in the fourth quarter of last year, we realized the need that there was need to have a stockpile so that we can have smooth production in the quarter.

James Mufara: What you don't want is the day that the mine has not produced, we are not in a position to produce in the plant. We made a deliberate decision towards the end of the year, end of November, beginning of December, to build a stockpile so that we will be in a position to consistently produce, even if we should have glitches on the mine. And this actually enabled us to decouple the mine from the plant. The third decision that we took also was to improve employee engagement. We did this through quite a number of initiatives, you know, one of them including management by workup, which means engaging the employees, what is the feedback from the employees, and what is the feedback from management.

James Mufara: The fourth action that we took to get to this record production, which was not in any case an incident, which didn't surprise us, it was deliberate action, was to start introducing short interval controls so that we will be in a position to control what's happening with the mine within shorter periods of time. You will see that this resulted in the record production that we now see. Going to the top graph, which is the first graph that you see, you will see that although we have had, you know, quite a sustained increase with regards to our turnage over time, the orange graph, which is the gray graph, is almost stagnated over time.

James Mufara: This is receiving attention through analysis that we are generating in the better grade areas so that we can improve, you know, our grades with time. In the quarter, more importantly in the quarter that just passed now, we actually saw an improvement of grade from 2.78 grams per tonne in January up to the, you know, when we ended the quarter in March, we actually ended on 3.3 grams per tonne. So this strategy is actually gaining traction and we are happy with the strategy that we have to improve. If you may kindly just get to the next round.

James Mufara: So the graph depicts how the actual production, okay, in the quarter, throughout the quarter, from January as compared to the budget that we have for the quarter. So if you look at this graph, it will show you the orange line is the actual production that we actually produce from the plant as of gold. And the purple line represents the budget ounces over the same period within the quarter. This is a very nice graph. It's a dream graph where you see that consistently throughout the quarter, the orange line remained above the purple line, which is showing both a flawless and a consistent delivery by the team.

James Mufara: If you look at the, I mean, this graph also shows us that we had a little bit of a glitch, which I've already alluded to with the grade, which was a 3.09 grams a tonne against a plan of 3.21. I've already alluded to the fact that we started off on our back foot with a grade of 2.78. However, we ended the quarter on a good grade, well above the plan of 3.3 grams per tonne, showing that the initiatives that we had put in the quarter had paid off. The stockpile assisted us to leverage the consistency also with regards to the mill throughput, showing that the decisions that we've taken, the deliberate decisions that we've taken in the fourth quarter began to pay off in this particular quarter.

James Mufara: If you can just turn to the next graph, So the graph, I know, shows the different graphs, which is the three graphs that you will see there. They show the measurement of the key performance areas of the mine and the different sections in the mine. of importance is to see that all the areas which is on the left-hand side, you know, the table on the left-hand side shows that all the key performance areas were actually exceeded. I mean, this is broken tons and these are the key inputs into what we produce on the mine. This resulted actually in the surface top part, which we had already built in the fourth quarter, which was 7,000 tons, doubling to about 15,000 tons already on surface.

James Mufara: The middle top, the top graph shows that there is this achievement in the four mining areas. There is four mining areas, the one being shallow section, one being shallow in the extreme left, and the section four on the extreme right being the different portion of the mine. And all the sections actually achieved four, so we consisted of production. What is also most encouraging is the bottom graph, which is the reserve generation graph. This shows that although we exceeded production, there was also an increase in the reserves that was generated. This sets up the mine for better consistent production in the future.

James Mufara: So overall, this picture shows, you know, discipline and focus in the execution of the plan and that we expect to achieve our targets even going into the future.

James Mufara: One of the key areas that Rose spoke about is the area with regards to cost, which is what I'm going to talk to before I hand over to Luciana. So, if I look at the next slide, if I can't get to the next slide again. This meeting is being recorded. So, and the next one. So, the focus on the cost of not being lost while we are pursuing higher production. and the following actions, which are some of the actions that we have already taken so that we can reduce our costs on the mine and thereby actually impacting our only sustaining costs.

James Mufara: We recruited, we sourced and recruited a business improvement manager to join the team from the third quarter. This is the office that will look at key initiatives with regards to costs, document and more importantly, being able to see that these initiatives are brought to fruition so that we can reduce this cost within the mine. Central Shaft was fully handed over a few years back, but one of the things that we need to do is to get this Central Shaft to be optimized and produce better. Central Shaft accounts for 60% of our production and we need to ensure that whatever we do in this area, we're in a position to operate optimally with regards to cost.

James Mufara: The second, within the top three costs that we do have, electricity is the second most expensive item that we do use on the mine. We have onboarded a company called Vision. to identify and measure the usage of energy within the different parts of the mine, which means to say now we are in a position where currently we have visibility of all the energy as it is being used at each energy centre. We've got more than 100 measuring units on the mine that we can actually measure the units. So we have real-time ability now to see where the energy is being used.

James Mufara: This is going to be useful for us going forward when we try to optimise the areas because we know where all the large areas where all the energy is actually being utilised. Labor is also a major cost. In fact, it is our biggest, biggest cost. And we have decided to attack this, the cost grip within the labor, so that we can utilize our labor better going forward. We have started, we've put a time and attendance, you know, system called Firefly on the language. So the whole mine is, that system now has been fully commissioned on the mine.

James Mufara: This time and attendance system is going to give us visibility with regards to where our workforce is. We'll be in a position to determine the underground hours at work, how many hours are the people going, and we will be in a position to determine where the overtime and all the hours that we may need to work on actually comes from. So this is, we are very happy with regards to the introduction of this, you know, time and attendance system. The other area that we need to look at, which is the third most, highest area, which is the area of consumables that we need to look at, is we need to do better planning with regards to resources.

James Mufara: We have actually introduced a better planning system now, where we are in a position to look at where each area of our mine, where are we using what, so that we can be in a position to see how can we put systems in place, so that we can have better resource utilization and, you know, better resource control.

James Mufara: So I will hand over now to Rusiano Nsoka to talk to some of the safety initiatives that we have put on the mine.

Rusiano Nsoka: But before I, you know, give him a time to speak, I just want to introduce who Rusiano Nsoka is. So Rusiano was hired in the third quarter of last year, 2024, to steer the safety and health strategy for the company. Rusiano has worked for Anglo, Goldfields, Real Kingdom, and for the last 15 years, Rusiano Nsoka was working for Goldfields as a health, as a group health and safety manager for the company. Harmony, just to put into context, is a 10.8 US dollar billion market cap company, which produces 1.5 million ounces of gold, and it's got a workforce of about 48,000 employees.

Rusiano Nsoka: Rusiano is in Zimbabwe, and he has more than 35 years of experience in the health and safety management.

Rusiano Nsoka: So if you might, I might just hand over to Rusiano to talk to the health and Good morning, ladies and gentlemen. Thank you, James, for the introduction. Thank you. I'm going to give you an update on one of our key pillars for our operational excellence, which is safety. We reviewed the safety strategy. Can you go to the next slide, please? The safety strategy was reviewed in May 2021. We have focused on several safety initiatives. But which are all listed here in this slide. But today I'm just going to highlight two of the most impactful, which is the Visible Felt Leadership.

Rusiano Nsoka: VFR, and the structured management of our top 20 operational... Visible faith leadership has ensured that our leaders, our managers and supervisors are consistently present where it matters most. which is underground and in the plant and in the field. And they are personally engaging with employees through two-way communication. This dialogue provides management with valuable insights and information that is not typically obtained during routine inspections and audits. So in this quarter, last quarter alone, we conducted 47... The air feeling good. which helped identify and address unsafe. and conditions at the source. while also fostering trust from the employees, accountability on the managers and providing the platform for a proactive safety culture.

Rusiano Nsoka: in managing the operation of this. We have identified and prioritized the mine's most critical safety and health which include falls of ground, heat stress, fire safety, and the tailings storage deck. And using the industry best practices and international standards, such as the ICMM guidelines, the ISO 45001 Risk Management Principles, we have assigned clear ownership. Deadlines and measurable outcomes. I'm pleased to report that over 85% of the high-priority actions have already been completed and closed down. This proactive closeout has significantly strengthened our critical controls, reduced our overall risk exposure, and directly contributed to the improved safety performance we've seen in this last quarter.

Rusiano Nsoka: The impact. of the combined initiatives, including these two, which I've just highlighted is clear. We have reduced incidents from five incidents in January this year to one in March. This has provided us in achieving 26 accident free days in January to 30 accident free days in March. Safety is non-negotiable and we are committed not only to protecting lives, but also to securing the long-term sustainability of our operations. Our vision is to build and embed a proactive safety culture across the operation. where every employee feels responsible, empowered and supported. to prevent incidents before they occur. So our journey to zero harm still continues.

Rusiano Nsoka: Thank you. Next slide.

Mark Learmonth: Okay, can I ask, we're going to talk about billboards now, could you, can I ask a couple of introductory comments before I hand over to Victor, so could you go to the next slide please? Okay, just before we get into the into the detail of what's going on, I just want to say a few words about capital allocation. I've said this before, but just to reiterate, just to reiterate, our management's objective in approaching the development route for Bilbo's is to maximise the uplift in Caledonia's net present value per share, which is the closest approximation we can actually get to our share price.

Mark Learmonth: There's a couple of ways to do this. The first, and Victor will talk about this in more detail, is the various work streams that are happening now to optimise the project economics. So to make the project as robust as possible. But the other side of the coin is that we need to minimise our equity dilution. So the way we do that is we're looking at ways to reconfigure the development approach to minimise the upfront capital cost. So that's the money we need to build a project. We're also looking at options to increase Caledonia's internal equity contribution.

Mark Learmonth: So that's our internal cash flow. And again, in a few moments, Craig will give you some background as to the initiatives that we're looking at there. Finally, to minimise the equity dilution, we also need to look at debt funding, but prudently. We clearly don't want to saddle the company with a burdensome amount of debt. We have had very fruitful engagements through Cockfield Freeman, our debt advisors, with potential funders. Those engagements are currently paused until we finish off the work that Victor is going to outline now. So I just want to be clear on capital allocation as the most important element in how we approach this project.

Victor Gapare: So can I hand over to Victor who will just run through what we're doing to achieve these objectives of optimising the project.

Victor Gapare: So Victor, over to you. Thank you, Mark. All the DUNGO projects are basically over the last few months working with DRA on the feasibility study. The work has actually revealed that there are some opportunities for further optimization, given the size of the project, in terms of the amount of all the mining, the waste will be mining, as well as the capital required for the project. As far as the mining side of things is concerned, the feasibility study, which we're looking at, looks at 240,000 tons per month. So there are opportunities to relook at the pit and mine shedling, particularly as this relates to our Makai and Isabella operations, which are really within a 5 kilometer radius of each other.

Victor Gapare: So there are opportunities there to reduce the upfront capital costs, and also the operating costs over life of mines. On the metallurgical side, as you know, we are going to use the bioprocessing method. The way we have looked at it now is that phase one of the project will focus on Isabella and Mackay's. And then phase two, which will come around year six, will focus on processing RO from our booby mine. So what we have done to optimize the capital there, we're looking at actually stripping out whatever upfront capital we're going to put in on the bios plant.

Victor Gapare: Chief Outs, the CAPEX related to BUBI, so that upfront we only deal with CAPEX related to Isabella and Makai. Obviously, this has implications in terms of maybe the future capital, but at least the upfront capital, which we have to put up now, will have gone down a bit. We also exploring the option of exporting concentrates. In the last few months. We have established that the Zimbabwe government can actually allow us to export concentrates, which means we won't have to put up the biops plant upfront. So we can put it maybe after two or three years that saves upfront capital costs.

Victor Gapare: So it's one of the optimization options which we're looking at.

Victor Gapare: As far as the infrastructure is concerned, this is really focused on the power requirements of the project. The biggest cost there is actually the power line, the direct supply power line, which will be about 70 kilometers. So we are in negotiations with the power authorities to actually put up, we will put up the carpets required for that line, but we can recoup that in the form of credits on our monthly electricity bill. So that will change the economics of the project. We're also looking at other things like the conveyors. which will result in us reducing again the upfront capital costs and also the op-eds over time.

Victor Gapare: There's also the issue of the contractor pricing. We think we can get better pricing from contractors when we look at the F moving, the C moves and the infrastructure. So that's an area we're looking at. We think there are savings to be had there. We are looking at the tailing storage facility, the TSF. It is the single largest cost in this project. So we are really looking at the waste itself. In terms of what the impact will be on the lining for us to comply from an environmental point of view. So that work, which maybe requires us to spend a little bit of money on it and a little bit of time on it to actually come up with the right lining requirements for the TSF and actually reduce the cost.

Victor Gapare: The issue of the relocation in the last presentation, we did say there was an opportunity to relook at the location of the TSF. We do own the Motapa property next door, as you know. So the terrain there is a little bit more suitable for the tailing storage facility. So we are looking at that, but that's more long term. If we do that, that will come in the construction stage.

Victor Gapare: The other important aspect we are looking at, given that we are optimizing the feasibility study, we are really looking at the smaller options, which we had looked at before. But really, at a conceptual level, at a scoping study level, to see whether the economics of those can be looked at, it can be options for us to look at. As far as timing of the publication, or rather for us to come back to the market and say, this is what we have. The preliminary results should be out before the end of the year. So we should be able to discuss the capital.

Victor Gapare: We should have the same idea of the capital cost. And other than the issues relating to the TSF site, which might take a little bit longer, or which will take a bit of longer. They should tell us whether there's merit to assist them. These will also be available at the same time as the feasibility study itself. Mark, that's all I can say about the project. That's good. OK, thank you, Victor.

Craig Harvey: Can we now ask Craig, Vice President of Technical Services, to quickly outline what we're doing in terms of exploration, and also to talk about some of the near-term revenue opportunities that we're working on. So Craig, over to you. Thanks, thanks. Thanks, Mark. I'll just quickly take you guys through exploration in the near term opportunities for Caledonia. So if we can move on to the next slide, please. One of our key focus areas for this year is Matapa. So at the end of last year, we put out a press release detailing the initial work that we had done.

Craig Harvey: So for this year exploration at Matapa, we've got a budget of just under $3 million. So the three trends that are there, North, Central, i.e. Maputi and South. On the Matapa North, we are focusing this year to drill out a minimum of 250,000 ounces into a mineral resource. It's about 19,500 meters of drilling that we've got planned. It's about 170 drill holes. Important to note is that you're only targeting down to about 150 meters. So that doesn't mean that everything stops there. It's kind of the first phase. I'm pretty sure that we'll be drilling there next year to grow that sulfide resource.

Craig Harvey: In our central area, as we've said before, the Mpuzi block, it's an unabandoned iron formation. It outcrops on surface, lots of surface scratchings and things like that. We've trenched the area significantly. The goal for this year is to define an oxide mineral resource of greater than about 30,000 ounces. And I just want to caveat that it comes with everything relating to is it amenable to a heap leach, what is the characteristics of the ore, where is the oxide sulphide boundary, and things like that. But we've got about 6,000 metres of drilling planned to have a look at that.

Craig Harvey: And quite clearly, Bulbo's being from the Mpuzi, it's probably about 400 to 500 metres away from the Bulbo's heap leach paths. So quite clearly, if we do the work... You know, we've got a source of all for the for the boulders, heap each bed. With all of the work that we're doing, you know, we're continually trenching across the shear zones that we find. And as we dig out some more info, Matarpa South has revealed that there's a 600 metre on strike anomaly. where the trenches have returned anomalous values over a 20 to 25 meter width.

Craig Harvey: So in this year we are going to be doing some infill trenching there and I hope to Get a few more fans on the of the year to go and do a bit of drilling if the results are actually quite positive.

Craig Harvey: So that's Matapa in a nutshell.

Craig Harvey: If we can move on to the next slide and we talk a bit about blankets. Blanket to Underground Exploration so Just briefly, towards the beginning of 2024, we released drilling results from Blanket, currently working on an update which should come out in the next two to three weeks on our long-haul drilling. Long-haul drilling remains very, very positive, very positive, the grades better than what we think, widths in some areas very much better than what we think. But currently, we have drilled almost about about 95% of what we want to draw down to 34 level to get it all into an indicated resource or better.

Craig Harvey: We are targeting extensions of the main ore bodies below 34 level, as we do need to look at that to determine if we do end up going deeper, first of all, is the mineralization there. One of the things that has also stuck out at Blanket is that kind of pre or sorry, post 1970, maybe post 1980, there hasn't been a lot of work done on surface. So to put it into context, Just to our south on our southern boundaries, the Wombachikwe Gold Mine, that's now gone into receivership and things like that. That's on a banded iron formation as well.

Craig Harvey: that's probably separated. cross-strike or Yeah, cross strike three to 400 meters away from the blanket shear zone. Now this banded eye information runs all the way through the blanket leaf area. It's about 10 k's in strike length. Pre 1970, there's some historic data that we are working through. And quite clearly, there are showings of good grades, there's showings of poor grades. But we have now embarked on a Strategy Dollar Per Ounce Gold. It's not all just limited to surface. The bottom one there is Smiler. We'll put out some info in due course. But again, historically, it's been mined down to about a depth of 150 meters.

Craig Harvey: It's one and a half caves north of Lima, which is the northernmost shaft at Blanket. It's got very good grades. It's got good widths, very amenable to mining. So your typical type of mining widths. So again, we'll start to have a look at that and we'll bring that into the stable at Blanket.

Craig Harvey: If we move on to the next slide, something I'm quite excited about is what we call these near term opportunities. So both at Metapa and at Boobie, as Victor said, Boobie is part of the Borbos project. But both of these old mines or old areas have what we call spent heap leach pads. Now, what we mean by that is that they were last irrigated in the year 2000 or last irrigated in the year 2020. But the big thing about these heap leach pads is they were run-of-mine leach pads. So what I mean by that is that the owners would mine, and they would drill and blast, and they would take the blasted rock and load it directly onto a pad.

Craig Harvey: So it did not go through a crushing circuit at all. If we just have a look there, Matapa the spent heap leach pad had a historical recovery from the records that we have of 53%. Booby had just under a 61% historical recovery. To put it into context, Bob has installed a crushing circuit into there. run-of-mine flow of ore and the bulldoze recovery is just north of 82% I think. So in a nutshell, very, very quickly, we've already started this work, a crushing and screening operation with a load onto a pad and leach. We could probably add somewhere.

Craig Harvey: in the region of 30 to 40,000 ounces of recoverable gold. over the next two to three year period at even lower cost than what a normal open pit mine would operate at. So we are clearly pushing this quite hard. and it's exciting. Thanks, Mark. That's all I've got to add on. Exxon Exploration. Thank you.

Mark Learmonth: Thank you, Craig.

Mark Learmonth: Okay, so we've spent quite a long time, we've been on this for 50 minutes or so.

Mark Learmonth: So can we quickly go to the outlook? I'll get to this as quickly as we can. So our objectives are really a strategic focus, just a thinning road. So the immediate objectives are to maintain blankets production, as it is at the moment. We've got off to an excellent start this year. We'll continue to progress our cost reduction initiatives. Hopefully by the end of the year we'll see some progress on that. As you've heard, we are expanding the exploration activities at Blanket with a view to extending Blanket's life of mine, and also to explore new opportunities on the on the lease area.

Mark Learmonth: We'll continue, as Victor's explained, to evaluate beneficial development options for Bilbo's with a view to optimising the economics and reducing the upfront capital cost. And then as Craig's also outlined, we're very excited about the potential at Matarpa. So we've come on a lot of ground there. I'm sorry about that. I hope you found it useful.

Unknown Executive: Can we open this up to questions? Thanks very much for that, Mark. Now, if you'd like to ask a question, please use the raise your hand button. down in the bottom of your screen. If you're on the telephone, please press star nine. So just hold for two seconds before we for people to come through on the question side of things.

Howard Flinker: And then we've got our first from Howie Flinker. Howie, please go ahead. All right, please go ahead. You just unmute yourself.

Howard Flinker: I have no question. and all their questions. Okay, last quarter, last quarter, guys. Thank you, Howard. Very usual for you to have those questions. That's great.

Nic Dinham: We've got our next question is from Nic Dinham.

Nic Dinham: Nic, please go ahead. Hi, everybody. Thanks. That was a really impressive presentation. Thank you. A couple of questions. James, you've unpacked a lot more data than we've seen traditionally about the mine itself. You've given us some comfort that you're balancing out the reserves and against the production. What about the longer term aspects of mine development? You know, the developments on the declines and the other work that you're doing. Is that where it should be at the moment?

James Mufara: That's the first question.

James Mufara: James, you're on mute James. Okay, thank you. Thanks, Nick. So, yes, so the development on the decline at the moment, as you can see, we have made a decision. When we took over, we realized there were quite some shallow reserves that we could mine. I mean, myself and Craig, we went in and realized, closer to the surface, you don't need much ventilation, you don't need a lot of energy, you can just get this out to surface. So we've decided to slow down, going down, because it's going to be costly, both in terms of training and all the other costs.

James Mufara: So we actually are getting our production better, closer to surface.

James Mufara: But obviously, in the medium to long term, we'll have to restart those declines and go better, go deeper.

James Mufara: Thank you.

Nic Dinham: Next question is really a little bit about blanket dividends and part of it can play in the future for the next two or three years. Your mind is obviously making a lot of money. What were the dividends that came out of blanket in 2024? And this is a difficult one for you, but if we look ahead for the year, how much money do you think you can extract from blanket to fund the rest of your business? And what is the likely closeout horizon on the facilitation loans under the current gold price scenario?

Mark Learmonth: Ross, do you want to do another one? Well, I think we're going to talk about facilitation loans. Well, let me just let me deal with the facilitation loan. First thing is blanket, just blanket dividend distributions. We don't, blanket is not a cash trap, okay? So it's in all the shareholder's interests, all the blanket shareholder interests to effectively take as much cash as anybody as you can out of blanket. We want that, and the other shareholders want that too, okay? So the balance has to be you don't overdistribute, which we're already doing.

Ross Gerrard: At this rate, I would expect the facilitation loans to get repaid in about 12 months time at this rate of distribution and cash generation.

Ross Gerrard: I'll leave it to Ross to talk about how much cash we think we might be able to get out of the blanket over the course of the year. Thanks, Mark.

Ross Gerrard: Hi, Nick. Yeah, quite feasibly, you know, we'd be able to end up at the end of the year with a cash balance of between 50 and 60 million, depending on various visas that we look at. So it's quite an exciting trajectory in terms of cash flows coming through. We are looking at various initiatives as part of that cost programme in terms of various initiatives in terms of longer term saving and bringing costs down. So there might be some additional capital that's deployed into those projects, short term spend to gain a longer term horizon. And we'll use our cash on that, but quite feasibly, you know, we're looking at a closing balance of about.

Ross Gerrard: anywhere between $50 and $60 million.

Nic Dinham: Thank you.

Nic Dinham: Anything else, Nick?

Nic Dinham: Yeah, I just want to, you still own a couple of small exploration projects, which would just not be the right time to shake yourself loose from them, given how big your commitment is in Bilbo's. Which one, which one, which one of them? That's the other one. Institute, Molly Green. I'm not Molly Green. There's nothing wrong with Molly Green. It's the incubator at the moment. No, we wouldn't sell that.

Mark Learmonth: I can't think of anything else that we've got.

Mark Learmonth: Okay, and Yeah, so finally, I think you touched on that is the is the tempting things that you could do with now the money, the strategic, the position the company is in now is materially different from what it was a year ago, and possibly even when your budgets were set. So there are potential opportunities. And I think you previously have spoken about investment in electricity. But is there anything else out there that attracts you like more investment in exploration around? I think we've got plenty on our plate right now. We've got some exciting potential investment opportunities.

Mark Learmonth: So there we go. More than enough to look at.

Mark Learmonth: Thank you very much.

Mark Learmonth: Okay, pleasure.

Mark Learmonth: Thanks very much, Nick.

Unknown Executive: Just to remind everybody, if you'd like to ask a question, please do press star one. Okay, just reminding everybody, if you'd like to ask a question, please do raise your hand or press star 9.

Katera Suwanora: So we've got our next question, which is from Katera Suwanora. Please go ahead, unmute yourself in order to ask your question. Hi, can you hear me? Yeah, we can hear you. All right, thank you. Um, you previously set aside $41 million in CAPEX for 2025 to modernize operations, improve mining efficiency and invest in exploration efforts. I think of this amount, you had said $34.1 million had been set aside for blanket and $6.9 million for billboards and Motapa.

Ross Gerrard: How much of that has been spent today?

Ross Gerrard: That's the slogans that roster up with the 10 across both. Yeah, we've done approximately 10. So the, the, the only impediment to spending that money is just the speed of doing it. It comes down to sometimes procuring things can take quite a long lead time. Sometimes it's getting drilling service providers to actually get there.

Ross Gerrard: So the only impediment isn't the availability of cash, it's just physically spending that money that quickly.

Katera Suwanora: Thank you.

Katera Suwanora: That's it.

Katera Suwanora: Do you have any further questions or is that the answer?

Unknown Executive: Okay, we've got no further questions.

Katera Suwanora: Sorry, yes. Yes, I just one more follow up. Since there's been a increase in your cash generation, and throughout the quarter, and indications that you want to build up your, your cash balance sheet at the end of the year to between 50 and 60 million. So, in terms of sourcing for your KPEX for the rest of the year, is it safe to assume that most of that will be coming from this? Could you explain on that?

Ross Gerrard: All of our KPEX is funded from internal cash generation. So, the 50 to 60 million that Ross referred to is after KPEX. So the mine, the mine will generate 100, of which 40 will get spent in CapEx and the balance is what's left over.

Ross Gerrard: So we fund the CapEx from cash flows.

Katera Suwanora: All right, thank you.

Unknown Executive: Okay, thank you.

Unknown Executive: Thanks very much.

Mark Learmonth: We have no further questions at the moment, so maybe if I could turn back to you, Mark, for any closing remarks. Okay, well, thank you all for your attendance. It was, it was a good quarter. But hopefully, at this gold price continuing, and as a with a robust start to production year, hopefully we'll see improvements in quarter two and thereafter.

Mark Learmonth: So we'll update you next quarter.

Mark Learmonth: Thanks very much for attending.

Mark Learmonth: Goodbye.