Caledonia Mining

Website: www.caledoniamining.com
Primary ticker: TSX:CAL, AIM:CMCL, NYSE:CMCL
Stage of development: Production
Commodity: Gold
Project to promote: Blanket Gold Mine
Project location: Zimbabwe
Company presentation: click here
Company video: 
click here

Live financials

Cash: USD$14.1M
Debt: USD$1.5M

Major shareholders:
Allan Grey – 18%
Sales Promotion Services – 7.4%
Fremiro Investments – 6.3%
UBS Wealth Management – 5%
Charles Schwab – 3.5%
Management Ownership – 4.5%

Caledonia is the 64% owner and operator of the Blanket Gold Mine in Zimbabwe. The mine is forecast to produce 53koz – 56koz in 2020 and to grow production to 80koz by 2022 at an AISC of $700 – $800/oz. The company currently pays a dividend of 7.5USc per quarter at a yield of 2.4%. Life of Mine is 14 years

Management Profile

 

Mark Learmonth, CFO

Mr Learmonth joined Caledonia in July 2008. Prior to this, he was a Division Director of Investment Banking at Macquarie First South in South Africa, and has over 17 years’ experience in corporate finance and investment banking, predominantly in the resources sector in Africa. Mr Learmonth graduated from Oxford University and is a chartered accountant. Mr Learmonth is a member of the Executive Committee of the Chamber of Mines, Zimbabwe. Mr Learmonth was appointed Caledonia’s
Chief Financial Officer in November 2014.


What is your rationale for attending 121 Mining Investment?

Marketing the company’s listed equity


What recent news would you like to highlight to investors attending?

Payment of quarterly dividend in May 2020, continuation of production for the duration of the COVID 19 shutdown, Q1 2020 financial results due to be published mid May 2020


What are your key goals for the next 3, 6 and 12 months?

3 Months:

Continue the investment and completion of the Central Shaft project which will enable production of 80koz per year

6 Months:

Complete the Central Shaft project and begin comissioning and ramp up

12 Months:

Ramp up production to a run rate of 80koz per year and begin to grow the dividend


What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?

Educating investors on the percieved political risk in Zimbabwe and Caledonia’s mitigating actions


In a sentence, what do you think makes your company such a compelling investment?

We have the capacity to grow the dividend very significantly, perhaps by a multiple of 3X to 5X

Analyst Insight – provided by Independent Investment Research

Caledonia Mining is an AIM and TSX-listed gold producer, with a focus on its 49%-owned Blanket Gold Mine in Zimbabwe. The mine, which was acquired from Kinross Gold Corporation during 2000, re-started production during April 2009 after a temporary shut-down due to economic difficulties in Zimbabwe.

The Blanket Gold Mine is a well-established Zimbabwean gold mine, which operates at a depth of approximately 750 metres below surface. During late 2010, Blanket successfully completed an expansion project which increased production capacity from 24,000 ounces of gold per annum to 55,00 ounces of gold annually. The mine is forecast to produce 53koz – 56koz in 2020 and to grow production to 80koz by 2022 at an AISC of $700 – $800/oz.

During the March quarter 2020, the company produced 14,233 ounces of gold at an on-mine cost of US$678 per ounce (Q1 2019: $794 per ounce) and an All-in Sustaining Cost (AISC) of $879 per ounce (Q1 2019: $1,039 per ounce).

The company is in the process of increasing production to 80,000 ounces through the construction of a new underground shaft at its Blanket Gold Mine. The new 1,050m Central Shaft will improve hoisting capacity, as well as allowing access to ore bodies below the current depth of 750m. Total capital expenditure on the project is approximately $70m and is funded entirely from internal cash flow.

Increased throughput will result in lower unit fixed costs and is expected to reduce the AISC to below US$750/oz. Blanket also holds brownfield exploration and development projects both on the existing mine area and on its satellite properties which are within trucking distance of the Blanket metallurgical recovery plant. 

The mine has current resource life of 10 years with M & I Resources of 661koz at a grade of 4.23g/t and Inferred resources of 623koz at a grade of 5.01g/t. Total resources currently stand at 1.28Moz of gold and have grown each year since 2011 despite mining depletion. Caledonia anticipates this trend is likely to continue with its focus on exploration and resource delineation drilling at the mine. The grade of mineralisation is improving at depth, which should result in continuing improvements in economics.