Caledonia Mining report another excellent quarter: record quarterly production

Caledonia Mining Corporation

Caledonia Mining Corporation Plc (LON:CMCL) has announced its operating and financial results for the quarter and the nine months ended September 30, 2021.  Further information on the financial and operating results for the Quarter and Nine Months can be found in the management discussion and analysis and the unaudited financial statements which are available on the Company’s website and have been filed on SEDAR.   

 Financial Highlights for the Quarter

·    Gross revenues of $33.5 million, a 31.9 per cent increase on the $25.4 million achieved in the third quarter of 2020 (“Q3 2020”).  

·    Gross profit of $15.7 million, a 25.6 per cent increase on the $12.5 million in Q3 2020, due to higher production and lower cost per ounce offset in the Quarter by a lower gold price.

·    EBITDA of $15.1 million, a 30 per cent increase on the $11.7 million in Q3 2020 at a margin of 45 per cent (Q3 2020: 46 per cent). 

·    The on-mine cost per ounce[1] decreased 8% from $758 in Q3 2020 to $695 due to higher production which spread fixed costs over more production ounces.

·    The all-in sustaining cost per ounce decreased 19% from $1,119 in Q3 2020 to $909. This reflects the decrease in on-mine cost per ounce and reduced sustaining capex. 

·    Basic IFRS earnings per share (“EPS”) increased by 56 per cent from 36.6 cents in Q3 2020 to 57.1 cents.

·    Adjusted EPS increased by 102 per cent from 34.1 cents in Q3 2020 to 68.9 cents.

·    Net cash from operating activities of $7.1 million (Q3 2020: $5.3 million) due to higher operating profit offset by higher working capital.

·    Net cash and cash equivalents of $13.0 million (Q3 2020: $21.6 million).

·    In October 2021, the Company declared and paid a quarterly dividend of 14 cents per share.  This was the seventh increase in the quarterly dividend since October 2019 and more than double the 6.875 cents declared only two years ago in October 2019

Operating Highlights

·    18,965 ounces of gold produced in the Quarter (Q3 2020: 15,155 ounces) which is a new quarterly production record for Blanket and reflects the contribution of Central Shaft.

·    48,872 ounces produced in the Nine Months, a 14 per cent increase on the 42,887 ounces produced in the first nine months of 2020.

Outlook

·    Production guidance for the year to December 31, 2021 has been narrowed at the top end of previous guidance at 65,000 to 67,000 ounces.

·    Due to, inter alia, historic delays in the completion of the Central Shaft arising from COVID-19, the need to remediate the poor electricity supply from the Zimbabwe Electricity Supply Authority, and an upgrade to the workers’ village to accommodate a larger workforce, capital expenditure at Blanket in 2022 is now expected to be $27million.

·    Caledonia has completed the purchase of the mining claims at Maligreen in the Zimbabwe midlands. 

·    Caledonia continues to evaluate Connemara North, in respect of which it has an option to purchase.

·    The Company will consider further investment opportunities in Zimbabwe and elsewhere.  

Steve Curtis, Caledonia Mining Corporation Chief Executive Officer, commented:

“This has been another excellent quarter: record quarterly production of almost 19,000 ounces signifies the contribution that Central Shaft is already making. The commissioning and subsequent ramp-up of activity at Central Shaft met our best expectations and we have therefore been able to narrow our production guidance to the top end of our previous range.  We remain on track to hit our 80,000 ounce target from 2022 onwards[2].

“Revenue in the Quarter was 32 per cent higher than in Q3 2020 due to a 42 per cent increase in the quantity of gold produced and sold offset by a 7 per cent decrease in the average realised gold price.  Net cash generated by operations in the Quarter was $7.1 million, compared to $5.3 million in Q3 2020. The increase was due to higher gross profit (due to increased production and lower costs per ounce), offset by increased working capital. 

“The completion of Central Shaft and the resultant increase in production means that Caledonia can execute other areas of its growth strategy, such as the agreement to acquire Maligreen which was announced during the quarter, which has an estimated inferred resource of 940,000 ounces of gold in 15.6 million tonnes at a grade of 1.88 grammes per tonne[3]. This transaction was completed after the end of the Quarter .

“In October 2021, the Company declared and paid an increased dividend of 14 cents per share. This was the seventh increase in the quarterly dividend since October 2019 and an increase of 104 per cent from 6.875 cents in October 2019. These dividend increases reflect the strong financial and operating performance of the business.  The board will continue to review Caledonia’s future dividend distributions as appropriate. 

“In October, the advance dividend loan account due from the Gwanda Community Share Ownership Trust (“GCSOT”), a 10 per cent shareholder in Blanket, was repaid. Henceforth GCSOT will receive its full entitlement to 10 per cent of dividends paid by Blanket. Investment in our local communities and employees (who also hold a 10 per cent shareholding in the mine through an employee trust) is key to a successful business and I am therefore delighted that the loan to the GCSOT is now fully repaid and that the community will start to receive its full dividend amount.

“Caledonia’s immediate strategic focus following the commissioning of the Central Shaft project earlier this year is to increase production, reduce operating costs and increase the flexibility to undertake further development and exploration, thereby safeguarding and enhancing Blanket’s long-term future.”

[1] Non-IFRS measures such as “on-mine cost per ounce”, “all-in sustaining cost per ounce” and “adjusted EPS” are used throughout this announcement. Refer to section 10 of the MD&A for a discussion of non-IFRS measures.

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[2] Refer to the technical report entitled “Caledonia Mining Corporation Plc NI 43-101 Technical Report on the Blanket Gold Mine, Zimbabwe” dated May 17, 2021 prepared by Minxcon (Pty) Ltd and filed by the Company on SEDAR (www.sedar.com) on May 26, 2021. Mr Dana Roets (B Eng (Min.), MBA, Pr.Eng., FSAIMM, AMMSA), Chief Operating Officer, is the Company’s qualified person as defined by Canada’s National Instrument 43-101 and has approved any scientific or technical information contained in this news release.

[3] Refer to technical report entitled “Caledonia Mining Corporation Plc NI 43-101 Mineral Resource Report on the Maligreen Gold Project, Zimbabwe” by Minxcon (Pty) Ltd dated November 2, 2021 and filed on SEDAR on November 5, 2021.

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