Caledonia Mining Q&A “very very commendable production results” (LON:CMCL)

Caledonia Mining Corporation

Caledonia Mining Corporation plc (LON:CMCL) Chief Executive Officer Steve Curtis caught up with DirectorsTalk for an exclusive interview to discuss a record quarterly production, the Central Shaft, another increase in dividends and their planned growth strategy.


Q1:
Caledonia Mining announced record quarterly production today, can you talk me through some of the highlights?

A1: We’re very happy with the results from the second quarter. It did come off a rather disappointing first quarter but that’s behind us so we don’t need to dwell on that.

So, the second quarter, we have surpassed the production levels that we’ve done for a second quarter on record which is excellent, it is more than 20% up on the comparative quarter.

It’s come about by achieving all the aspects of good mining. We’ve got the tonnes out, we’ve had good throughput through the mills, the grade has been slightly above what our budget was for the quarter which is excellent and our overall recovery in the milling and CIL section is virtually sport on.

The end result is that we are slightly above budget and recording about 16,700 ounces for a quarter which makes us very pleased and gives us nearly 30,000 ounces for the half year. That’s a good place to be considering our target for the full year is somewhere between 61,000 to 67,000 ounces so to be sitting at nearly 30,000 at this stage, after a disappointing first quarter, is a very good place to be.

So, I’m very happy with the results and very very proud of the guys at the mine who, again under difficult circumstances with COVID and various restrictions that are in existence, have produced a very very commendable production results so a good place to be.

Q2: Is the increase due to the commissioning of Central Shaft?

A2: Indirectly, yes because we’re not running the Central Shaft and the old Number 4 shaft. The Central Shaft at the moment is being used primarily for bringing waste material up as we become accustomed to using the equipment. The Central Shaft, if you remember, goes down to 1,200 metres where the old shaft only goes down to 750 metres.

So, what we’ve done is a lot of the development work that’s happening in what we call the new mine, which is below 750 metres, that development waste used to have to come up the old 4 shaft and obviously with restricted capacity there, the more waste you were hoisting, you had to sacrifice ore.

Now, we’ve got capacity on the Central Shaft and we are trucking more and more material to the Central Shaft, it’s freed up more capacity on the Number 4 shaft and the ore is coming up from there without the hindrance.

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It’s working very well in combination as we get a mix of mining from various areas and various depths, having two shafts is definitely paying dividends for us and it’s a good place to be.

Q3: You also announced another increase in quarterly dividends, how many is that now that the company done?

A3: We’ve had six quarterly increases since the end of 2019. At that stage, the dividend had been flat at about 6.8 cents per share per quarter and now we’re up to 13 cents per share so it’s 85% increase in the dividend level so that’s very very encouraging.

We’ve moved the dividend up by 1 cent a quarter and it is very good to see we have got the cash, the gold price is good for us and the production is working well. The Central Shaft is completed so we’ve got capex to spend this year which is part of the budget but as we go forward, there will be a lower demand on the cash generated for capital items and the plan is working.

So, very happy to present and suggest to the Board another increase and for them to support it so we’re very happy to be abler to give a bigger return back to shareholders.

Q4: With the planned growth strategy post Central Shaft, will that affect the dividend in any way?

A4: Well, as we ramp up to 80,000 ounces in 2022, which is now only 6 months away, we are obviously going to be generating more cash out of Blanket operation and we’re going to start getting better economies of scale. Blanket will be able to distribute bigger dividends to its shareholders, Caledonia Mining being the 64% shareholder so there’s going to be more money available at the corporate level. There will also be, as we’ve indicated, more money allocated to other opportunities that we’ve embarked on, we’ve got two exploration properties.

The availability of cash is going to be much higher, gold price permitting of course, but our commitment has always been to reward shareholders and distribute more money to our shareholders.

So, everything being equal, we’ve indicated we’ve got a commitment to moving the dividend up and we’re going to moving up to a higher production level, good cost controls which I’m sure Blanket will do because it’s known for that.

So, we’re looking forward to having more cash in the coffer and we can make some serious decisions about dividends.

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