Caledonia Mining Corporation Plc Results for the quarter ended September 30, 2020

ST HELIER, Jersey, Nov. 12, 2020 (GLOBE NEWSWIRE) — Caledonia Mining Corporation Plc (NYSE AMERICAN: CMCL; AIM: CMCL) (“Caledonia” or the “Company”) announces its operating and financial results for the quarter and the nine months ended September 30, 2020 (the “Quarter” and “Nine Months ” respectively). Further information on the financial and operating results for the Quarter and Nine Months can be found in the management discussion and analysis (“MD&A”) 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 $25.4 million, a 27 per cent increase on the $20.0 million achieved in the third quarter of 2019 (“Q3 2019”).
• Gross profit
  
  ¹
  
  of $12.5 million, a 47 per cent increase on the $8.5 million in Q3 2019 at a gross margin of 49 per cent (Q3 2019, 43 per cent).
• EBITDA
  
  ²
  
  (excluding net foreign exchange gains and share based payments) of $11.2 million, a 34 per cent increase on the $8.3 million in Q3 2019 at a margin of 44 per cent (Q3 2019, 42 per cent).
• The on-mine cost per ounce
  
  ³
  
  increased from $686 in Q3 2019 to $758 due to costs associated with COVID-19, a share-based payment expense and increased use of the diesel generators.
• The all-in sustaining cost per ounce
  
  ³
  
  increased from $872 in Q3 2019 to $1,119 due to a higher insurance premium and an increased share-based payment expense.
• Basic IFRS earnings per share (“EPS”) of 36.6 cents (Q3 2019, 63.4 cents). IFRS earnings for the Quarter were adversely affected by a lower foreign exchange gain and higher taxation.
• Adjusted EPS
  
  ³
  
  of 34.1 cents (Q3 2019, 15.8 cents).
• Net cash from operating activities of $5.3 million (Q3 2019, $4.9 million).
• Net cash and cash equivalents of $21.6 million (December 31, 2019, $8.9 million).
• Total dividend paid in the Quarter of 8.5 cents per share; a further dividend at the increased rate of 10 cents per share was paid in October.

Operating Highlights

• 15,155 ounces of gold produced in the Quarter (Q3 2019, 13,646 ounces); 42,887 ounces produced in the Nine Months (first nine months of 2019, 38,306 ounces).
• Tonnes mined and milled in the Quarter increased by 10 per cent compared to Q3 2019; recoveries were also slightly improved.
• Equipping of Central Shaft continued in the Quarter at an increased rate as operations returned to normal following the relaxation of measures to prevent the spread of COVID-19.
  

Effect of COVID-19


and


Outlook

• COVID-19 had no effect on production in the Quarter which was above target for the Nine Months.
• Production guidance for 2020 increased from 53,000 to 56,000 ounces to 55,000 to 58,000 ounces.
• Progress on the Central Shaft returned to the planned rate as travel and transport restrictions were lifted. Central Shaft is expected to be fully equipped by the end of 2020 and to be commissioned in the first quarter of 2021 – approximately three months later than expected due to the delays arising from COVID-19. Production guidance for 2021 is 61,000 to 67,000 ounces; guidance for 2022 is approximately 80,000 ounces.
• Voltalia, an international renewable energy provider, has been appointed as the contractor for the 12MW solar project which is expected to be commissioned before the end of 2021 and is expected to provide approximately 27 per cent of Blanket’s average daily electricity requirements.

Dividend

• The July dividend was increased by 13.3 per cent to 8.5 cents per share and the October dividend was further increased to 10 cents per share following the continued strong financial and operating performance.
• The cumulative increase in the dividend per share since January 2020 is 45 per cent.
• Further dividend increases will depend on the balance between delivering returns to shareholders and pursuing the significant growth opportunities within Zimbabwe.
  

Steve Curtis, Chief Executive


O


fficer


,


commented


:

“

I am delighted by Blanket Mine


’s


continued


strong


operating


performance


in the


Quarter


.


Despite


the


disruption caused by the COVID-19 pandemic, t


he m


anagement initiatives


which were implemented


in


2019


have


continued into 2020


and have


resulted in


a


1


2


per cent increase in gold production in the f


i


rst


nine


months of


2020 compare


d


to the


same period


of


2019.


The resilience of Blanket’s operations during this difficult period is testament to the outstanding commitment of the entire team at Blanket Mine.


Production for the first nine months of 2020 exceeded expectations and t


his trend continued into


October


.


We


have therefore increased our


gold


production guidance for 2020 from a range of


53,000


to


56,000 ounces


to a range of 55,000 to 58,000 ounces


.

“


Cost control in the


Quarter


continued to be excellent, but


a comparison of the costs for the Quarter


to


costs in the


third


quarter of 2019


is


complicated by factors which


somewhat increased


the costs in th


is


Quarter


. The on-mine cost per ounce


i


n the Quarter w


as


$


758


compared to $


686


in Q


3


2019. However, the costs in Q


3


20


20


include


approximately $73 per ounce of


costs relating to COVID-19, a non-cash charge in respect of share-based payments


and the cost of increased usage of the diesel generators.


After adjusting for these items, the on-mine cost per ounce of the Quarter


was $685 per ounce


–


virtually unchanged from Q3 2019 and lowe


r


than budget.

“


T


he


a


ll-in sustaining cost per ounce for the


Q


uarter


was $1,119 per ounce – an increase of


28 per cent compared to Q3 2019. This increase was


due to a higher royalty charge, which reflects the increased gold price,


increased administrative expenses, which is largely due to


higher insurance premiums


and an increased charge for share-based payments, which reflects the increased share price.

“


Notwithstanding these and other factors, we remain


on track to achieve our cost guidance for 2020 of


between $


693 and $767 per ounce for


o


n-mine costs and between $951 and $1,033 per ounce for all-in sustaining costs.

“


The


excellent


performance was also reflected in


continued


strong


cash generation:


net cash flow from


operating


activities (i.e. before


interest, taxation payments and capital expenditure) was $


7.4


million


in the


Quarter


compared to $


4.9


million in


Q


3


2019.


Net cash flow from operating activities for the Quarter was after an increase


in working capital of $1.5 million as we replenished our inventories to increase our


business


resilience


to guard against


any


resurgence of the COVID-19 pandemic which could affect Blank


e


t’s supply chain.

“During the


Q


uarter we raised $13 million (before


e


xpenses)


from the issue of equity


,


and the proceeds


will be used to construct the 12 MW s


o


lar


plant


.

“


Caledonia ended the


Quarter


with net cash and cash equiv


a


lents of


$


21.6


million


(


excluding $1 million of a gold ETF which we purchased in the Quarter to protect


cash in South Africa


against


devaluation of the


S


o


uth African Rand


)


.

“


T


he


continued strong performance


was achieved with


out


compromis


ing


o


n safety performance.


The


T


otal Injury Frequency


R


ate has bee


n


subst


antially


reduced


from


the levels in 2019 after a


concerted effort by management


over the last


18


months


to improve and enforce safety standards.


I am also very pleased to report that


in the Quarter we achieved


one


million


manhours at the Central Shaft project without incurring any serious injury


.

“


I


nterruptions to the


supply of


electricity


from the grid


have continued, but Blanket


manage


s


the


se


using


its


increase


d


su


i


te of diesel generators.


In the previous quarter we


resolved to construct a 12MW solar plant at a cost of approximately


$12 million, which is expected to provide 100


per cent


of Blanket’s


baseload


electricity demand during daylight hours and approximately


27


per cent


of Blanket’s tot


al


daily


electr


i


c


i


ty


demand.


Whilst


expected to


deliver an acceptable


financial retu


r


n


,


this investment


is primarily


intended to protect Blanket fr


om


a


further deterioration in its electric


i


ty supply


as well as to reduce


Blanket’s environmental footprint


.


W


e have raised the funds to construct this project


and


have appointed


Voltalia


as


the contractor


for the project


which


could be operational by


the end of


2021


.

“T


he coron


a


virus pandemic had no appreciable effect on Blanket


’s production in


the Quarter


and a minor effect on costs.


However,


w


ork on Central Shaft


has been


slower than planned


because trav


e


l restrict


i


ons


imposed to control the spread of COVID-19


affected the movement of


speciali


s


ed


equipment and


contractors


between


South Africa


and Blanket.


The project is approximately 12 weeks be


h


ind schedule


: it is currently expected that the shaft will be equipped before the end of 2020 and will be commissioned during


the first quarter of


2021. As a result of this delay,


the


build-up in production


will also be affected


: gold production in 2021 is now expected t


o


be in the range of


61,000 to 67,000 ounces


; there is no change to the


production target of approximately


80,000 ounces of gold from 2022 onwards


⁴


.

“


I


n light of the


improved performance


and the brighter outlook for 2020


and beyond


, Caledonia


increase


d


its quarterly dividend from 6.875 cents per share to 7.5 cents per share


in January 2020


.


A


t the end of


June


, in light of Blanket’s strong perf


o


rmance


, the higher gold price


and the return to normal levels of production


including renewed access to supply chains


,


Caledonia increased its quarterly dividend further to 8.5 cents per share


. In October,


due to the continued strong operational performance, the dividend was further increased to 10 cents


per share. This


means the


cumu


l


ative increase in the quar


t


er


ly


dividend


in 2020 is


45


per cent. The


board will review Caledonia’s future dividend distributions as appropriate while considering the balance between delivering returns to shareholders and pursuing the significant growth opportunities within Zimbabwe and in line with a prudent approach to financial management.


”

___________________

¹

Gross profit is after deducting royalties, production costs and depreciation but before administrative expenses, other income, interest and finance charges and taxation.


²

EBITDA is after deducting royalties, production costs and administrative expenses, but is before depreciation, net other income, profit on sale of a subsidiary, net foreign exchange gains, cash-settled share-based payments, hedging expenses, finance charges and taxation.


³

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


⁴

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.

For further information please contact:

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 to Caledonia’s current expectations, intentions, plans, and beliefs. Forward-looking information can often be identified by forward-looking words such as “anticipate”, “


envisage


”, “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.

Securityholders, potential securityholders 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;


risks related to natural disasters, terrorism, civil unrest, public health concerns (including health epidemics or outbreaks of communicable diseases such as the coronavirus


(COVID-19)


)


;


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. Shareholders 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.

This news release is not an offer of the common shares of Caledonia for sale in the United States. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the common shares of Caledonia, in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such province, state or jurisdiction.