Caledonia Mining Corporation Plc (LON:CMCL) has announced its operating and financial results for the year ended December 31, 2020. Further information on the financial and operating results for the Year and the quarter ended December 31, 2020 can be found in the Management Discussion and Analysis and the audited financial statements which are available on the Company’s website and which are filed on SEDAR.
2020 Financial Highlights
· Gross revenues of $100 million (2019: $75.8 million).
· Gross profit of $46.6 million (2019: $31.1 million) at a gross margin of 47 per cent (2019: 41 per cent).
· EBITDA of $43.3 million (2019: $29.9 million) at a margin of 43 per cent (2019: 39 per cent).
· On-mine cost1 of $744 per ounce (2019: $651 per ounce).
· Normalised all-in sustaining cost1 (i.e. excluding the effect of the export credit incentive and its successor scheme) of $946 per ounce (2019: $820 per ounce).
· Adjusted earnings per share1 of 204 cents (2019: 145 cents).
· Net cash from operating activities of $30.9 million (2019: $18.1 million).
· Net cash and cash equivalents of $19.1 million (2019: $8.9 million). Cash position increased due to a $13 million (gross) equity issue in the third quarter of 2020.
· Total dividend paid of 33.5 cents per share, a 21.8 per cent increase from 2019.
1 Non-IFRS measures such as “On-mine cost per ounce”, “All-in sustaining cost per ounce” and “adjusted EPS” are used throughout this document. Refer to section 10 of the MD&A for a discussion of non-IFRS measures.
· 57,899 ounces of gold produced in the Year (2019: 55,182 ounces); record annual production at Blanket Mine.
· Gold recoveries have improved following the completion of the upgrade to the oxygen plant in the Year: gold recovery in the Year was 93.8 per cent (2019: 93.4 per cent).
· Equipping the Central Shaft was completed in November 2020 and commissioning expected in first quarter 2021.
· Increased awareness in safety procedures has led to a 60 per cent reduction in total accidents from 2017 to 2020.
· Entered into option agreements on two properties, Glen Hume and Connemara North, in the Gweru mining district in the Zimbabwe Midlands for the right to explore each property for periods of 15 and 18 months respectively.
Post Year-End Highlights and Outlook
· Quarterly dividend increased by 10 per cent to 11 cents per share in January 2021, a 60 per cent cumulative increase from the level of 6.875 cents since October 2019. This is due to Caledonia’s improved financial and operating performance and the enhanced outlook as the Company approaches the end of the Central Shaft project.
· 2021 gold production guidance of between 61,000 – 67,000 ounces.
· Central Shaft commissioning is expected in the first quarter of 2021 after which production is expected to begin to ramp up to approximately 80,000 ounces in 2022.
Management will host a conference call on 25th March to discuss the results for 2020 and the outlook for the Company. The details for this call are set out towards the end of this announcement.
There will also be a Results presentation video with Management that will be available on the Caledonia website at https://www.caledoniamining.com/media/#corpvideos
Steve Curtis, Caledonia Mining Corporation Chief Executive Officer, commented:
“Operationally, the last 12 months have been transformational for the business. Central Shaft has been a five-year project costing approximately $67 million, all funded through internal cash flow and I am delighted that equipping was completed in the period and commissioning is on track to be completed in the first quarter of 2021.
“Production in the Year was 57,899 ounces, which was at the top end of the guidance range and was a new record for annual production. The robust operating performance was supported by a rising gold price and gross profit for the Year was $46.6 million – almost 50 per cent higher than 2019. Gross profit for the Quarter was $14.4 million – almost 27 per cent higher than the comparable quarter. Once Central Shaft is commissioned, we can start to expect further increases in production: guidance for 2021 is a range of 61,000 to 67,000 ounces while from 2022 onwards it is 80,000 ounces – 38 per cent higher than in 2020.
“We also increased the dividend for the fourth time at the start of January to 11 cents a share. This is a 60 per cent cumulative increase from the level of 6.875 cents since October 2019, creating genuine value and returns for our shareholders.
“In trying to minimise the impacts of our operations on the natural environment and in a general drive towards a more sustainable future for our business, Caledonia has entered into a contract to construct a 12MW solar plant at the Blanket Mine. To fund the project, in the third quarter of 2020, the Company issued approximately 600,000 shares to raise $13 million before expenses. The number of shares issued was lower than the 800,000 new shares that the Company had expected to issue, thereby improving the anticipated returns to shareholders from the project. Around 27 per cent of the Mine’s daily electricity demand is expected to be provided by the new solar plant, thereby significantly decreasing our reliance on non-renewable energy sources; it is also expected to yield a modest return to shareholders.
“To further our commitment towards social responsibility, in February 2021, we announced the appointment of Mrs Geralda Wildschutt to serve as a non-executive director with a specific focus on sustainability. Mrs Wildschutt has over 25 years’ experience working in social development and stakeholder management in the fields of social performance, community relations in mining operations, financial services and industry bodies focused on responsible mining.
“In December we announced that we had entered into option agreements on two properties, Glen Hume and Connemara North, in the Gweru mining district in the Zimbabwe Midlands which has historically produced significant quantities of gold. These options give the Company the right to explore each property for periods of 15 and 18 months respectively and acquire the mining claims over them. If our exploration is successful these properties will add further impetus to our growth.
“Despite our operational success, 2020 has been a complicated year globally with the Covid-19 pandemic wreaking havoc throughout the world and disrupting many people’s lives and livelihoods. The Blanket Mine continued to operate throughout the whole period with strict restrictions of movement put in place in and out of the Mine and local community. The measures to combat the coronavirus are constantly reviewed and monitored in line with WHO and government guidelines, and with our priority always being the safety of our people.
“Caledonia’s immediate strategic focus is to complete the Central Shaft project, which is expected to increase production, reduce operating costs and increase the flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket’s long-term future. We will also conduct exploration activities at Glen Hume and Connemara North while evaluating further investment opportunities in the gold and precious metals sector in Zimbabwe and in other jurisdictions, with our long-term vision of becoming a mid-tier, multi-asset gold producer.”