Caledonia Mining Plc(US:CMCL)2024-08-12 18:43Financial Data and Key Metrics Changes - Production increased to just under 21,000 ounces of gold in Q2 2024, up from 17,500 ounces in Q2 2023, indicating a substantial improvement [2][4] - Gold price realization was $2,300 per ounce, significantly higher than $1,949 in the same quarter last year [4] - Revenue for the quarter exceeded $50 million, reflecting a 35.4% increase due to higher production and gold prices [6] - Gross profit more than doubled to nearly $23 million from approximately $11 million in the previous year [4][6] - Net profit attributable to shareholders was nearly $8.4 million, compared to a loss of $0.5 million in the corresponding quarter [4][6] - Earnings per share (EPS) rose to $0.43, with adjusted EPS at $0.51 for the quarter [6] Business Line Data and Key Metrics Changes - The all-in sustaining cost decreased, with online costs at Blanket reduced to $906 per ounce from $915 in the previous quarter [6][8] - Administrative expenses decreased by approximately $3 million due to prior year expenditures related to the Bilboes sulfide project [8] - Cash generation increased, with over $20 million generated in the quarter, marking the highest cash generation in the last two years [9] Market Data and Key Metrics Changes - The company maintained production guidance for Blanket Mine at 74,000 to 78,000 ounces for the year, with similar levels expected from 2025 onwards [10] - The life of mine plan now extends to 2041, significantly underpinning the business going forward [3] Company Strategy and Development Direction - The company is focused on completing the feasibility study for the Bilboes sulfide project, which is expected to produce 1.5 million ounces over a 10-year mine life [2][10] - The strategy includes becoming a multi-asset gold producer, with ongoing exploration at Motapa [10][11] - The company is refining its understanding of the debt capacity for the Bilboes project, anticipating a high proportion of funding to be sourced from debt due to the project's high margins [10] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the new ZiG currency, which replaced the RTGS, and noted that foreign exchange losses have decreased significantly since the introduction of the ZiG [21][24] - The company acknowledged the risk of water shortages due to drought conditions in Zimbabwe but indicated that measures have been taken to mitigate this risk [16][17] - Management remains optimistic about production levels and cost management, with expectations for continued improvement in future quarters [5][10] Other Important Information - The company has rescheduled the declaration and payment of quarterly dividends for administrative purposes [3] - The increase in gold ounces produced was attributed to both higher tonnage and improved grades [3] Q&A Session Summary Question: BlackRock's increased shareholding and its implications - Management clarified that BlackRock's participation is as a passive fund manager tracking the Russell 3000 Index, and their shareholding will fluctuate based on the company's market capitalization [13][14] Question: CapEx increase for the Tailings facility - The increase in planned CapEx was due to improvements in underground pneumatics at Blanket [15] Question: Impact of water shortages on operations - Management noted that the new aligned tailings facility allows for better water recycling, mitigating the impact of water shortages [16][17] Question: Production grade profile at Blanket - The grade profile is currently lower than in previous years but is expected to improve over time [18] Question: Foreign exchange losses and their impact on adjusted EPS - Management explained that foreign exchange losses have been significant in the past but are expected to become less noticeable with the stability of the new currency [21][24] Question: Rock fall incident at Eroica - Management confirmed that the rock fall was an isolated incident and production has returned to normal levels [36] Question: Planned CapEx for H2 - Management confirmed that planned CapEx will be released in the second half of the year, amounting to approximately $31 million to $32 million by year-end [37] Question: Solar power project and its future - The solar project will be sold, but a long-term power purchase agreement will remain in place, ensuring continued benefits [38]