TIDMCMCL
RNS Number : 8886Y
Caledonia Mining Corporation PLC
14 May 2019
Caledonia Mining Corporation Plc
Results for the quarter ended 31 March 2019
St Helier, 14 May 2019 - Caledonia Mining Corporation Plc
("Caledonia" or the "Company") announces its operating and
financial results for the first quarter of 2019 ("Q1" or the
"Quarter").
Gold production in the Quarter was 11,948 ounces, approximately
8 per cent below the first quarter of 2018 (the "comparable
quarter" or "Q1 2018"). Production was adversely affected by lower
grade, although this was anticipated as part of the mine plan.
Consolidated operating profit before tax of $12.3m for the
Quarter was 105 per cent higher than Q1 2018 although this increase
was entirely due to exceptional gains of $3.3 million on foreign
exchange following the devaluation of the domestic Zimbabwean
currency and a profit on the sale of a subsidiary of $5.4m.
Attributable profit after tax was also substantially higher than
the comparable quarter in 2018 at $9.3m again due to exceptional
items which outweighed lower gross profit. Foreign exchange gains
and profits arising on disposal are excluded from Caledonia's
adjusted earnings per share of 23 cents which were 44 per cent
lower than the comparable quarter, largely due to reduced
production and higher on-mine costs.
Operating cash flows for the Quarter were $6.3 million (Q1 2018;
$7.0 million) and the Company's balance sheet remains strong with
net cash of $9.7 million as at 31 March 2019. Amounts stated below
are expressed in thousands of US Dollars, unless otherwise stated
or the context requires otherwise.
Q1 2018 Q1 2019 % Change Comment
Gold produced 12,924 11,948 -7.6% Lower gold production was mainly due
(oz) to lower grade, which was in-line with
the mine plan. The grade dilution which
was experienced in previous quarters
has largely been addressed. Production
was less than planned due mainly to
lower than planned tonnage
-------- -------- --------- ----------------------------------------------
On-mine cost 687 794 15.6% On-mine costs increased due to Blanket's
per ounce ($/oz)[1] high fixed costs, which has an adverse
effect at low production levels. Labour
rates and the costs and consumption
rates for certain consumables were also
higher, but were as expected
-------- -------- --------- ----------------------------------------------
All-in sustaining 832 943 13.3% AISC increased due to the higher on-mine
cost ($/oz) cost per ounce the effect of which was
("AISC")(1) partially offset by lower sustaining
capital investment and lower administrative
expenses
-------- -------- --------- ----------------------------------------------
Average realised 1,312 1,284 -2.1% The average realised price of gold reflects
gold price the prevailing gold price received:
($/oz)(1) revenues from the export credit incentive
("ECI") and gold support price are accounted
for as "other income"
-------- -------- --------- ----------------------------------------------
Gross profit 6,223 4,284 -31.2% Gross profit was lower due to a reduction
([2]) in the number of ounces sold and increased
on-mine cost per ounce
-------- -------- --------- ----------------------------------------------
Net profit 3,154 9,318 195.4% Net profit attributable to shareholders
attributable increased due to foreign exchange gains
to shareholders and the profit on disposal of a subsidiary,
the combined effect of which outweighed
lower gross profit
-------- -------- --------- ----------------------------------------------
Adjusted basic 40.8 23.0 -43.6% Adjusted basic earnings per share excludes
earnings per deferred tax, foreign exchange gains
share ("EPS")[3] and the profit on disposal of a subsidiary
(cents)
-------- -------- --------- ----------------------------------------------
Net cash and
cash equivalents 13,380 9,742 -27.2% Net cash remains strong
-------- -------- --------- ----------------------------------------------
Cash from operating activities remains
Cash from operating robust and exceeded capital investment
activities 7,045 6,275 -10.9% in the Quarter
-------- -------- --------- ----------------------------------------------
Commenting on the results, Steve Curtis, Caledonia's Chief
Executive Officer said:
"Notwithstanding the production difficulties experienced as a
result of lower than expected production tonnage, unreliable
electricity supply and lower mine grade, cash generation for the
quarter was solid at $6.3 million - sufficient to support both
capital investment in the Central Shaft project of $5.1 million and
Caledonia's regular quarterly dividend as well as maintain a
healthy balance sheet with net cash of $9.7m at the end of
March.
"Work on sinking the Central Shaft remains on track. I expect
shaft sinking to be completed in the middle of this year after
which a further 12 months will be needed to equip the shaft before
it is commissioned in mid-2020 and we can begin to increase
production to our target of 80,000 ounces per annum by 2022. This
production increase will contribute significantly to reducing
operating costs through economies of scale and we look forward to
further increasing cash flows and earnings as the shaft is
commissioned.
"We maintain our full year production guidance of 53,000 -
56,000 ounces for 2019. I look forward to an improved cost
performance in the remaining quarters of the year as we anticipate
that the beneficial effects of improved production will be felt in
the subsequent quarters of 2019.
"The early part of the Quarter was made more challenging by some
significant macroeconomic disruptions. In particular, the
continuation of the currency peg between domestic currency and the
US dollar caused severe hardship to our employees in Zimbabwe due
to their reduced purchasing power which had repercussions for
employee morale. The removal of the currency peg in late February
resulted in a devaluation of the local currency and allowed
management to take steps to remediate the situation of our
employees. This, in conjunction with other measures to address
operational issues, has resulted in improved performance: I am
pleased to report that production in April was almost exactly as
planned and we are confident that production will improve in the
remainder of 2019.
"The devaluation did however have a one-off positive financial
impact on our results with a foreign exchange gain of $3.3 million
arising on the revaluation of assets and liabilities that are
denominated in local currency. Looking forward, provided the
exchange rate which is used to calculate Blanket's local currency
denominated gold receipts recognises economic fundamentals,
management is optimistic that current monetary policy may create a
more stable economic environment.
"Unit costs in the Quarter, although higher than the comparable
quarter of 2018, were largely as expected. Blanket's relatively
high fixed costs component makes our business particularly
sensitive to production volumes. On-mine cash costs per ounce of
$794 and AISC of $943 were 15.6 per cent and 13.3 per cent higher
respectively than the comparable quarter in 2018 although in line
with budget.
"Operating profit was boosted by exceptional one-off gains on
the sale of Eersteling (a South African gold mine which has been
held on care and maintenance for many years) and the foreign
exchange gain arising on the devaluation of the domestic
currency.
"I am particularly pleased that we have maintained a safe
working environment during what was clearly a difficult time for
all our Zimbabwe based employees. I join with my fellow directors
in expressing our sincere gratitude to all our management and staff
for their contribution to this achievement.
"Notwithstanding the challenges experienced in the Quarter, we
remain encouraged by the overall direction of policy development
which we believe will result in improved operating conditions and a
better investment climate in Zimbabwe. The most recent positive
development in this regard is the introduction of a gold support
price of $1,368 per ounce, a premium above the prevailing spot
price in order to incentivize domestic gold production. On the
exploration front, we are also particularly encouraged by
Zimbabwe's geological prospectivity and we continue to evaluate
potential investment opportunities."
For further information please contact:
Caledonia Mining Corporation Plc
Mark Learmonth Tel: +44 1534 679 802
Maurice Mason Tel: +44 759 078 1139
WH Ireland Tel: +44 20 7220 1751
Adrian Hadden/Jessica Cave/James
Sinclair-Ford
Blytheweigh Tel: +44 207 138 3204
Tim Blythe/Camilla Horsfall/Megan
Ray
Condensed Unaudited Consolidated Statement of Profit or Loss and Other
Comprehensive Income
($'000's)
3 months ended March
31
2019 2018
$ $
Revenue 15,920 18,059
Royalty (819) (904)
Production costs (9,769) (10,010)
Depreciation (1,048) (922)
------------- --------------
Gross profit 4,284 6,223
Net other income 1,200 1,381
Administrative expenses (1,396) (1,542)
Profit on sale of subsidiary 5,409 -
Foreign exchange gain 3,280 71
Equity-settled share-based expense - (14)
Cash-settled share-based expense (361) (114)
Cost of gold hedge (130) -
Operating profit 12,286 6,005
Net finance cost (48) (16)
------------- --------------
Profit before tax 12,238 5,989
Tax expense (1,519) (2,110)
------------- --------------
Profit for the period 10,719 3,879
------------- --------------
Other comprehensive income
Items that are or may be reclassified to profit
or loss
Foreign currency translation differences for
foreign operations (144) 208
Reclassification of accumulated exchange differences (2,109) -
on the sale of subsidiary
Total comprehensive income for the period 8,466 4,087
-------------
Profit attributable to:
Shareholders of the Company 9,318 3,154
Non-controlling interests 1,401 725
------------- --------------
Profit for the period 10,719 3,879
------------- --------------
Total comprehensive income attributable to:
Shareholders of the Company 7,065 3,362
Non-controlling interests 1,401 725
------------- --------------
Total comprehensive income for the period 8,466 4,087
------------- --------------
Earnings per share (cents)
Basic 88.6 29.3
Diluted 88.5 29.2
Adjusted earnings per share (cents) (i)
Basic 23.0 40.8
--------------------------------------------------------- ------------- --------------
Consolidated Statements of Financial Position (unaudited)
($'000's) As at March 31 Dec 31
2019 2018
Total non-current assets 102,625 97,525
Inventories 9,068 9,427
Prepayments 1,077 866
Trade and other receivables 5,456 6,392
Gold hedge receivable 194 -
Cash and cash equivalents 9,742 11,187
Assets held for sale - 296
--------- -----------------
Total assets 128,162 125,693
--------- -----------------
Total non-current liabilities 29,694 34,687
Trade and other payables 9,700 10,051
Income tax payable 1,205 1,538
Cash-settled share-based payments 134 -
- short term portion
Liabilities associated with assets
held for sale - 609
--------- -----------------
Total liabilities 40,733 46,885
--------- -----------------
Total equity 87,429 78,808
--------- -----------------
Total equity and liabilities 128,162 125,693
---------------------------------------- ------- ------ --------- -----------------
Condensed Consolidated Statement of Cash Flows (unaudited)
($'000's)
3 months ended March 31
2019 2018
Cash flows from operating activities
Cash generated by operations 6,633 7,684
Net interest paid (112) (38)
Tax paid (246) (601)
------------ ------------
Net cash from operating activities 6,275 7,045
------------ ------------
Cash flows from investing activities
Acquisition of property, plant and equipment (5,140) (5,158)
Proceeds from disposal of subsidiary 1,000 -
Net cash used in investing activities (4,140) (5,158)
------------
Cash flows from financing activities
Dividends paid (738) (899)
Repayment of term loan facility - (375)
------------ ------------
Net cash used in financing activities (738) (1,274)
------------ ------------
Net increase in cash and cash equivalents 1,397 613
Effect of exchange rate fluctuations on cash
held (2,842) 11
Cash and cash equivalents at beginning of
the period 11,187 12,756
Cash and cash equivalents at end of the period
(net of overdraft) 9,742 13,380
------------------------------------------------- ------------ ------------
Note: This announcement contains inside information which is
disclosed in accordance with 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 to Caledonia's current
expectations, intentions, plans, and beliefs. Forward-looking
information can often be identified by forward-looking words such
as "anticipate", "believe", "expect", "goal", "plan", "target",
"intend", "estimate", "could", "should", "may" and "will" or the
negative of these terms 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
production rates, and our plans and timing regarding further
exploration and drilling and development. This forward-looking
information is based, in part, on assumptions and factors that may
change or prove to be incorrect, thus causing actual results,
performance or achievements to be materially different from those
expressed or implied by forward-looking information. Such factors
and assumptions include, but are not limited to: failure to
establish estimated resources and reserves, the grade and recovery
of ore which is mined varying from estimates, success of future
exploration and drilling programs, 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 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. Such factors include,
but are not limited to: risks relating to estimates of mineral
reserves and mineral resources proving to be inaccurate,
fluctuations in gold price, risks and hazards associated with the
business of mineral exploration, development and mining, risks
relating to the credit worthiness 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. Security holders,
potential security holders and other prospective investors are
cautioned not to place undue reliance on forward-looking
information. By its nature, forward-looking information involves
numerous assumptions, inherent risks and uncertainties, both
general and specific, that contribute to the possibility that the
predictions, forecasts, projections and various future events will
not occur. Caledonia undertakes no obligation to update publicly or
otherwise revise any forward-looking information whether as a
result of new information, future events or other such factors
which affect this information, except as required by law.
[1] Non-IFRS measures such as "On-mine cost per ounce", "AISC"
and "average realised gold price" are used throughout this
announcement. Refer to Section 10 of the Quarter's MD&A for a
discussion of non-IFRS measures.
[2] Gross profit is after deducting royalties, production costs
and depreciation but before administrative expenses, other income,
interest and finance charges and taxation.
[3] Adjusted EPS is a non-IFRS measure which aims to reflect
Caledonia's ordinary trading performance. Refer to Section 10 of
the Quarter's MD&A for a discussion of non-IFRS measures.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFSFDFADFUSELI
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