Caledonia Mining Corporation Plc (AMEX:CMCL) Q4 2022 Earnings Call Transcript

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Caledonia Mining Corporation Plc (AMEX:CMCL) Q4 2022 Earnings Call Transcript March 28, 2023

Mark Learmonth: By way of introduction, I'm Mark Learmonth, Caledonia's Chief Executive, prior to that as the CFO as you may well know. I'd also like to take some time to introduce Victor Gapare, who's an Executive Director, joined the group in January following the acquisition of Bilboes. I'd just like to give Victor an opportunity to introduce himself. Please, Victor.

Victor Gapare: Thank you, Mark. My name is Victor Gapare. I worked for Anglo American Corporation Zimbabwe for 16 years. And my last job in Anglo was Director for the Gold and Pyrites Mining Division. I left Anglo American at the beginning of 2003, after I had completed the management buyout of the gold and pyrites businesses, which I was managing at that time. From 1 January, 2003, I became the Chief Executive officer of Bilboes. So I have been Chief Executive of Bilboes until we completed the transaction with Caledonia in January 2023. Between 2009 and 2011, I was also President of the Chamber of Mines of Zimbabwe. Basically the Chamber of Mines is the organization which represents organized mining in Zimbabwe, and it includes suppliers and service providers to the mining industry as well as professionals in the mining industry.

During the time €“ over the last few years from €“ really from 2010, I led the Bilboes team, which raised the first $6 million from Baker Steel Resources Trust, which is listed on the London Stock Exchange. So we used that money to carry out exploration €“ to begin exploration at the Bilboes properties. In 2018, we raised the by $10 million, which helped us progress the feasibility study. Also in 2018, we also raised another $7 million debt from the Industrial Development Corporation of South Africa, which enabled us to restart our operations after we had closed them during the hyperinflation period. So basically that's little bit about me. Thank you, Mark.

Mark Learmonth: Thank you, Victor. And then also, Chester Goodburn, who replaced me as CFO last year, and we've got Dana Roets, who is the Chief Operating Officer, been with us for about 10 years now; Maurice Mason, Vice President of Corporate Development; Adam Chester, our General Counsel; and Camilla Horsfall, who is Vice President, Group Communications. Okay, so let's get into the meat of the presentation. Just in terms of results highlights, production €“ all disclosed previously increasing from about 58,000 ounces in 2020 to just over 80,000 ounces in 2022, which is good. We've not been held much by the gold price, so all the increase in revenue is largely driven by higher production. Gross profit up from $46 million to $54 million to nearly $62 million, but you will notice there has been a slight compression in the gross margin from about 46% in 2020 to 43% in 2022, and that reflects the general increase in our operating costs offset by economies of scale.

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And then I'd also draw your attention to the dividend, which has increased from $0.335 in 2020 to last year, we did $0.56, but again, more information about that later. Okay. All of this will come into more detail later. Just a few words on safety, if I may. Very unfortunately we had the fatality in 2022 and a further fatality in 2023. Dana may want to talk about this more, but it is fair to say the fatalities resulted from non-adherence to prescribed safety procedures, and our response to that has to be to redouble our attempts to enforce adherence to safety procedures. And clearly, fatality is a very distressing event, but we just have to work harder, just try and make sure that people adopt the safe working practices that we set out. Other than that, our general safety performance compares quite well with other similar deep-level mines in the gold sector.

Dana, would you like to add anything further to what I've said?

Dana Roets: Well, Mark, I think it's just important to also know that we were in a place and increasing our labor numbers, which complicated things. And I think a good indication of €“ we actually improved our safety record from 2021 is the fact that there are disability in injury frequency rate, which takes the extra number of employees into account, year-on-year improved from 0.26 to 0.23.

Mark Learmonth: Yes. But I got to say it does compare. If you compare us to other gold producers, I've got to say not many of them produce information on this granularity, we actually perform quite well. So should we just move on and talk about the operations? Dana, can I ask you to just talk to the next couple of slides?

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