CMCL Q2 2020 Earnings Call

Operator: Hello, and welcome to Caledonia mining results for quarter ended June 30, 2020. My name is Julie, and I'll be your coordinator for today's event. [Operator Instructions] I will now hand you over to your host, Chief Executive, Steve Curtis, to begin today's conference. Thank you.

Steven Curtis: Thank you very much, and welcome, everybody, who has joined this call. And it is our second quarter as our hosts mentioned, second quarter 2020 results. And we're very happy to release these and have an opportunity to discuss this with you. The presentation is on our website. So if you haven't had a chance to look at it, please go to that, if you'd like to follow. And I'm joined on the call today by Mark Learmonth, who is our Chief Financial Officer; Dana Roets, Chief Operations Officer; and Maurice Mason, who is in charge of Business Development and Investor Relations. So I'd like to just proceed immediately and just draw your attention to the disclaimer, as usual, and take that as read and understood. The prime and probably prominent thing that's on everybody's mind is COVID. And if you have read the results this morning, you will notice that the production for the quarter was very good. And it really does demonstrate and illustrate that the mine has managed the COVID pandemic exceptionally well, and it really has had very little to no effect on our operations. I'm very pleased to say that we are free of any COVID infections at this point in time. And we continue to practice the best standards of protection and isolation and distancing that needs to be done. So yes, COVID has had very little effect on our operation. Mark will discuss costs a little bit later, and he will tell you that we have spent some money on COVID, but that's a positive, not a negative. So really, with no further review, what I'd like to do is ask Dana to take us into some of the aspects of operations, and let's take it on a couple of slides in the presentation. So let me hand over to Dana. Dana, you there? Dana?

Dana Roets: Sorry, I'm back, I was on mute.

Steven Curtis: Okay. All right.

Dana Roets: Review of Operations, Slide 7. We started the year very well in quarter 1. And end of quarter 1 going into quarter 2, we had the lockdown with the coronavirus. We're very lucky that we weren't severely affected by the coronavirus. And after a slow start during lockdown, we picked up, and we ended the quarter strong. And the grade was slightly down, below target. But we saw a 6% increase quarter-on-quarter comparable with last year. And in half year, we're actually up 12% if you compare 2019 to 2020. So overall, the outlook that we started putting in last year, the second half of 2019 continued into 2020 and the team is focused, and we saw that in the production. Production is still expected to increase to 80,000 ounces from 2022 onwards. And the tonnes milled also improved on quarter 2 due to, as I said, the Nyanzvi initiatives. What we also have done, we install the oxygen plant, and we saw great improvements as far as the recovery is concerned. We're closing now to 94%. Last year, we're hovering just above 93%. If we go to Slide 8 then, COVID-19. Back to you, Steve.

Steven Curtis: Thank you, Dana. So as you can see, as Dana has told us, operations are going well. We are sticking to the basics and the operation is moving towards being able to finish the Central Shaft with the equipping that's taking place during this year. There has been some interruption in terms of getting some highly qualified and specialist contractors up to the mine, but that's part of travel restrictions and that hopefully will be short-lived and then the program will go back to normal. The program is continuing all of this time and has continued the whole way through the lockdown. And we look forward to the finalization of the equipping of the Central Shaft. I've got nothing more to say on COVID. It is spoken about quite extensively on Page 8. So I think let's get into the [ guts ] of the conversation, and that's about the financials.

And I'll hand over to Mark to do that. Mark Learmonth: Thanks, Steve. Okay. Turning to Page 10. What you see here is just a little sort of summary information on the results. So gold production for the quarter was 13,500, up 6% better than the comparable quarter in quarter 2. The number that really sticks out here, the on-mine cost per ounce, which increased from $534 an ounce in quarter 2 of 2019 to $811 in quarter 2 of 2020. I want to come back and talk about that in quite some detail because the last thing I wanted people to leave the discussion thinking that cost are under control. But the headline is that the second quarter of 2019, that $534 was -- is artificially known as various factors, and the quarter gets finished with artificially high for various factors. But I'll explain that in more detail and that really plays to --into the all of the pending cost per ounce. Average gold price, as you know, the gold price is high. So we benefited by that [ dollar amount ] in terms of realized gold price. Gross profit, that's a good number. That’s gone up from $7 million to $9 million. That really does reflect the strong performance of the business. Net profit attributable to shareholders, $23 million in quarter 2 of 2019 and $5 million this quarter ending, don’t forget. Please don’t forget that $23.3 million in the second quarter 2019 increased about $20 million of unrealized foreign exchange gain due to the rapid devaluation of the Zimbabwe dollar last year. So really, if you're looking at profitability, the meaningful number is the adjusted earnings per share, which increased from about [ $0.24 ], up to [ $0.36 ], so approximately 50% increase there. And that really does reflect the underlying performance of the business. The adjusted earnings per share, excluding some business relating to foreign exchange gains that excludes any profit realized on the disposable asset in South Africa and exclude deferred tax. So we strip out all the numbers and that, frankly, is the underlying performance of the business. And if you don't like accounting, if you go look at cash, maybe a realistic approach, net cash increased from $7.8 million at the end of the second quarter of 2019 to $11.6 million at the end of June this year. And that excludes another $1 million or so, the gold ETF, which we're holding in South Africa on a short-term basis to protect cash in South Africa against further devaluation of the South African rand. So actually, $11.6 million in sort of real term is actually is over $12.5 million. Looking at Page 11. We'll talk about revenue in a moment. The royalties still pegged at 5%. On production costs, I’m going to come back to in some detail in a moment. 7.5 million, up to 11.4 million. So gross profit 7 million increased to 9.2 million. Other income. That's a considerable increase in the quarter. That really reflects the Export Credit Incentive scheme, which was introduced towards the end of the first quarter of 2020 and running for most of the second quarter of 2020. It was terminated, I think, in May. And that we were effectively getting a 25% increase. 25% premium on the gold we were delivering to the government. It's [ circular ] really by the Zimbabwean authorities. It is paid in local currency. It doesn't mean a great deal. We didn't particularly welcome it, and we weren’t particularly sad to see it to go. We think it's a very distorting component in the arrangement with Zimbabwe. And if anyone -- I think we’ll talk about that in more detail, if anybody want to later. Other expenses, 1.3 million in the quarter. That 1.3 million largely comprises $1 million of donations that we made to sort of COVID-19 initiative outside immediate mine area. So the mining costs -- the production costs include about $0.5 million of COVID costs on the mine, and there's another $1 million in the local community, which we donated. Then also, we spent about $200,000 evaluating those in preliminary work on the solar project. Admin expenses down a bit because we're not traveling as much. Foreign exchange down, is only $1.4 million. Of the -- the asset base in Zimbabwe depreciates [ oil ] just simply less to write-down as the local currency depreciates so that's why that tends to diminish. The cash settled share-based payment 700,000. That largely reflect the increased value of the LTIP scheme as a result of the higher share price. So operating profit of just under $10 million for the quarter compared to $27 million for the previous -- for the comparable quarter. Don't forget that $27 million increase, $21 million of foreign exchange on exchange gain. Tax needs a little bit of explanation. In the quarter, the tax charge was $3.5 million out of an accounting PBT of nearly $10 million. So that's an effective tax rate of about 35%. The bulk of that is the tax in Zimbabwe, income tax in Zimbabwe. The tax regime in Zimbabwe particularly [ earlier ], it's a 25% -- 25.75% tax rate. But we've got to understand it that although we -- our business in Zimbabwe has been U.S. dollar as its accounting currency, the tax calculations have to be performed on the back of Zimbabwe dollar accounts, which means that losses, foreign exchange losses in U.S. dollar term or foreign share gains in U.S. dollar terms have reversed in Zimbabwe dollar terms. And what that meant, particularly for the previous quarter, for the comparable quarter in 2019 was that we were getting tax rates in Zimbabwe for the substantial unrealized foreign exchange movements, which meant that in quarter 2 of 2019, we're actually getting a [ working grade ] tax credit, which is why in quarter 2 2019, you see the tax expense actually is a small tax credit, which clearly was abnormal and not sustainable. So the tax charge for the quarter, $3.5 million. The bulk of that is fairly normal income tax in Zimbabwe. On top of that, we also have to pay some additional taxes arising from moving money around the place and the holding tax. And that also incur a small amount of income tax in South Africa arising on the procurement function. So tax is in Zimbabwe – I mean, the company profit, which is why -- so that's why in total, the overall tax rate might be higher, but it's [ only high for ] structural movements. So that’s the profit and loss accounts. All you see on Page 12 is just some background information, helping us navigate how the revenue increased and what contributes the revenue increments and was mainly on gold price, but to a lesser extent, it was tonnes milled growing production. I’ll just try to give you some more context as to what was driving the good news on the revenue side. Page 13 is production costs. And let's focus on this a little bit more because this really gets to the reason why the on-mine costs per ounce increased from $534 to $811. So to break down production costs, wages and salaries is 2.9 million -- 3.9 million increased about 4.9 million. And that reflects an increase in head count and an increase in the number of man hours worked. And also, to a small extent, about $300,000 or so arose from the fact that in the lockdown period, we have to change our working practices so that we achieved social distancing in the mine operations. To do that, we had to reduce the number of people who went on the ground. We had told the workers that we were going to pay them all, whether they would come to work or not. But then the workers we all called come to work, made a point quite fairly, but why should I get paid the same for actually going down the mine and doing the that work as to a guy who was sitting at home doing nothing. So we felt obliged to offer a premium rate to those people who were called upon to work during the lockdown period. We added about $300,000 or so of costs in the quarter. So wage and salary. Consumable materials. They went up from 2.6 million to 3.7 million. The increase was largely due to the increased cost of maintaining the fleet of underground trackless equipment which we're using in the decline. We got second-hand refurbished equipment, which is somewhat expensive in terms of the maintenance. To address this issue, we have identified a contractor based on Johannesburg, who in due course, will be at the mine, helping to improve the maintenance of the equipment and reduce the maintenance costs. But from the current COVID-19 environment, they’re not able to travel up there. Employees can't travel up to the mine. And so we had a plan in place to address this increased cost. We just can't implement it quite at this time. And the big reason for the increase in costs, as you can see is electricity costs, which in second quarter of 2019 was less than $0.5 million. This quarter was 2 -- just over $2 million. The reason for the increase is that the $447,000 electricity costs in 2019 reflects the fact that we're paying for electricity at that time in Zimbabwe dollars. As the Zimbabwe dollar diminished in value then the effective unit cost of our electricity fell from $0.128 per kilowatt hour to less than $0.02 kilowatt hour, all of that being reflected in the second quarter. Now clearly, that wasn't sustainable, and there was a bit of a win for profit for us, and that has now normalized to a level of just over $2 million, which includes about $300,000 of genset usage. So that's the prime [ swing ] in the reason for the increase in the on-mine costs. So really, if you look -- if you try and reconcile why $534 on-mine costs per ounce increased to $811, there's really 4 components to it. The component of the sort of artificially low electricity costs in the second quarter of 2019, which accounts for approximately $150 an ounce; use of gensets in the second quarter of '20, the increased use of gensets in the second quarter of 2020, which added about $22 an ounce; the increased maintenance cost on the trackless equipment, that's about $64 an ounce; and the COVID-19 expenses, both at some consumables and the labor, that's about $38 an ounce. So taking all those into account, [ amounts to ] at the cost of $534 up to just over $800 an ounce, which pretty much explains why the -- why that cost per ounce has increased. So special factors and reasons that we've got under control. So don't please leave this call, thinking that we're not controlling the costs. The costs remain well under control, and that is to sort of unusual events. And they are within guidance. We are well within our guidance range for the year. Cash flow, a lot of numbers here. There is 5 points I’ll make on the cash flow that’s listed. We have to adjust the very big unrealized foreign exchange gains of, what, $22 million. The second thing is just look at the strength of the cash coming from operating activities. So second quarter of 2019, it was just over $2 million for the quarter. This quarter just finished, it’s nearly $4 million. And so for the half year, it's $14 million. So we really continue to generate good cash from the business. You can see that the cash -- the CapEx, [ 0.3 ]. You can see the CapEx. It's still quite high, $4 million or $3 million a quarter. In the second quarter 2020, CapEx was -- the CapEx spend was sort of adversely affected by the coronavirus, which why we weren’t able to procure and do as much as we would hope to. That will catch up towards the end of the year. But then by early 2021 onwards, we do expect the working capital expenditure to diminish. You can see the $1 million purchase of the gold ETF. That's not really an investment, but really just putting money into another pocket. So I do -- I would actually say that, that increases the cash from 11.6 million really to just over 12.5 million. And if you see the dividends, the dividends paid, little red number five, dividends paid increased from $882,000 to just over $1 million. And that reflects the 2 dividend increases that we've made in the course of the year-to-date, one in January and then other one in 31 July. And as the number of shares issued have increased as well. We issued about 700,000 new shares in January to Fremiro in the quarter, the other 15% to Blanket mine. Page 15 just trying to show the main components of our quarterly cash flow, the cash from operations, and then how that might be affected by working capital and the cash from investing activities. Nothing really of note on the balance sheet. The balance sheet continues to grow as we invest in the project. And also the current assets typically tend to improve as we build up inventories to be defensive in the case of several interruptions to our supply chain. And also, we're finding increasingly even to make prepayments in Zimbabwe because there's no availability of supplier credit. So really, that's all I have on the finance. If anyone has any specific questions, we can come back to that in the Q&A session. Steve, I hand back to you.

Steven Curtis: Thank you, Mark. Thank you very much. And as we said right upfront, a great set of results. We're operating in a good sector. We've got a good gold price. And the message coming out is that the mine is still operating at a level that will generate sufficient cash flow to enable us to complete the Central Shaft project, which is what we've been doing for the last 5 years. So that message, I hope, is clear to everybody. Mark has spoken about dividends, but let me just elaborate a little bit on the solar project. We have got final Board approval to embark on the construction of a solar project that will give us the ability to provide the baseload during daylight hours to Blanket. And this is a strategic decision to protect Blanket from erratic and sort of substandard quality power. We do get the majority of our power from Zimbabwe grid. But as we have known in the past, the grid is old, and it has some problems. And the whole southern African region is short of power. South Africa is short in its own right, and Zimbabwe does purchase power from South Africa. So although COVID has depressed economic activities in the whole region, we know that will reverse and the demand for power will become higher and higher. Therefore, our decision to embark on a solar project. We'll start off with initial 12 megawatts. And as I said, that will give us the baseload for the whole operation. Ultimately, we could add to that, but that will mean establishing other arrangements to sell excess power into the national grid, and we'll get there if that's appropriate. We're not going batteries for the night time and just from a cost perspective, so effectively, we will continue to run on a blend of grid power, diesel generator power where needed and the solar power. And the solar power would provide about 27% of our daily requirements. So that is exciting. We hope that sort of by this time next year that far will be up and operational. We have cleared ground. But again, the COVID travel restrictions will prevent the appropriate contractors to be able to get on site. But again, we're looking towards that as a temporary sort of blockage in the process. The next part of the discussion is really just the outlook and for people who are familiar with us know that we are in the shorter term embarking on increasing production from our current levels of 55,000, 56,000 ounces, up to 80,000 ounces, as Dana said, from 2022 onwards. And that comes from our ability to access deeper levels that the Central Shaft allows us to get to. So Dana and his mining teams are building the new mine underneath the existing mine and the Central Shaft with a much increased capacity will enable us to extract higher tonnages and from multiple levels. So that is very exciting. We have got reserves and resources down there, and we will continue to do deep level exploration as we get deeper. Because of the nature of the ore bodies, you have to be deeper in the mine to be able to do successful and full exploration. So yes, our objective is to get up to the 80,000 ounces. And we’ve indicated before, and we continue to look actively in the Zimbabwe arena for new opportunities into which we can deploy some of the cash that Blanket is going to generate. We are looking for brownfield operations, where we can do some exploration or we are looking for something that has already got a defined resource, and we believe that we can turn it to accounts with the expertise that we have in country. This is a process that takes some time, and we've been at it for a long time. So we’ve covered an enormous amount of ground, but we are hoping that we will be able to announce something in the not-too-distant future. COVID is causing a bit of indigestion there as well. The shaft we've spoken about, and there's a slide on those in the deck. And that's really just for information purposes. But just to reiterate before I close, I'm on Slide 23. And really, the magic of this whole program is that when Blanket ramps up its production to 80,000 ounces, the cash generation and the free cash flow is going to be significant. The CapEx will decline. And we -- you can pick the gold price, and we're anticipating that Blanket will be able to produce more in sustaining costs somewhere between $700 and $800 an ounce. And you can see at 80,000 ounces that does deliver a fair amount of free cash flow, which Blanket will dividend out to shareholders and us being the major shareholder, Caledonia will be a beneficiary of that. And we can decide on where to invest that for the best from a shareholder perspective. So I think that covers everything that we really wanted to talk about. And I think what we should do is now open up the floor to questions, and we invite people to keep please pose their questions to us and the team.

So I'll hand it over to our host. Operator: [Operator Instructions] The first question is coming from the line of [ Nir Venda Halom ] from -- who is a private investor.

Unknown Shareholder: And as a very long term or long time shareholder, I’m very, very pleased with how you performed under difficult circumstances. And so to the whole team, thank you very much. I've got 4 questions, if that's okay. First one is -- most of them are technical in nature. For the first one is that for Mark. You mentioned that about $300,000 was spent on this quarter for genset power, up 2%, the way I calculated it. Do you expect that to increase? What's your outlook going forward in terms of that until such time as obviously it will reduce with the solar power? That’s the first of it.

Mark Learmonth: Okay. [ Shareholder Nir Venda Halom ], so I'll answer this one and then you can do the other 3 questions. We can't project how much we'll use the gensets. Because we just simply have to react to the situation as it unfolds. And the reason -- one of the main reason why we embarked on [ some ] wasn't just because it's a good economic return, but it's to protect us from a situation whereby there's a complete failure in the grid for whatever reason that we end up having to run the gensets all the time. And we -- theoretically, we could run the gensets all the time. But then you've got the difficulty of just procuring that much diesel in such a short time frame that it would become logistically very difficult. So we can't project how much diesel we will use. The solar project that we're putting in place on a normal 24-hour basis would provide about 27% of Blanket’s daily electricity requirement. And the balance will be made up between grid power and gensets, subject to the continuing availability of grid power. I’m afraid I can't give a better answer than that, I’m afraid.

Unknown Shareholder: Okay. No, that's fine. I mean in terms of, I guess, the CapEx, what percentage of the CapEx roughly is in development, in a ramping down, declining? And do you have a ballpark figure for cost per meter of development, final development?

Mark Learmonth: Probably, Dana is best place to answer that. Dana, if you could?

Dana Roets: Our capital or our development is very strong. On the development, which is about $600 per meter, then you get to trade development, that's about close to $1,000. And then we've got our decline developments, which we do with trackless equipment, which is about $1,500 per meter. Yes, percentage wise, we're going to do about roughly going forward, 400 meters a month of development. So [ it turns to all ] that's about 5 pillars. So -- and that's [ 5,000 tonnes a thousand ]. Let’s say, 5 million of development. And I would say that, going forward, that's not all the -- our capital.

Unknown Shareholder: Okay. No, that's really helpful. And so that kind of leads into my next question. My understanding, looking at the 43-101 and historical production, is that your -- you had a very big bonanza really in AR. I think it's the AR Main orebody. And my understanding was that AR Main orebody quite a wide orebody. But I'm just curious to know, going forward, as you ramp up to 80,000 ounces, what kind of mining methods are you going to be using? You’re using trackless machines. But I know some of the other orebodies in the region, and I guess some of historical orebodies are a lot narrow. Have you got a rough split in terms of what's going to be kind of trackless? Or are you going to go into conventional shrinkage start/stop? Can you give us a little bit of color on that?

Dana Roets: Yes. We've got our wide orebodies is AR Main and AR South, where AR South is the main producer at a higher grade. Now -- but going forward, I would say, within the next 5 years, Blanket orebody is where the bulk of the production is going to come from. And that's a thinner orebody. So the trackless mining stays at AR Main and AR South. And then when you look at Blanket, we're going back conventional. There are some areas where we might do some long-haul stoping. But again, it's [ handheld ] conventional long-haul [ S26 ] machines. So going forward, it's going to be a hybrid with more back to conventional mining. Eroica, there are -- might be some opportunities there to do some trackless mining as well, but it's mining itself.

Unknown Shareholder: Okay. And then my last question is, obviously, you're not sure when you're going to have contractors back up there in that site, assuming you could get the contractors back up there in say the next month or so, I would imagine, what was your projected target base for commissioning the shaft?

Dana Roets: We still -- it looks like we can still finish the shaft really late in the fourth quarter. And then that's with the current delay. So if we can get the contractors back there now, we definitely finished within the throughput or commissioning the shaft.

Unknown Shareholder: Okay. And once again, congratulations to the team. Very, very happy on how you got it done. Well done.

Operator: And the next question is coming from the line of Howard Flinker from Flinker & Co. Howard Flinker;Flinker & Co.;Analyst: I have a few questions. One, are those expenses of 500,000 and 870,000 pretax or post tax?

Mark Learmonth: Pretax. Howard Flinker;Flinker & Co.;Analyst: Pretax. The second, Mark, you broke up when you were discussing the 11.5 million of expense compared to about 7.5 million, did you -- did I hear correctly that you think about 1.25 million or $1.5 million of that can be reduced?

Mark Learmonth: Let’s go back to, [ what’s that ]? So you're talking about the production cost being, what, 7.5 million in quarter 2 last year and this year, it was 11.4 million. What I'm saying is that about 1.6 million is accounted for by electricity, which is going to stay there. So yes, yes, say that again, so the thing -- the cost that, we think, we called out would be the costs of the -- maintaining the trackless equipment, that's about $870,000 and including all of the --- with the COVID costs to the extent COVID disappears eventually, you would hope that those costs wouldn't occur. So gensets, we're still going to have the need for the genset going forward, so I wouldn't say genset will disappear completely. So I thought, yes, say, 900 million to about 1.4 million shouldn't be recurring. Howard Flinker;Flinker & Co.;Analyst: Okay. When the current medical crisis ends, of course, not necessarily this afternoon.

Mark Learmonth: Yes. Not [ this quarter ]. Howard Flinker;Flinker & Co.;Analyst: Additionally, have you completed your sale at the market? Or is there still some to go?

Mark Learmonth: No, it's still ongoing? Howard Flinker;Flinker & Co.;Analyst: It is. All right. And I had -- and the final question relates to taxes. Did I understand that your taxes will continue at the current rate? Or because of the shift between tax credits and payment of taxes, it will balance out at somewhat lower rate than the current 35%.

Mark Learmonth: No, I still think it will continue at approximately 35% because we still -- the tax in Zimbabwe is a combination of income tax and deferred tax, which more or less should balance out at approximately 25%. So all that's going to happen is when we stop investing quite heavily, we’ll be paying more income tax and the deferred tax, but we'll still incur tax leakage on the movement of funds out of Zimbabwe, so withholding tax on dividend payments. And actually, that would probably go up because as we start to make more money and start to distribute more money out of Zimbabwe, clearly we'll be paying more withholding tax on the dividend distribution of Zimbabwe up to the U.K. and also continue to incur income tax in South Africa on the intercompany profits arising from the group procurement activity. So structurally, -- well, yes, because we continue to procure in South Africa. So one of the -- that's one of the... Howard Flinker;Flinker & Co.;Analyst: I thought those profits would be sent to Jersey or [ Guernsey ] instead of...

Mark Learmonth: No. No. [ Because the ] people actually do the procurement, live and work in Johannesburg they need to. They need to be able to [ pop ] down the road the [ box burden ] and look at a bit of [ kit ]. So we can't really do that with some area. So structurally, we are going to continue to incur an overall tax rate that is higher than the basic rate of tax because of the cost of using money around and also because of the tax leakage arising in South Africa. There's nothing we can do about that. Howard Flinker;Flinker & Co.;Analyst: There is one more question. Related to those $870,000 of maintenance expense, I wasn't clear why that arose. Is that continuous? Or is that extra expenses just to keep the equipment operational when you're not actually using it?

Mark Learmonth: No. It's because we bought -- we conditioned a second-hand equipment. Dana is probably the best place to talk about that. And Dana, do you want to talk about the cost of maintenance, please?

Dana Roets: Yes. What happened was we -- from the start, we bought refurbish equipment because that's what we could afford at that stage. And we actually worked our equipment quite hard. We started with the tracking equipment in 2015. So the only equipment has been operating for 5 years, and we came to a point where 2018 was very rough in getting parts and with the end of 2018, getting past to the mine and then the Zim dollar came in and third, we got 35% of our currency in dollars. And we struggled to get parts. And that improved during 2019. And lately, that's improved even more. But with that, we started to get enough spare parts, critical spares and new equipment into the country. Unfortunately, our old fleet deteriorated quite dramatically and being lockdown happened and we really struggled to get technicians and parts into the country. Because what happened was end of 2019, we've got a South African maintenance contractor in come and help us because we also lost a couple of our maintenance people to Vietnam. That's when it was really bad and you couldn’t put payout people in the U.S. dollar. So we lost a couple of those. And of the skills, we've got people in from South Africa, then unfortunately lockdown happened, and we couldn't get into the mine. So with all of that, our trackless equipment went into a very bad patch, and we had to catch up on that. So I would say, we probably saw a spike in those costs, and we're busy catching up and that should come down again. And we should become more efficient... Howard Flinker;Flinker & Co.;Analyst: So they're not continuous. It's not 870,000 every quarter.

Mark Learmonth: No. And can I also make a point, we actually started a program of replacing the clocked out, old equipment with brand new equipment. So -- and that should also reduce the maintenance cost as well. Howard Flinker;Flinker & Co.;Analyst: Has the lockdown in South Africa continued, or has it ended?

Steven Curtis: Currently, yes, it is continuing, but we are anticipating an announcement any day now from the President as to -- and a potential relaxation. We seem to have turned a corner in some provinces. And we -- as I say, we're expecting to see if there is going to be a relaxation. But apart from highly skilled technical people, the supply chains are working perfectly all right. And although the travel restrictions make it difficult, it is not impossible to get people up to the bank. We did get some additional people for the Central Shaft up there a month or so ago. And we work with the authorities through the mines -- the Ministry of Mines and the Ministry of Health, and we get specific [ dispensation ] to get people up. It just takes much longer than buying an air ticket and just jumping on an airplane. But it will be doable. And we're getting a lot of cooperation from the authorities to help us get the right people at the right place.

Operator: [Operator Instructions] As of right now, there are no further questions in the queue.

Steven Curtis: Well, then, Judy, let me wrap up and just thank everybody for joining the call today. And I hope you've been able to get the information that you needed. It's very encouraging to see that this is the largest number of participants that we've had on one of these calls. And thank you from us and the team for you participating. And let's hopefully keep on watching the success of Caledonia. And we will continue to deliver. And as Dana says, the target is still to get the Central Shaft complete, and then we'll do the ramp-up. And the story will continue. So thank you once again. Thank you to the team for joining the call, and thank you to everybody who dialed in, and I just wish you good health and stay safe, everybody. Bye-bye now.

Operator: Thank you, everyone, for joining us on today's call. You may now disconnect your handsets. Host, please [ be connected ].