Caledonia Mining Corporation Plc Results for the Fourth Quarter and Year ended December 31, 2018 (NYSE AMERICAN: CMCL; AIM: CMCL; TSX: CAL)
Caledonia Mining Corporation Plc (?Caledonia? or the ?Company? - https://www.commodity-tv.net/c/search_adv/?v=298787) announces its operating and financial results for the fourth quarter (?Q4? or the ?Quarter?) and the year ended December 31, 2018 (the ?Year?). erwise stated.
Steve Curtis, Chief Executive Officer, said:
?Blanket delivered a robust performance, despite the well-known challenges of operating in Zimbabwe. We made good progress on the Central Shaft, which I expect to be operational in approximately 15 months and we continued our track record of growing the resource base at Blanket.
?Production for the Year was lower than in 2017 primarily due to an unplanned lower recovered grade as a result of added dilution due to the adoption of long-hole stoping in certain areas for safety reasons. Provided the drilling is accurate and the shape of the reef does not vary too much, long-hole stoping is an efficient mining method; however, drilling accuracy and choice of the most suitable areas to use this methodology is essential to reduce the dilution. Management is addressing this by conducting extensive re-training of drillers, and the situation now appears to be improving.
?During the Year we continued to implement the Investment Plan at Blanket Mine with the objective of increasing production to 80,000 ounces per annum.o commissioning which is scheduled for mid-2020.
?Exploration continues at Blanket with encouraging results.ear of resource growth at Blanket where resources have increased by 858,000 ounces since 2011, despite mining over 300,000 ounces in the same period.
?The monetary environment in Zimbabwe became more challenging following changes in policy although the general direction of policy development appears to be positive. Policy changes disrupted the commercial banking system in October 2018 and February 2019 which adversely affected procurement.
?Costs in the Year and the Quarter were higher than expected due to a combination of increased prices for cyanide and steel, the increased cost of a larger fleet of trackless equipment which operates in the declines and the adverse effect of lower than expected grades.
?Notwithstanding these challenges, the financial performance of the Company remained robust: net profit attributable to shareholders for the Year increased from $9.4 million to $10.8 million; cash generated by operations before working capital was $25.8 million for the Year, compared to $26.8 million in 2017.
?Towards the end of the Year, Blanket drew down a new $6 million three-year debt facility, having repaid the previous facility of $3 million. Cash and cash equivalents at the end of the Year were $11.2 million (2017; $12.8 million).
?From these cash flows and cash resources, Blanket funded $17.8 million of expansion capital investment, $2.2 million of sustaining capital expenditure and repaid $1.5 million of debt; Caledonia also paid $2.9 million of dividends.
?Unfortunately, during the Year there were two fatal accidents at Blanket.s generally a safer mining methodology, but unfortunately, this has the risk of adding to dilution.
?We are at a very exciting point in our development. At our current production level we are already highly cash generative. For the next 18 months, the bulk of the cash generation will be deployed to the Investment Plan at Blanket which we are confident will further increase cash flows as we increase production to approximately 80,000 ounces of gold in 2022.
Shareholder Conference Call
A presentation of the 2018 results and outlook for Caledonia is available on Caledonia?s website (www.caledoniamining.com). Management will host a conference call at 1500 GMT on March 26, 2019.
Details for the call are as follows:
Date: March 26, 2019
Time (local): 1500 London, 1700 Johannesburg, 1600 Zurich and Frankfurt, 1100 Toronto and New York
Chief Executive?s Report
This information is extracted from the MD&A, the full version of which can be seen on the Company?s website.
Regrettably two fatal mining-related accidents occurred in the Year on February 23, 2018 and on July 12, 2018.fety of its employees very seriously and, accordingly, measures have been taken to reinforce adherence to prescribed safety procedures through increased training activities: all mine employees will participate in a five-day programme, focusing on safety behaviour and safe mining practices; all minin
Production and earnings
14,952 ounces of gold were produced during the Quarter, nine per cent lower than in the comparable quarter; 54,511 ounces of gold were produced in the Year, 2.9 per cent lower than in 2017.
Adjusted EPS for the Year was 131.5 cents, which is lower than the guidance of 140 to 150 cents per share which was published on October 11, 2018.
On September 20, 2018 Caledonia announced a further upgrade to the resource base at Blanket. Total Measured and Indicated gold ounces at Blanket increased by 13 per cent to 805,000 ounces as at July 2018.ined resource growth at Blanket. Blanket?s resources have grown by approximately 86 per cent since 2011 despite mining over 300,000 ounces over this period. This resource upgrade further vindicates the decision taken in November 2017 to extend the Central Shaft from the initial planned depth of 1,08
Zimbabwe Monetary Conditions
The shortage of foreign currency has been a long-standing difficulty in Zimbabwe which has worsened following a policy announcement by the Reserve Bank of Zimbabwe (?RBZ?) on October 1, 2018.
Following the announcement of the new policy, Caledonia and other Zimbabwean gold miners engaged with the Government of Zimbabwe and the RBZ, which increased the FCA allocation for large scale gold miners from 30 per cent to 55 per cent of their gold proceeds in FCA with effect from November 12, 2018.
On February 20, 2019 the RBZ issued a further monetary policy statement, which allows inter-bank trading between RTGS Dollars and other foreign currencies.n February 27, 2019 this will have an adverse effect on Caledonia?s earnings per share for 2019 of between 40 and 46 cents per share.
It is hoped that the inter-bank trading mechanism will address the most pressing difficulty that emerged after the October 2018 policy implementation, being the erosion of the purchasing power of Blanket?s employees due to rapidly increasing retail prices.
Provided the RTGS/US Dollar exchange rate used to calculate Blanket?s RTGS-denominated gold receipts is at an inter-bank rate that recognises economic fundamentals and Blanket continues to receive its gold proceeds promptly and in full, management is optimistic the revised policy may create a more stable economic environment. Investors should recognise that Blanket?s ability to implement its investment programme and Caledonia?s ability to sustain its operations outside Zimbabwe and pay future dividends depends, inter alia, on the ability to externalise cash from Zimbabwe.
Caledonia?s dividend policy is to pay a dividend of 6.875 United States cents per share at the end of January, April, July and October.
Revised Central Shaft Project
The shaft is currently at a depth of 1,150 metres.
Sale of Eersteling Gold Mining Company Limited
Eersteling Gold Mining Company Limited (?Eersteling?) is a South African subsidiary which has been on care and maintenance since 1997 and has recorded no production since then. On May 31, 2018 the Group entered into an agreement to sell two Eersteling rock dumps for a combined cash consideration of ZAR 3 million ($217,000).
On July 12, 2016 Caledonia entered into a conditional agreement to sell the shares of Eersteling for a cash consideration of $3 million. This agreement lapsed in December 2017 due to the failure of the purchaser to pay the purchase consideration. instalment has now been received after which ownership of Eersteling (and all future risks and rewards) has been transferred to the purchaser.
Eersteling?s assets had largely been written off: the carrying value of Eersteling?s assets and liabilities in Caledonia?s consolidated accounts as at 31 December 2018 was a net liability of $313,000; in the year to 31 December 2018, EGM gave rise to an administrative expense of $212,000.
Caledonia intends to use the sale proceeds for general corporate purposes.
Strategy and Outlook
Caledonia?s strategic focus is the implementation of the Investment Plan at Blanket, the main component of which is the Central Shaft project. costs and increased flexibility to undertake further exploration and development, thereby safeguarding and enhancing Blanket?s long-term future.
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014
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 toerms or similar words suggesting future outcomes, or other expectations, 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 produprograms, reliability of drilling, sampling and assay data, assumptions 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 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 and currency fluctuations.
Firma: Swiss Resource Capital AG
Ansprechpartner: Stadt: St. Helier
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