Caledonia Mining Q&A: A great year with £100 million turnover & a 60% accumulative dividend increase (LON:CMCL)


Caledonia Mining Corporation plc (LON:CMCL) Chief Executive Officer Steve Curtis caught up with DirectorsTalk for an exclusive interview to discuss the financial highlights from their Q4 results, why 2020 was transformational for the company, their response to COVID and what we can expect from them over the coming months.

Q1: Caledonia Mining announced quarter four results this morning, can you just take us through some of the financial highlights?

A1: 2020’s results, in through what all of us know was very, very difficult operationally because of COVID, but really they tell a fantastic story.

We hit £100 million turnover which was a 32% increase on the previous year, gross profit at £46 million was 50% up on the previous year, our adjusted earnings per share was 41% up at 204 cents a share and through the 12 month period, we’d increased our dividend four times and that accumulated to a 60% increase from the end of 2019.

So, all in all, yes, there was a good gold price but the mine delivered and that resulted in some very, very, very good financial results which we’re very proud of.

Q2: Operationally, why was 2020 transformational for the company?

A2: Well, we had the final equipping of our central shaft project which listeners may remember is a five-year old project and we finished equipping the shaft in the last quarter of 2020, which is fantastic, which allows us now to go into the commissioning stage, which is where we are right now.

We had to manage our way through the COVID pandemic and we had no outside management able to get to the mine. We instituted a hard lockdown and it just shows the resilience of the team that we’ve got up at Blanket who endured the lockdown, endured the pandemic, and produced a record production result of nearly 58,000 ounces.

So, it was transformational, it also showed that the strength of the training that we have put in, that culture has permeated into the organisation and that got us through and we’re very, very proud of that.

Right at the end of the year, we announced two options that we that we took out on exploration properties and this now brings action to our words of wanting to move on from being single asset business to a multi-asset gold producer so these are going to be exploration properties.

So, all in all, 2020 has taken us from a space of doing a project, to finishing a project, to embarking on an expansion programme so it’s been a great year for us.

Q3: Now, you did mention COVID, how was the company affected by COVID and what did you do in response to the pandemic?

A3: When you think about it, it started sort of this time last year for us in Zimbabwe, in South Africa. Through the year, effectively production was not affected, and as I’ve already said, we actually hit a record gold production of 58,000 ounces nearly and that’s just fantastic considering some of the restrictions that were placed upon us.

Our costs were a little bit higher because of the measures that we put in place to fight COVID and to protect our staff so we accept those increased costs happily. Staff discipline was really tested to the limit with hard lockdowns, that was hard for everyone while they were trying to worry about their families and continue doing a job so that was a massive challenge.

We did do, on a positive side, we managed to make some rather significant donations to the Chamber of Mines in Zimbabwe to assist them with their drive to help the nation fight with COVID so we were happy with that.

On our own doorstep, we focused on some CSR projects that were in our local area, that needed some help, especially during this difficult time. We spent time and money upgrading and improving schools and some medical facilities that had either been damaged, or that were just insufficient. The prime project there was we built an isolation centre for one of the clinics in the local area, we built a two-ward isolation centre with a new kitchen facility in a new ablution facility to just give the medical personnel in the area some resources and some structure to protect the community and to fight this COVID pandemic.

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So, we were very happy that we could decide, execute, and deliver that while the COVID pandemic was raging on so tough year but the team came through with flying colours.

Q4: What can we expect from Caledonia Mining over the next few months?

A4: Considering where we’ve come, you kind of think is it time to sit down and take a break and a breather, and no, absolutely not.

Shaft commissioning will finish this quarter, just to remind people, the shaft is 1200 meters deep, four compartments, it’s going to run at two or three times the speed of the old shaft and much greater capacity. So, once Dana and his teams are finished doing the commissioning then he can operationalise that shaft so there’ll be some announcements around that.

As I’ve already spoken about, the exploration properties, the Glen Hume property is having drilling taking place on it as we speak, and we will continue to do that. Those two programmes are sort of between 15 and 18 months long so there should be some regular information coming out on those. Let’s remember, they are exploration, we are confident about them but they will be what they will be and we will do a proper exploration job there. The Connemara North project is really in the planning phase but Glen Hume is steaming ahead.

We’ll have Q1 results before we know where we are, Q1 has started off a little bit quietly in January and February but I’m pleased to say that March has picked itself up. There’s been some challenges, we’ve had absolute record rains in the area which is something we are not used to and we’ve had some operational challenges with excessive water.

We’re still very happy and we are still guiding that for 2021 our guidance is somewhere between 61,000 and 67,000 ounces so that’s an uptake on the 58,000-odd ounces that we did last year.

Obviously, we’ve got the solar project which we announced last year but that is now going ahead to a greater extent, detailed design is completed, the instruction to commence has been given to the contractors, COVID restrictions have been slightly relaxed so we are confident that that can now go full steam ahead. The site is cleared but now we need to get down to getting some of the kit and caboodle onto the ground and get building. It is going to take us probably 12 months from where we are now to get that into operation but that’ll be something that you’ll hear about over the next few months.

Very importantly, in the next two weeks, early early April, there’ll be another dividend declaration and as I’ve already said, we’ve already had a cumulative 60% increase. We’ve shown a willingness and an interest in increasing the dividends so I look forward to that dividend being discussed at the Board level and then announced to the market.

So, quite a lot coming up in the next few months and certainly 2021 is not going to be an idle year for us at all.

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Find more news, interviews, share price & company profile here for:
Caledonia Mining Corporation

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