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Caledonia Mining Corporation Plc - Results for the Quarter ended 30 June 2019 and details of a shareholder conference call

ID: 1551349
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(PresseBox) - Caledonia Mining Corporation Plc (?Caledonia? or the ?Company? -https://www.commodity-tv.net/c/search_adv/?v=298787

Gold production in the Quarter was 12,712 ounces, an increase of 6.4 per cent on gold produced in the first quarter of 2019 of 11,948 ounces taking production for the first six months of 2019 to 24,660 ounces. Gross profit for the Quarter was $7 million, 37 per cent higher than in the second quarter of 2018 (the ?comparable quarter?) due to lower on-mine costs. Operating profit for the Quarter, before foreign exchange gains, was just over $6 million, 21 per cent higher than the comparable quarter. usted earnings per share[1], which excludes inter alia unrealised foreign exchange gains, were 26.8 cents ? 19.5 per cent lower than in the second quarter of 2018 due to deferred tax adjustments arising from the calculation of Blanket?s taxes in local currency. Cash generated by operating activities remains robust with net cash of approximately $8.4 million generated in the first half of 2019.

Due to operational difficulties relating to grade and unreliable power, production guidance for 2019 has been reduced from a range of 53,000 to 56,000 ounces to a range of 50,000 to 53,000 ounces[2].

After the end of the Quarter, on 24 July 2019, the Company announced the completion of the shaft sinking at Central Shaft. This important milestone marks a very significant step towards completing the Investment Programme at Blanket in the second half of 2020 after which production is expected to increase to the target level of 80,000 ounces per annum from 2022.

Following the implementation of indigenisation in September 2012, Caledonia owns 49 per cent of the Blanket Mine in Zimbabwe. Caledonia continues to consolidate Blanket and the operational and the financial information set out below is on a 100 per cent basis unless otherwise indicated. We continue to work with the relevant regulatory bodies in Zimbabwe to obtain the outstanding approvals so that we can complete the purchase of the 15 per cent shareholding in Blanket that is owned by one of its indigenous shareholders.



[1] Non-IFRS measures such as ?Adjusted earnings per share?, ?On-mine cost per ounce?, ?AISC? and ?average realised gold price? are used throughout this document.&A for a discussion of non-IFRS measures.

[2] Refer to technical report dated 13 February 2018 entitled ?National Instrument 43-101 Technical Report on the Blanket Mine, Gwanda Area, Zimbabwe (Updated February 2018), a copy of which was filed by the Company on SEDAR on March 2, 2018 for the key assumptions, parameters, and methods used to estimate the mineral resources and mineral reserves from which planned gold production, as set out in this news release, is to be derived and risks that could materially affect the potential development of the mineral resources or mineral reserves.

Commenting on the results and the period under review, Steve Curtis, Chief Executive Officer, said:

?By far the most important news in the period covered by this review is the completion of the shaft sinking at the Central Shaft, which we announced in late July. This is a major milestone and marks the successful culmination of five years work and approximately $45 million of capital investment.

?Production of 12,712 ounces was marginally higher than the first quarter of 2019 although below plan. Production was adversely affected by lower than expected grade as problems with mining dilution adversely affected the grade and mine production continued to be disrupted due to the instability of the incoming power supply.

?The electricity situation worsened considerably in July and early August and Blanket experienced frequent and long interruptions to its power supply. To address this problem Blanket has procured additional back-up diesel generators which will be installed in the coming weeks. We have had constructive engagement with the state electricity utility and the chamber of mines as a result of which Blanket has signed a new electricity supply agreement in terms of which it will receive un-interrupted imported power at a lower cost than it previously paid.problem.

?Due to the continued low grade and difficulties with electricity supply in July and early August, management has reduced full year production guidance from the previous range of 53,000 to 56,000 ounces to a revised guidance range of 50,000 to 53,000 ounces. Whilst it is disappointing to reduce production guidance, earnings guidance for 2019 remains unchanged at 86 to 117 cents per share due to a higher than anticipated gold price and lower than expected costs.

?Our cost performance for the Quarter was excellent as a result of stringent cost control, aided by the devaluation of the Zimbabwe currency, the South African rand and sterling which reduced the dollar value of expenses incurred in such currencies. 3 per cent lower than the second quarter of 2018.

?Caledonia also remains highly cash generative with operating cash generated in the first half of 2019 of approximately $8.4 million, this cash contributed to a healthy balance sheet with cash on hand of approximately $8 million at the end of the Quarter.

?Other macroeconomic events during the quarter were the continued devaluation of the Zimbabwean currency, which experienced an almost 10-fold devaluation since late February 2019.uation and inflationary conditions appear for the most part to be a legacy of past fiscal indiscipline rather than as a result of current policy: indeed, government continues to run a primary budget surplus, a level of fiscal discipline that bodes well for future stability. Moreover, in the Finance Minister?s recent interim budget statement he announced the royalty payable to the Zimbabwe government will be deductible for the purposes of calculating income tax. He also revised the royalty rate which is reduced from five per cent to three per cent of revenues when the gold price is below $1,200 per ounce. We welcome the government of Zimbabwe?s continued efforts to promote investment in the sector.

?The devaluation of the Zimbabwe currency resulted in very substantial foreign exchange gains as the value of liabilities such as bank loans and deferred tax were eroded in US-dollar terms.e 26.8 cents per share, unchanged from the previous quarter and in-line with guidance for 2019.

?Capital investment for the quarter was in-line with our capex plan for 2019 at $4.2 million, most of which was incurred at Central Shaft. We expect capex to decline substantially after we commission the Central Shaft as planned in 2020. Thereafter we expect free cash flow to increase significantly driven by rising production, an expected decline in operating costs and importantly, reduced capital investment. We are also pleased to see the recent strength in the gold price which, if sustained will be a welcome boost for patient gold investors.

?Finally, I would like to thank our staff who have worked very hard during the Quarter in very difficult conditions: their dedication is a key component of our continued success.?

Strategy and Outlook

Caledonia is on track to achieve the production target of 80,000 ounces per year by 2022 at its Zimbabwean subsidiary, Blanket Mine (also referred to as ?Blanket?). The Company?s strategic focus continues to be the implementation of the Investment Plan at Blanket, which was announced in November 2014 and revised in November 2017 and is expected to extend the life of mine by providing access to deeper levels for production and further exploration.ng costs and greater flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket?s long-term future.

Dividend Policy

Caledonia pays a quarterly dividend of 6.875 US cents per share, the quarterly dividend is paid at the end of January, April, July and October respectively. It is envisaged that the current dividend policy will be maintained.

Shareholder Conference Call

Management will host a conference call at 1500 BST on 14 August 2019.

Details for the call (in local times) are as follows:

Date: 14 August 2019

Time: 1500 London, 1600 Johannesburg, 1600 Zurich and Frankfurt, 1000 Toronto and New York

Password: Caledonia Mining

For further information please contact:

Caledonia Mining Corporation Plc

Mark Learmonth

Maurice Mason

Tel: +44 1534 679 802

Tel: +44 759 078 1139

WH Ireland

Adrian Hadden/ Jessica Cave/James Sinclair-Ford

Tel: +44 20 7220 1666

Blytheweigh

Tim Blythe/Camilla Horsfall/Megan Ray

Tel: +44 207 138 3204

Curate Communications

Debra Tatenda

Swiss Resource Capital AG

Jochen Staiger

Tel:

www.resource-capital.ch

info(at)resource-capital.ch

Note:

Cautionary Note Concerning Forward-Looking Information

Information and statements contained in this news release that are not historical facts are ?forward-looking information? within the meaning of applicable securities legislation that involve risks and uncertainties relating, but not limited to Caledonia?s current expectations, intentions, plans, and beliefs.ions, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Examples of forward-looking information in this news release include: production guidance, estimates of future/targeted production rates, and our plans and timing regarding further explorationions regarding the representativeness of mineralization being inaccurate, success of planned metallurgical test-work, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors.

Security holders, potential security holders and other prospective investors should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements.thiness or financial condition of suppliers, refiners and other parties with whom the Company does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards, employee relations; relationships with and claims by local communities and indigenous populations; political risk; availability and increasing costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, including the risks of obtaining or maintaining necessary licenses and permits, diminishing quantities or grades of mineral reserves as mining occurs; global financial condition, the actual results of current exploration activities, changes to conclusions of economic evaluations, and changes in project parameters to deal with unanticipated economic or other factors, risks of increased capital and operating costs, environmental, safety or regulatory risks, expropriation, the Company?s title to properties including ownership thereof, increased competition in the mining industry for properties, equipment, qualified personnel and their costs, risks relating to the uncertainty of timing of events including targeted production rate increase anr other such factors which affect this information, except as required by law.



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published by: PresseBox
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Date: 08/13/2019 - 08:14
Language: English
News-ID 1551349
Character count: 28345
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