CMCL Caledonia Mining Corporation Plc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

Of the Securities Exchange Act of 1934

 

For the month of August 2024

 

Commission File Number: 001-38164

 

CALEDONIA MINING CORPORATION PLC

(Translation of registrant's name into English)

 

B006 Millais House
Castle Quay
St Helier
Jersey JE2 3EF

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F

 

Form 20-F      X       Form 40-F ______

 

 

 

 

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	CALEDONIA MINING CORPORATION PLC
	(Registrant)
	By:	/s/ Mark Learmonth
Dated: August 12, 2024	Name:	Mark Learmonth
	Title:	CEO and Director

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit Index

 

Exhibit	Description
99.1	Interim Financial Statements/Report
99.2	Interim MD&A
99.3	52-109F2 - Certification of Interim Filings - CEO
99.4	52-109F2 - Certification of Interim Filings - CFO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

 

Caledonia Mining Corporation Plc

 

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION

 

To the Shareholders of Caledonia Mining Corporation Plc:

 

Management has prepared the information and representations in this interim report. The unaudited condensed consolidated interim financial statements of Caledonia Mining Corporation Plc and its subsidiaries (the “Group”) have been prepared in accordance with IFRS Accounting Standards, as issued by the International Accounting Standards Board (“IFRS”) and, where appropriate, these statements include some amounts that are based on best estimates and judgment. Management has determined such amounts on a reasonable basis in order to ensure that the unaudited condensed consolidated interim financial statements are presented fairly, in all material respects.

 

The accompanying Management Discussion and Analysis (“MD&A”) also includes information regarding the impact of current transactions, sources of liquidity, capital resources, operating trends, risks and uncertainties. Actual results in the future may differ materially from our present assessment of this information because future events and circumstances may not occur as expected.

 

The Group maintains adequate systems of internal accounting and administrative controls, within reasonable cost. Such systems are designed to provide reasonable assurance that relevant and reliable financial information is produced.

 

Management is responsible for establishing and maintaining adequate internal controls over financial reporting (“ICOFR”). Any system of ICOFR, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

At June 30, 2024 management evaluated the effectiveness of the Group’s ICOFR and concluded that such ICOFR was effective based on the criteria outlined in the Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organisations of the Treadway Commission.

 

The Board of Directors, through its Audit Committee, is responsible for ensuring that management fulfils its responsibilities for financial reporting and internal control. The Audit Committee is composed of four independent non-executive directors. This Committee meets periodically with management, the external auditor and internal auditor to review accounting, auditing, internal control and financial reporting matters.

 

These unaudited condensed consolidated interim financial statements have not been audited by the Group’s independent auditor.

 

The unaudited condensed consolidated interim financial statements for the period ended June 30, 2024 were approved by the Board of Directors and signed on its behalf on August 12, 2024.

 

 

 

(Signed) J.M. Learmonth		(Signed) C.O. Goodburn
Chief Executive Officer		Chief Financial Officer

 

 

 

Consolidated statements of profit or loss and other comprehensive income

(in thousands of United States Dollars, unless indicated otherwise)

For the				Three months ended								Six months ended
				June 30,								June 30,
Unaudited		Note		2024				2023				2024				2023
Revenue					50,107				37,031				88,635				66,466
Royalty					(2,475	)			(1,963	)			(4,409	)			(3,443	)
Production costs		6			(20,460	)			(20,726	)			(39,420	)			(40,576	)
Depreciation		13			(4,239	)			(3,409	)			(8,058	)			(5,664	)
Gross profit					22,933				10,933				36,748				16,783
Net foreign exchange loss		7			(2,014	)			(3,610	)			(6,153	)			(2,077	)
Administrative expenses		8			(3,664	)			(3,183	)			(6,275	)			(9,122	)
Net derivative financial instrument expense					(174	)			(54	)			(476	)			(488	)
Equity-settled share-based expense		9.2			(305	)			(221	)			(506	)			(331	)
Cash-settled share-based expense		9.1			(4	)			9				(57	)			(271	)
Other expenses		10			(664	)			(1,461	)			(1,264	)			(2,099	)
Other income					185				168				349				186
Operating profit					16,293				2,581				22,366				2,581
Finance income		11			3				4				9				9
Finance cost		11			(797	)			(1,061	)			(1,529	)			(1,833	)
Profit before tax					15,499				1,524				20,846				757
Tax expense					(5,151	)			(1,273	)			(7,681	)			(4,775	)
Profit (loss) for the period					10,348				251				13,165				(4,018	)
Other comprehensive income
Items that are or may be reclassified to profit or loss
Exchange differences on translation of foreign operations					178				(330	)			34				(699	)
Total comprehensive income for the period					10,526				(79	)			13,199				(4,717	)
Profit (loss) attributable to:
Owners of the Company					8,429				(513	)			10,560				(5,542	)
Non-controlling interests					1,919				764				2,605				1,524
Profit (loss) for the period					10,348				251				13,165				(4,018	)
Total comprehensive income attributable to:
Owners of the Company					8,607				(843	)			10,594				(6,241	)
Non-controlling interests					1,919				764				2,605				1,524
Total comprehensive income for the period					10,526				(79	)			13,199				(4,717	)
Earnings (loss) per share
Basic earnings (loss) per share ($)					0.43				(0.01	)			0.53				(0.31	)
Diluted earnings (loss) per share ($)					0.43				(0.01	)			0.53				(0.31	)

 

The accompanying notes on pages 6 to 28 are an integral part of these consolidated financial statements.

 

On behalf of the Board: “J.M. Learmonth”- Chief Executive Officer and “C.O. Goodburn”- Chief Financial Officer.

 

 

 

Consolidated statements of financial position

(in thousands of United States Dollars, unless indicated otherwise)

Unaudited				June 30,				December 31,
As at		Note		2024				2023
Assets
Exploration and evaluation assets		12			94,536				94,272
Property, plant and equipment		13			181,027				179,649
Deferred tax asset					180				153
Total non-current assets					275,743				274,074
Income tax receivable					274				1,120
Inventories		14			20,401				20,304
Derivative financial assets					20				88
Trade and other receivables		15			7,882				9,952
Prepayments		16			5,287				2,538
Cash and cash equivalents		17			15,412				6,708
Assets held for sale		18			13,484				13,519
Total current assets					62,760				54,229
Total assets					338,503				328,303
Equity and liabilities
Share capital		19			165,188				165,068
Reserves					138,445				137,819
Retained loss					(57,985	)			(63,172	)
Equity attributable to shareholders					245,648				239,715
Non-controlling interests					26,326				24,477
Total equity					271,974				264,192
Liabilities
Deferred tax liabilities					5,381				6,131
Provisions		20			9,416				10,985
Loans and borrowings					2,033				–
Loan notes - long term portion		21			8,238				6,447
Cash-settled share-based payment - long term portion		9.1			190				374
Lease liabilities - long term portion					22				41
Total non-current liabilities					25,280				23,978
Cash-settled share-based payment - short term portion		9.1			454				920
Income tax payable					4,152				10
Lease liabilities - short term portion					114				167
Loan notes - short term portion		21			855				665
Trade and other payables		22			18,803				20,503
Overdraft and term loans		17			16,778				17,740
Liabilities associated with assets held for sale		18			93				128
Total current liabilities					41,249				40,133
Total liabilities					66,529				64,111
Total equity and liabilities					338,503				328,303

 

The accompanying notes on pages 6 to 28 are an integral part of these consolidated financial statements.

 

 

 

Consolidated statements of changes in equity

(in thousands of United States Dollars, unless indicated otherwise)

Unaudited		Note		Share capital				Foreign currency translation reserve				Contributed surplus				Equity- settled share-based payment reserve				Retained loss				Total				Non- controlling interests (NCI)				Total equity
Balance December 31, 2022					83,471				(9,787	)			132,591				14,997				(50,222	)			171,050				22,409				193,459
Transactions with owners:
Dividends declared					-				-				-				-				(6,066	)			(6,066	)			(1,512	)			(7,578	)
Share-based payments:
- Shares issued on settlement of incentive plan awards		9.1			351				-				-				-				-				351				-				351
- Equity-settled share-based expense		9.2			-				-				-				331				-				331				-				331
Shares issued:
- Equity raise (net of transaction cost)		19			15,658				-				-				-				-				15,658				-				15,658
- Bilboes acquisition					65,677				-				-				-				-				65,677				-				65,677
Total comprehensive income:					-				-				-				-				-
(Loss) profit for the period					-				-				-				-				(5,542	)			(5,542	)			1,524				(4,018	)
Other comprehensive income for the period					-				(699	)			-				-				-				(699	)			-				(699	)
Balance at June 30, 2023					165,157				(10,486	)			132,591				15,328				(61,830	)			240,760				22,421				263,181
Balance December 31, 2023					165,068				(10,409	)			132,591				15,637				(63,172	)			239,715				24,477				264,192
Transactions with owners:
Dividends declared*					-				-				-				-				(5,373	)			(5,373	)			(756	)			(6,129	)
Share-based payments:
- Shares issued on settlement of incentive plan awards		9.1			83				-				-				-				-				83				-				83
- Equity-settled share-based expense		9.2			-				-				-				592				-				592				-				592
Shares issued:
- Options exercised		19			37				-				-				-				-				37				-				37
Total comprehensive income:
Profit for the period					-				-				-				-				10,560				10,560				2,605				13,165
Other comprehensive income for the period					-				34				-				-				-				34				-				34
Balance at June 30, 2024					165,188				(10,375	)			132,591				16,229				(57,985	)			245,648				26,326				271,974
		Note			19

 

*

Dividends of $2.7 million declared on January 2, 2024 were paid on January 26, 2024. Dividends of $2.7 million declared on March 27, 2024 were paid on April 26, 2024. Dividends to NCI declared and accrued for during the period amounted to $756.  $259 of the NCI dividends declared during 2023 was paid during the period.

 

The accompanying notes on pages 6 to 28 are an integral part of these consolidated financial statements.

 

Consolidated statements of cash flows

(in thousands of United States Dollars, unless indicated otherwise)

Unaudited				Three months ended June 30,								Six months ended June 30,
		Note		2024				2023				2024				2023
Cash inflow from operations		23			20,988				2				27,523				666
Interest received					3				4				9				9
Finance costs paid		25			(710	)			(1,231	)			(1,283	)			(1,431	)
Tax paid		25			(1,195	)			(1,001	)			(2,276	)			(2,346	)
Net cash inflow (outflow) from operating activities					19,086				(2,226	)			23,973				(3,102	)
Cash flows used in investing activities
Acquisition of property, plant and equipment		25			(6,897	)			(6,009	)			(10,638	)			(10,602	)
Acquisition of exploration and evaluation assets		12			(733	)			(139	)			(1,163	)			(283	)
Acquisition of put options					(168	)			(811	)			(408	)			(811	)
Net cash used in investing activities					(7,798	)			(6,959	)			(12,209	)			(11,696	)
Cash flows from financing activities
Dividends paid		25			(2,912	)			(2,893	)			(5,632	)			(5,317	)
Payment of lease liabilities					(38	)			(35	)			(75	)			(72	)
Shares issued – equity raise (net of transaction cost)		19			–				4,834				–				15,658
Proceeds from loans and borrowings					2,032				–				2,032				–
Loan notes - Motapa payment					–				(1,288	)			–				(6,687	)
Loan notes - solar bond issue receipts (net of transaction cost)		21.1			1,939				2,500				1,939				7,000
Net cash from (used in) financing activities					1,021				3,118				(1,736	)			10,582
Net increase (decrease) in cash and cash equivalents					12,309				(6,067	)			10,028				(4,216	)
Effect of exchange rate fluctuations on cash and cash equivalents					485				(30	)			(362	)			(187	)
Net cash and cash equivalents at the beginning of the period					(14,160	)			3,190				(11,032	)			1,496
Net cash and cash equivalents at the end of the period					(1,366	)			(2,907	)			(1,366	)			(2,907	)

 

The accompanying notes on pages 6 to 28 are an integral part of these consolidated financial statements.

 

 

 

1

Reporting entity

 

Caledonia Mining Corporation Plc (“Caledonia” or the “Company”) is a company domiciled in Jersey, Channel Islands. The Company’s registered office address is B006 Millais House, Castle Quay, St Helier, Jersey, Channel Islands.

 

These unaudited condensed consolidated interim financial statements as at and for the six months ended June 30, 2024 are of the Company and its subsidiaries (the “Group”). The Group’s primary involvement is in the operation of a gold mine and the exploration and development of mineral properties for precious metals in Zimbabwe.

 

Caledonia’s shares are listed on the NYSE American LLC stock exchange (symbol – “CMCL”). Depository interests in Caledonia’s shares are admitted to trading on AIM of the London Stock Exchange plc (symbol – “CMCL”). Caledonia listed on the Victoria Falls Stock Exchange (“VFEX”) (symbol – “CMCL”) on December 2, 2021. Caledonia voluntarily delisted from the Toronto Stock Exchange (the “TSX”) on June 19, 2020. After the delisting the Company remains a Canadian reporting issuer and has to comply with Canadian securities laws until it demonstrates that Canadian shareholders represent less than 2% of issued share capital.

 

2

Basis of preparation

 

(a)

Statement of compliance

 

These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all the information required for full annual financial statements. Accordingly, certain information and disclosures normally included in the annual financial statements prepared in accordance with IFRS Accounting Standards, as issued by the International Accounting Standards Board (“IFRS”) have been omitted or condensed. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended December 31, 2023.

 

(b)

Basis of measurement

 

These unaudited condensed consolidated interim financial statements have been prepared on the historical cost basis except for:

 

·

cash-settled share-based payment arrangements measured at fair value on grant and re-measurement dates;

 

·

equity-settled share-based payment arrangements measured at fair value on the grant date; and

 

·

derivative financial assets measured at fair value.

 

(c)

Functional currency

 

These unaudited condensed consolidated interim financial statements are presented in United States Dollar (“$” or “US Dollars” or “USD”), which is also the functional currency of the Company. All financial information presented in US Dollars has been rounded to the nearest thousand, unless indicated otherwise.

 

3

Use of accounting assumptions, estimates and judgements

 

In preparing these unaudited condensed consolidated interim financial statements, management has made accounting assumptions, estimates and judgements that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in estimates are recognised prospectively. Key accounting assumptions, estimates and judgements applied in the preparation of the unaudited condensed consolidated interim annual financial statements are consistent with those applied in the preparation of the audited annual consolidated financial statements for the year ended December 31, 2023.

 

4

Material accounting policies

 

The same accounting policies and methods of computation have been applied consistently to all periods presented in these unaudited condensed consolidated interim financial statements as compared to the Group’s annual consolidated financial statements for the year ended December 31, 2023. In addition, the accounting policies have been applied consistently throughout the Group.

 

5

Blanket Zimbabwe Indigenisation Transaction

 

On February 20, 2012 the Group announced it had signed a Memorandum of Understanding (“MoU”) with the Minister of Youth, Development, Indigenisation and Empowerment of the Zimbabwean Government pursuant to which the Group agreed that indigenous Zimbabweans would acquire an effective 51% ownership interest in the Zimbabwean company owning the Blanket Mine (also referred to herein as “Blanket” or “Blanket Mine” as the context requires) for a paid transactional value of $30.09 million. Pursuant to the above, members of the Group entered into agreements with each indigenous shareholder to transfer 51% of the Group’s ownership interest in Blanket Mine whereby it:

 

•

sold a 16% interest to the National Indigenisation and Economic Empowerment Fund (“NIEEF”) for $11.74 million;

•

sold a 15% interest to Fremiro Investments (Private) Limited (“Fremiro”), which is owned by indigenous Zimbabweans, for $11.01 million;

•

sold a 10% interest to Blanket Employee Trust Services (Private) Limited (“BETS”) for the benefit of present and future managers and employees for $7.34 million. The shares in BETS are held by the Blanket Mine Employee Trust (“Employee Trust”) with Blanket Mine’s employees holding participation units in the Employee Trust; and

•

donated a 10% ownership interest to the Gwanda Community Share Ownership Trust (“Community Trust”). In addition, Blanket Mine paid a non-refundable donation of $1 million to the Community Trust.

 

The Group facilitated the vendor funding of these transactions which is repaid by way of dividends from Blanket Mine. 80% of dividends declared by Blanket Mine are used to repay such loans and the remaining 20% unconditionally accrues to the respective indigenous shareholders. Following a modification to the interest rate on June 23, 2017, outstanding balances on these facilitation loans attract interest at a rate of the lower of a fixed 7.25% per annum payable quarterly or 80% of the Blanket Mine dividend in the quarter. The timing of the loan repayments depends on the future financial performance of Blanket Mine and the extent of future dividends declared by Blanket Mine. The Group related facilitation loans were transferred as dividends in specie intra-group and now the loans and most of the interest thereon is payable to the Company.

 

 

 

5

Blanket Zimbabwe Indigenisation Transaction (continued)

 

Accounting treatment

 

The directors of Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”), a wholly-owned subsidiary of the Company, performed an assessment using the requirements of IFRS 10: Consolidated Financial Statements (IFRS 10). It was concluded that CHZ should consolidate Blanket Mine after the indigenisation. The subscription agreements with the indigenous shareholders have been accounted for accordingly as a transaction with non-controlling interests and as a share-based payment transaction.

 

The subscription agreements, concluded on February 20, 2012, were accounted for as follows:

 

•

Non-controlling interests (“NCI”) were recognised on the portion of shareholding upon which dividends declared by Blanket Mine will accrue unconditionally to equity holders as follows:

(a)

20% of the 16% shareholding of NIEEF;

(b)

20% of the 15% shareholding of Fremiro; and

(c)

100% of the 10% shareholding of the Community Trust.

•

This effectively means that NCI was initially recognised at 16.2% of the net assets of Blanket Mine, until the completion of the transaction with Fremiro, whereby the NCI reduced to 13.2% (see below).

•

The remaining 80% of the shareholding of NIEEF and Fremiro was recognised as NCI to the extent that their attributable share of the net asset value of Blanket Mine exceeds the balance on the facilitation loans, including interest.

•

The transaction with BETS is accounted for in accordance with IAS 19 Employee Benefits (profit sharing arrangement) as the ownership of the shares does not ultimately pass to the employees. The employees are entitled to participate in 20% of the dividends accruing to the 10% shareholding in Blanket Mine if they are employed at the date of such distribution. To the extent that 80% of the attributable dividends exceeds the balance on the BETS facilitation loan, they will accrue to the employees at the date of such declaration.

•

BETS is an entity effectively controlled and consolidated by Blanket Mine. Accordingly, the shares held by BETS are effectively treated as treasury shares in Blanket Mine and no NCI is recognised.

 

Fremiro purchase agreement

 

On November 5, 2018 the Company and Fremiro entered into a sale agreement for Caledonia to purchase Fremiro’s 15% shareholding in Blanket Mine. On January 20, 2020 all substantive conditions to the transaction were satisfied. The Company issued 727,266 shares to Fremiro for the cancellation of their facilitation loan and purchase of Fremiro’s 15% shareholding in Blanket Mine. The transaction was accounted for as a repurchase of a previously vested equity instrument. As a result, the Fremiro share of the NCI of $3,600 was derecognised, shares were issued at fair value, the share-based payment reserve was reduced by $2,247 and the Company’s shareholding in Blanket Mine increased to 64% on the effective date.

 

 

5

Blanket Zimbabwe Indigenisation Transaction (continued)

 

Accounting treatment (continued)

 

Blanket Mine’s indigenisation shareholding percentages and facilitation loan balances

 

 

						Effective interest & NCI				NCI subject to facilitation				Balance of facilitation loan #
USD		Shareholding				recognised				loan				June 30, 2024				December 31, 2023
NIEEF			16	%			3.2	%			12.8	%			8,096				8,489
Community Trust			10	%			10.0	%			0.0	%			–				–
BETS ~			10	%			-	*			-	*			4,594				4,908
			36	%			13.2	%			12.8	%			12,690				13,397

 

* The shares held by BETS are effectively treated as treasury shares (see above).

^~ Accounted for under IAS19 Employee Benefits.

^# Facilitation loans are accounted for as equity instruments and are accordingly not recognised as loans receivable.

 

The balance on the facilitation loans is reconciled as follows:

 

		2024				2023
Balance at January 1			13,397				15,026
Interest incurred			237				259
Dividends used to repay loan			(944	)			(1,888	)
Balance at June 30			12,690				13,397

 

6

Production costs

 

		2024				2023
Blanket Mine			37,839				33,046
Salaries and wages			14,953				12,459
Consumable materials			12,381				11,544
Electricity costs			7,014				5,812
Safety			548				554
Share-based expense (note 9)			145				386
On mine administration			1,971				1,472
Security			570				523
Solar operations and maintenance services			173				198
Pre-feasibility exploration costs			84				98
Bilboes			1,581				7,530
Salaries and wages			569				1,774
Consumable materials			374				4,742
Electricity costs			185				425
Share-based expense (note 9)			7				–
On mine administration			446				589
			39,420				40,576

 

 

 

 

7

Net foreign exchange (loss) gain

 

The RTGS$ devalued from RTGS$ 6,104: USD1 on December 31, 2023 to RTGS$ 22,055: USD1 on March 31, 2024 and RTGS$ 30.674:USD1 on April 5, 2024. The significant and accelerating rate of devaluation in the RTGS$ led the Reserve Bank of Zimbabwe (“RBZ”) to introduce a new currency which is referred to as the “ZiG” on April 5, 2024.

 

According to the 2024 Monetary Policy Statement issued by the Governor of the Reserve Bank of Zimbabwe (“RBZ”) on April 5, 2024, the ZiG is a structured currency which is anchored by a composite basket of foreign currency and precious metals (mainly gold) held as reserves for this purpose by the RBZ. The ZiG replaced the RTGS$ with immediate effect and was introduced at an official rate of ZiG13.56:US$1 on April 5, 2024. On the same date, all RTGS$ balances were translated from RTGS$ to ZiG using an exchange rate of ZiG1: RTGS$ 2,499. The ZiG co-circulates with other foreign currencies in the economy. The retention threshold on gold receipts remained unchanged: gold producers will continue to receive 75% of their revenues in US dollars and the balance in local currency i.e. the ZiG.

 

The ZiG has been much more stable on the formal market to the US Dollar since its introduction, compared to the RTGS$. The ZiG closed at an official ZiG13.70:US$1 on June 30, 2024. All conversions were performed at the official rate.

 

The table below illustrates the effect the weakening of the ZiG, RTGS$ and other foreign currencies had on the consolidated statement of profit or loss.

 

		2024																2023
		ZiG				RTGS$				Other				Total				ZiG				RTGS$				Other				Total
Unrealised foreign exchange (losses) gains			(27	)			728				(62	)			639				–				3,221				762				3,983
Taxation foreign exchange gains (including VAT)			145				1,021				–				1,166				–				3,379				–				3,379
Other unrealised foreign exchange (losses) gains			(172	)			(293	)			(62	)			(527	)			–				(158	)			762				604
Realised foreign exchange (losses) gains			(73	)			(6,706	)			(13	)			(6,792	)			–				(6,091	)			31				(6,060	)
Bullion sales receivable foreign exchange gains (losses)			51				(1,824	)			–				(1,773	)			–				(2,360	)			–				(2,360	)
Cash and cash equivalents foreign exchange losses			(81	)			(1,731	)			(13	)			(1,825	)			–				(874	)			(23	)			(897	)
Taxation foreign exchange losses (including VAT)			(23	)			(1,984	)			–				(2,007	)			–				(1,242	)			–				(1,242	)
Trade and other payables foreign exchange (losses) gains			(20	)			(1,167	)			–				(1,187	)			–				(1,615	)			54				(1,561	)
Net foreign exchange (losses) gains			(100	)			(5,978	)			(75	)			(6,153	)			–				(2,870	)			793				(2,077	)

 

 

 

7

Net foreign exchange (loss) gain (continued)

 

Sensitivity analysis

 

A strengthening or weakening of the ZiG to the US Dollar exchange rate will affect the cash flows, profit or loss and financial position (in USD) as indicated below, assuming all other variables remain constant for the period to June 30, 2024 or on the date as applicable.

 

		ZiG weakening by 10%				ZiG strengthening by 10%
Consolidated statement of financial position:
Cash and cash equivalents			2,874				3,513
Bullion sales receivable			1,421				1,736
VAT receivables			1,436				1,755
Trade and other receivables			1,822				2,227
Trade and other payables			(87	)			(106	)
Income tax payable			(1,083	)			(1,324	)
Consolidated statement of profit or loss and other comprehensive income:
Foreign exchange (losses) gains			(638	)			975

 

8

Administrative expenses

 

		2024				2023
Investor relations			237				322
Audit fee			134				139
Advisory services fees			782				3,823
Listing fees			321				592
Directors fees – Company			346				301
Directors fees – Blanket			34				30
Employee costs			3,350				2,815
Other office administration cost			100				247
Information technology and communication cost– Group related			128				84
Director and management liability insurance			461				414
Travel costs			382				355
			6,275				9,122

 

 

 

 

9

Share-based payments

 

9.1

Cash-settled share-based payments

(a)

Restricted Share Units and Performance Units

 

Certain management and employees within the Group are granted Restricted Share Units (“RSUs”) and Performance Units (”PUs”) pursuant to provisions of the 2015 Omnibus Equity Incentive Compensation Plan (“OEICP”). All RSUs and PUs were granted and approved at the discretion of the Compensation Committee of the Board of Directors.

 

RSUs vest three years after grant date given that the service conditions of the relevant employees have been fulfilled. The value of the vested RSUs is the number of RSUs vested multiplied by the fair market value of the Company’s shares, as specified by the OEICP, on the date of settlement.

 

PUs have a performance condition, determined on their grant date, based on gold production, average normalised controllable cost per ounce of gold, resource development at Blanket Mine, financing and construction of Bilboes sulphide project and a performance period of one to three years. The number of PUs that vest will be the relevant portion of the PUs granted multiplied by the performance multiplier, which will reflect the actual performance in terms of the performance conditions compared to expectations on the date of the award.

 

RSU holders are entitled to receive dividends over the vesting period. Such dividends will be reinvested in additional RSUs at the then applicable share price. PUs have rights to dividends only after they have vested.

 

RSUs and PUs allow for settlement of the vesting date value in cash or, subject to conditions, shares issuable at fair market value or a combination of both at the discretion of the unitholder.

 

The fair value of the RSUs at the reporting date was based on the Black Scholes option valuation model less the fair value of the expected dividends during the vesting period multiplied by the performance multiplier expectation. The fair value of the PUs at the reporting date was based on the Black Scholes option valuation model. At the reporting date it was assumed that there is an 80%-100% probability that the performance conditions will be met and therefore an 80%-100% (2023: 93%-100%) average performance multiplier was used in calculating the estimated liability.

 

The liability as at June 30, 2024 amounted to $644 (December 31, 2023: $1,294). Included in the liability as at June 30, 2024 is an amount of $67 (2023: $386) that was expensed and classified as production costs; refer to note 6.

 

 

 

 

9

Share-based payments (continued)

 

9.1

Cash-settled share-based payments (continued)

(a)

Restricted Share Units and Performance Units (continued)

 

The cash-settled share-based expense for PUs for the period amounted to $57 (2023: $271). During the period PUs to the value of $83 were settled in share capital (net of employee tax) (2023: $351) with the employee tax portion recognised in profit or loss.

 

The following assumptions were used in estimating the fair value of the cash-settled share-based payment liability on:

 

		June 30, 2024				December 31, 2023
		PUs				PUs
Risk free rate			4.36	%			3.88	%
Fair value (USD)			9.72				12.20
Share price (USD)			9.72				12.20
Performance multiplier percentage			80-100%				93-100%
Volatility			0.83				0.90

 

Share units granted:		PUs				PUs
Grant - January 11, 2021			35,341				56,244
Grant - May 14, 2021			482				964
Grant - June 1, 2021			375				1,310
Grant - June 14, 2021			199				398
Grant - September 6, 2021			229				458
Grant - September 20, 2021			230				460
Grant - October 1, 2021			508				1,016
Grant - October 11, 2021			225				450
Grant - November 12, 2021			923				1,846
Grant - December 1, 2021			225				900
Grant - January 11, 2022			41,386				75,198
Grant - January 12, 2022			556				825
Grant - May 13, 2022			1,894				2,040
Grant - June 1, 2022			–				1,297
Grant - July 1, 2022			1,899				2,375
Grant - October 1, 2022			1,800				2,024
Grant - April 7, 2023			73,464				79,521
Grant - May 15, 2023			–				581
Grant - June 1, 2023			617				617
Grant - June 7, 2023			572				572
Grant - August 10, 2023			5,514				5,514
Grant - September 1, 2023			1,617				1,617
Grant - October 3, 2023			14,258				14,258
Grant - April 8, 2024			169,141				–
Grant - June 10, 2024			1,406				–
Grant - June 17, 2024			1,155				–
Settlements/ terminations			(95,571	)			(68,171	)
Total awards outstanding			258,445				182,314

 

 

9

Share-based payments (continued)

 

9.2

Equity-settled share-based payments

(a)

EPUs

 

PUs which are classified as equity-settled (i.e. there is no option to vest in cash) (“EPUs”) have a performance condition, determined on their grant date, based on gold production, average normalised controllable cost per ounce of gold, resource development at Blanket Mine, financing and construction of Bilboes sulphide project and a performance period of three years. The number of EPUs that vest will be the relevant portion of the EPUs granted multiplied by the performance multiplier, which will reflect the actual performance in terms of the performance conditions compared to expectations on the date of the award.

 

EPUs have rights to dividends only after they have vested.

 

The shares issued are subject to a minimum holding period of until at least the first anniversary of the EPUs vesting date.

 

The fair value of the EPUs at the reporting date was based on the Black Scholes option valuation model less the fair value of the expected dividends during the vesting period multiplied by the performance percentage. At the reporting date it was assumed that there is a 100% probability that the performance conditions will be met and therefore a 100% performance multiplier was used in calculating the expense. The equity-settled share-based expense for EPUs as at June 30, 2024 amounted to $414 (2023: $331). An amount of $85 (2023: $Nil) was expensed and classified as production costs; refer to note 6.

 

The following assumptions were used in estimating the fair value of the equity-settled share-based payment that are in issue on:

 

Grant date		January 24, 2022				April 7, 2023				April 8, 2024				May 13, 2024
Number of units - remaining at reporting date			113,693				80,773				125,433				14,771
Share price (USD) - grant date			11.50				16.91				10.91				10.29
Fair value (USD) - grant date			10.15				15.33				9.53				10.02
Performance multiplier percentage at grant date			100	%			100	%			100	%			100	%

 

(b)

Equity Restricted Share Units

 

RSUs which are classified as equity-settled (i.e. there is no option to vest in cash) (“ERSUs”) vest on the date as specified in the RSUs agreement given that the service conditions of the relevant employees have been fulfilled. The value of the vested RSUs is the number of RSUs vested multiplied by the fair market value of the Company’s shares, as specified by the OEICP, on the date of settlement.

 

ERSU holders are entitled to receive dividends over the vesting period. Such dividends will be reinvested in additional ERSUs at the then applicable share price.

 

The fair value of the RSUs at the reporting date was based on the Black Scholes option valuation model less the fair value of the expected dividends during the vesting period multiplied by the performance multiplier expectation.

 

9

Share-based payments (continued)

 

9.2

Equity-settled share-based payments (continued)

(b)

Equity Restricted Share Units (continued)

 

The following assumptions were used in estimating the fair value of the equity-settled share-based payment that are in issue on:

 

Grant date		May 13, 2024
Vesting date		September 30, 2024
Number of units - remaining at reporting date			26,404
Share price (USD) - grant date			10.29
Fair value (USD) - grant date			10.02
Performance multiplier percentage at grant date			100	%

 

The equity-settled share-based expense for ERSUs as at June 30, 2024 amounted to $92 (2023: $Nil).

 

10

Other expenses

 

		2024				2023
Intermediated Money Transaction Tax*			528				666
Community and social responsibility cost			736				582
Impairment of property, plant and equipment (note 13)			–				851
			1,264				2,099

*	Intermediated Money Transfer Tax ("IMTT”) is tax chargeable in Zimbabwe on transfer of physical money, electronically or by any other means and ranges from 1% to 2% per transaction performed in Zimbabwe.

 

11

Finance income and finance cost

 

		2024				2023
Finance income received - Bank			9				9
Unwinding of rehabilitation provision (note 20)			198				36
Finance cost - Leases			5				11
Finance cost - Overdraft and short term loans			864				977
Finance cost - Solar loan notes payable (note 21.1)			395				197
Finance cost - Motapa loan notes payable			–				612
Finance cost – Loans and borrowings			67				–
			1,529				1,833

 

 

12

Exploration and evaluation assets

 

Bilboes Gold

Motapa

Maligreen

GG

Sabiwa

Abercorn

Valentine

Total

Balance at January 1, 2023

–

7,844

5,626

3,723

294

27

65

17,579

Acquisition costs:

- Bilboes Gold

73,198

–

–

–

–

–

–

73,198

Decommissioning asset estimation adjustment

–

1,466

152

–

–

–

–

1,618

Exploration costs:

- Consumables and drilling

–

903

102

–

–

–

–

1,005

- Contractor

–

2

–

–

–

–

–

2

- Labour

–

377

111

–

–

–

–

488

- Power

–

–

7

–

–

–

–

7

- Other

375

–

–

–

–

–

–

375

Balance at December 31, 2023

73,573

10,592

5,998

3,723

294

27

65

94,272

Decommissioning asset estimation adjustment*

–

(899

)

–

–

–

–

–

(899

)

Exploration costs:

- Consumables and drilling

–

558

2

–

–

–

–

560

- Contractor

–

–

5

–

–

–

–

5

- Labour

–

285

–

51

–

–

–

336

- Power

–

2

2

–

–

–

–

4

- Other

191

67

–

–

–

–

–

258

Balance at June 30, 2024

73,764

10,605

6,007

3,774

294

27

65

94,536

*	After further review of the Motapa claims the old tailings storage facility, previously included in the rehabilitation liability, was not within the Caledonia owned claims area. The tailing storage facility was therefore excluded from the rehabilitation liability footprint.

 

13

Property, plant and equipment

 

Cost		Land and Buildings				Right of use assets				Mine development, infrastructure and other				Assets under construction and decommissioning assets				Plant and equipment				Furniture and fittings				Motor vehicles				Solar Plant&				Total
Balance at January 1, 2023			15,194				525				82,154				46,453				70,485				1,563				3,314				14,138				233,826
Additions*			–				–				–				28,276				538				335				294				163				29,606
Impairments			–				–				(872	)			–				(36	)			–				–				–				(908	)
Disposals			–				–				–				–				(33	)			–				–				–				(33	)
Reallocate to assets held for sale			–				–				–				–				–				–				–				(14,301	)			(14,301	)
Reallocations between asset classes			1,492				–				37,116				(39,099	)			491				–				–				–				–
Foreign exchange movement			–				(24	)			–				(2	)			–				(37	)			(3	)			–				(66	)
Balance at December 31, 2023			16,686				501				118,398				35,628				71,445				1,861				3,605				–				248,124
Additions*			–				–				128				8,841				429				38				–				–				9,436
Reallocations between asset classes			–				–				13,409				(12,412	)			(997	)			–				–				–				–
Foreign exchange movement			–				1				–				–				–				2				–				–				3
Balance at June 30, 2024			16,686				502				131,935				32,057				70,877				1,901				3,605				–				257,563

*

Included in additions is the change in estimate for the decommissioning asset of ($868) (2023: $1,962) due to change in the Life of Mine (“LoM”) estimate to 2041.

&

The solar plant was fully commissioned on February 2, 2023 and the sale agreement between Caledonia Mining Corporation Plc and Caledonia Mining Services (Private) Limited was concluded for the sale of the solar plant.  Depreciation on the solar plant commenced on February 2, 2023 and the power purchase agreement, between Caledonia Mining Services (Private) Limited and Blanket Mine, became effective. From September 28, 2023 the solar plant is classified as held for sale. In December 2022, the Caledonia board approved a proposal for Caledonia Mining Services (Private) Limited (which owns the solar plant) to issue loan notes pursuant to a loan note instrument (“bonds”) up to a value of $12 million. The decision was taken in order to optimise the capital structure of the Group and provide additional debt instruments to the Zimbabwean financial market. Refer to note 21.1 for more information on these loan notes.

 

 

 

13

Property, plant and equipment (continued)

 

Accumulated depreciation and Impairment losses		Land and Buildings				Right of use assets				Mine development, infrastructure and other				Assets under construction and decommissioning assets				Plant and equipment				Furniture and fittings				Motor vehicles				Solar Plant				Total
Balance at January 1, 2023			8,350				230				12,368				693				29,257				1,100				2,845				–				54,843
Depreciation for the year			1,012				124				5,459				93				6,573				185				258				782				14,486
Accumulated depreciation for assets reallocated to assets held for sale			–				–				–				–				–				–				–				(782	)			(782	)
Accumulated depreciation impairments			–				–				(21	)			–				(10	)			–				–				–				(31	)
Foreign exchange movement			–				(9	)			–				–				–				(30	)			(2	)			–				(41	)
Balance at December 31, 2023			9,362				345				17,806				786				35,820				1,255				3,101				–				68,475
Depreciation for the period			557				62				3,488				46				3,701				87				117				–				8,058
Foreign exchange movement			–				1				–				–				–				2				–				–				3
Balance at June 30, 2024			9,919				408				21,294				832				39,521				1,344				3,218				–				76,536
Carrying amounts
At December 31, 2023			7,324				156				100,592				34,842				35,625				606				504				–				179,649
At June 30, 2024			6,767				94				110,641				31,225				31,356				557				387				–				181,027

 

 

 

 

14

Inventories

 

		2024				December 31, 2023
Consumable stores*			19,437				18,001
Gold in progress @			964				2,303
			20,401				20,304

*	Included in consumables stores is an amount of ($1,793) (December 31, 2023: ($1,793)) for provision for obsolete stock for items that are not compatible with plant and equipment currently in use.
@	Gold work in progress balance as at June 30, 2024 consists of 1,066 ounces (December 31, 2023: 3,057 ounces).

 

15

Trade and other receivables

 

		2024				December 31, 2023
Bullion sales receivable			3,844				5,403
VAT receivables			3,612				4,259
Deposits for stores, equipment and other receivables			426				290
			7,882				9,952

 

The carrying value of trade and other receivables are considered a reasonable approximation of fair value are due to the short term nature of the receivables. No provision for expected credit losses was recognised in the current or prior period as none of the debtors were past due and there has been no doubtful debt on debtors. Up to the date of approval of these financial statements all of the outstanding bullion sales receivable were settled in full. The Company allocated the VAT receivables equating to $1.8 million in the period against liabilities due for the period Quarterly Payment Dates (“QPD’s”) administrated by the Zimbabwe Revenue Authority.

 

16

Prepayments

 

		2024				December 31, 2023
Caledonia Mining South Africa (Proprietary) Limited (“CMSA”) suppliers			681				527
Blanket Mine third party suppliers - USD			1,482				808
Blanket Mine third party suppliers - ZiG			2,947				–
Blanket Mine third party suppliers - RTGS$			–				938
Other prepayments			177				265
			5,287				2,538

 

 

17

Cash and cash equivalents

 

		2024				December 31, 2023
Bank balances			15,412				4,252
Restricted cash			–				2,456
Cash and cash equivalents			15,412				6,708
Bank overdrafts and short term loans used for cash management purposes			(16,778	)			(17,740	)
Net cash and cash equivalents			(1,366	)			(11,032	)

 

Loan initiated

Expiry

Repayment term

Principal value

Balance drawn at June 30, 2024

Undrawn amount at June 30, 2024

Overdraft facilities and term loans

Stanbic Bank - ZiG denomination

Sep-2023

Sep-2024

On demand

ZiG 6.5 million

ZiG Nil

ZiG 6.5 million

Stanbic Bank - USD denomination

Sep-2023

Sep-2024

On demand

$4 million

$3.4 million

$0.6 million

CABS Bank – USD denomination&

Aug-2023

Jul-2024

On demand

$2 million

$1.9 million

$0.1 million

CABS Bank– USD denomination*

Mar-2024

Mar-2027

On demand

$3 million

$3 million

$Nil million

Ecobank - USD denomination

Mar-2024

Feb-2025

On demand

$4 million

$4 million

$Nil million

Nedbank Zimbabwe - USD denomination

Apr-2024

Apr-2025

On demand

$7 million

$4.5 million

$2.5 million

Total USD

$20 million

$16.8 million

$3.2 million

 

*	Included in Loans and borrowing is a term loan from CABS that is repayable over three years.
&	$2 million CABS Bank USD denominated loan expiring in July 2024 was fully repaid.

 

18

Assets and liabilities associated with assets held for sale

 

		2024				December 31, 2023
Non-current assets held for sale
Solar plant			13,484				13,519
Liabilities associated with assets held for sale
Site restoration liability			93				128

 

 

 

18

Assets and liabilities associated with assets held for sale (continued)

 

In the second quarter of 2023 management embarked on a marketing process to locate a buyer for the Company’s solar plant located next to Blanket Mine. Various offers were received and a counterparty with a non-binding offer was given exclusivity to further negotiate the sale of the plant after proving their ability to operate and fund solar plants of similar size and complexity. The offer was received from a reputable global renewable energy operator and management is in an advanced stage of executing agreements to sell the solar plant. It is proposed that the new owners will exclusively supply Blanket with electricity from the plant, on a take-or-pay basis and in doing so secure Blanket’s future power supply. This has the benefit of realising a cash profit on the sale of the plant and generate cash for reinvestment in our gold projects. In addition, management can focus on Caledonia’s core business of gold mining.

 

On September 28, 2023 the Board approved management to negotiate the sale of the solar plant with the potential buyer. The assets were available for sale in their condition on September 28, 2023 and therefore met the criteria to be classified as held for sale.

 

Management determined the value of the carrying amount as the lower of the fair value less cost to sell and the carrying amount. The proceeds of the disposal are expected to substantially exceed the carrying amount of the related net assets and accordingly no impairment losses have been recognised on the classification of the solar plant. The asset was classified as property, plant and equipment before the reclassification to assets held for sale.

 

The change in estimate for the liability held for sale is due to the Blanket Mine’s LoM that was extended to 2041 (that is inclusive of inferred resources and is based on an internal estimate representing management’s best estimate of the LoM inclusive of the latest drilling results).

 

19

Share capital

 

Authorised

 

Unlimited number of ordinary shares of no par value.

Unlimited number of preference shares of no par value.

 

Issued ordinary shares

		Number of fully paid shares				Amount
January 1, 2023			12,833,126				83,471
Shares issued:
- share-based payment - employees (note 9.1(a))			24,389				351
- equity raise			1,207,514				15,569
- Bilboes Gold Limited acquisition			5,123,044				65,677
December 31, 2023			19,188,073				165,068
Shares issued:
- share-based payment - employees (note 9.1(a))			6,787				83
- options exercised*			5,000				37
June 30, 2024			19,199,860				165,188

 

*	A consultant of Caledonia signed his option exercise notice on June 14, 2024 to purchase 5,000 shares at the exercise price of $7.35 per option share.  The shares were issued on July 5, 2024 when his payment was received in the bank account of Caledonia.

 

20

Provisions

 

Site restoration

 

Site restoration relates to the estimated cost of closing down the mines and projects and represent the site and environmental restoration costs, estimated to be paid as a result of mining activities or previous mining activities. For the Blanket Mine site restoration costs are capitalised in property, plant and equipment with an increase in the provision at the net present value of the estimated future and inflated cost of site rehabilitation. Subsequently the capitalised cost is amortised over the life of the mine and the provision is unwound over the period to estimated restoration. For properties in the exploration and evaluation phase, such as the Bilboes, Maligreen and Motapa projects, site restoration costs are capitalised in exploration and evaluation assets with an increase in the provision at the undiscounted value of the estimated cost of site rehabilitation. Subsequently the costs capitalised are not amortised and the provision is not unwound.

 

Reconciliation of site restoration provision		June 30, 2024				December 31, 2023
Blanket Mine
Balance January 1			4,766				2,823
Unwinding of discount (note 11)			198				109
Change in estimate (Blanket) (note 13)*			(868	)			1,834
Balance			4,096				4,766
Motapa, Maligreen and Bilboes
Balance January 1			6,219				135
Change in estimate (Motapa) (note 12)@			(899	)			1,466
Change in estimate (Maligreen) (note 12)			–				152
Acquisition - Bilboes			–				4,466
Balance			5,320				6,219
Total balance			9,416				10,985
Current			–				–
Non-current			9,416				10,985
			9,416				10,985

 

*	The change in estimate is due to the Blanket Mine’s LoM that was extended to 2041 (that is inclusive of inferred resources and it is based on an internal estimate representing management’s best estimate of the LoM inclusive of the latest drilling results).
@	After further review of the Motapa claims the old tailings storage facility, previously included in the rehabilitation liability, is not within the Caledonia claims area. The Tailing storage facility was subsequently excluded from the rehabilitation liability footprint.

 

The discount rate in calculating the present value of the Blanket Mine provision is 4.61% (2023: 4.14%) and is based on a risk-free rate and cash flows are estimated at an average 2.37% inflation (2023: 2.40%). The gross rehabilitation costs, before discounting, amounted to $5,950 (2023: $5,629) for Blanket Mine as at June 30, 2024.

 

The undiscounted gross rehabilitation costs for exploration and evaluation assets as at June 30, 2024, amounted to $4,466 (2023: $4,466) for Bilboes Holdings, $567 (2023: $1,466) for Motapa and $287 (2023: $287) for Maligreen.

 

 

 

21

Loan notes

 

Loan notes - finance costs				2024				2023
Solar loan notes		21.1			395				197
Motapa loan notes					–				612
					395				809

 

Loan notes - financial liabilities				2024				December 31, 2023
Solar loan notes		21.1			9,093				7,112
					9,093				7,112
Current					855				665
Non-current					8,238				6,447
					9,093				7,112

 

21.1

Solar loan notes

 

Following the commissioning of Caledonia’s wholly owned solar plant on February 2, 2023, the decision was taken to optimise the capital structure of the Group and provide additional debt instruments to the Zimbabwean financial market by way of issuing loan notes pursuant to a loan note instrument (“bonds”). The bonds were issued by the Zimbabwean registered entity owning the solar plant, Caledonia Mining Services (Private) Limited. The bonds carry a fixed interest rate of 9.5% payable bi-annually and have a tenure of 3 years from the date of issue. The bond repayments are guaranteed by the Company. $9 million of bonds were in issue at the date of approval of these financial statements. $7 million of bonds were issued to Zimbabwean registered commercial entities. Subsequently, these bonds were transferred to Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”), a subsidiary of the Company.

 

A summary of the bonds is as follows:

 

		2024				December 31, 2023
Balance January 1			7,112				–
Amounts received			2,000				7,000
Transaction costs			(61	)			(105	)
Finance cost accrued			395				549
Finance cost paid			(353	)			(332	)
Balance			9,093				7,112
Current			855				665
Non-current			8,238				6,447
			9,093				7,112

 

 

 

22

Trade and other payables

 

		2024				December 31, 2023
Trade payables			4,222				6,166
Electricity accrual			3,771				2,676
Audit fee			232				395
Dividends due			1,608				1,048
Other payables			1,021				692
Financial liabilities			10,854				10,977
Production and management bonus accrual - Blanket Mine			785				214
Other employee benefits - other			1,613				2,229
Other employee benefits - settlements			–				1,588
Leave pay			3,498				2,655
Bonus provision			70				190
Accruals			1,983				2,650
Non-financial liabilities			7,949				9,526
Total			18,803				20,503

 

23

Cash flow information

 

Non-cash items and information presented separately on the statements of cash flows statement:

 

		2024				2023
Operating profit			22,366				2,581
Adjustments for:
Impairment of property, plant and equipment (note 13)			–				851
Unrealised foreign exchange gains (note 7)			(639	)			(3,983	)
Fair value loss on derivative instruments			476				488
Cash-settled share-based expense (note 9.1)			57				271
Share-based expense included in production costs (note 6)			152				386
Cash portion of cash-settled share-based expense			(690	)			(1,673	)
Equity-settled share-based expense (note 9.2)			506				331
Depreciation (note 13)			8,058				5,664
Cash generated from operations before working capital changes			30,286				4,916
Inventories			(83	)			(1,005	)
Prepayments			(2,037	)			(148	)
Trade and other receivables			1,972				894
Trade and other payables			(2,615	)			(3,991	)
Cash generated from operations			27,523				666

 

 

 

 

24

Operating Segments

 

The Group's operating segments have been identified based on geographic areas. The strategic business units are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s CEO reviews internal management reports on at least a quarterly basis. Blanket Mine, Bilboes oxide mine, exploration and evaluation assets (“E&E projects”) and South Africa describe the Group's reportable segments. The Blanket operating segment comprises Caledonia Holdings Zimbabwe (Private) Limited, Blanket Mine (1983) (Private) Limited, Blanket’s satellite projects and Caledonia Mining Services (Private) Limited (“CMS”). The Bilboes oxide mine segment comprises the oxide mining activities. The E&E projects segment includes the exploration and evaluation activities of the Bilboes sulphide project as well as the Motapa and Maligreen projects. The South African segment represents the sales made by Caledonia Mining South Africa Proprietary Limited to the Blanket Mine. The holding company (Caledonia Mining Corporation Plc) and Greenstone Management Services Holdings Limited (a UK company) are responsible for corporate administrative functions within the Group and contribute to the strategic decision making process of the CEO and are therefore included in the disclosure below and combined with corporate and other reconciling amounts that do not represent a separate segment. Information regarding the results of each reportable segment is included below. Performance is measured based on profit before income tax, as included in the internal management report that is reviewed by the Group's CEO. Segment profit or exploration and evaluation cost is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. The accounting policies of the reportable segments are the same as the Group’s accounting policies.

 

Information about reportable segments

 

For the six months ended June 30, 2024		Blanket				South Africa				Bilboes oxide mine				E&E projects				Inter-group eliminations adjustments				Corporate and other reconciling amounts				Total
Revenue			86,937				–				1,698				–				–				–				88,635
Inter-segmental revenue			–				8,149				–				–				(8,149	)			–				–
Royalty			(4,324	)			–				(85	)			–				–				–				(4,409	)
Production costs			(38,161	)			(7,338	)			(1,581	)			–				7,660				–				(39,420	)
Depreciation			(8,472	)			(67	)			–				–				502				(21	)			(8,058	)
Net foreign exchange (loss) gain			(6,022	)			16				(58	)			–				(20	)			(69	)			(6,153	)
Administrative expenses			(475	)			(1,455	)			(21	)			(4	)			3				(4,323	)			(6,275	)
Net derivative financial instrument expense			–				–				–				–				–				(476	)			(476	)
Equity-settled share-based expense			–				–				–				–				–				(506	)			(506	)
Cash-settled share-based expense			–				–				–				–				–				(57	)			(57	)
Other expenses			(1,245	)			–				(19	)			–				–				–				(1,264	)
Other income			147				1				1				–				(3	)			203				349
Management fee			(1,457	)			1,457				–				–				–				–				–
Finance income			–				310				–				–				(1,348	)			1,047				9
Finance cost			(1,830	)			(4	)			(96	)			(47	)			1,348				(900	)			(1,529	)
Profit (loss) before tax			25,098				1,069				(161	)			(51	)			(7	)			(5,102	)			20,846
Tax expense			(7,218	)			(337	)			(5	)			–				39				(160	)			(7,681	)
Profit (loss) after tax			17,880				732				(166	)			(51	)			32				(5,262	)			13,165

 

24

Operating Segments (continued)

 

As at June 30, 2024		Blanket				South Africa				Bilboes oxide mine				E&E projects				Inter-group eliminations adjustments				Corporate and other reconciling amounts				Total
Segment assets:
Non-Current (excluding intercompany)			189,863				630				–				92,890				(5,188	)			(2,452	)			275,743
Current (excluding intercompany, including Assets held for sale)			59,866				2,432				–				683				(1,697	)			1,476				62,760
Expenditure on evaluation and exploration assets (note 12)			–				–				–				1,163				–				–				1,163
Expenditure on property, plant and equipment (note 13)			9,857				(26	)			–				–				(397	)			2				9,436
Assets held for sale (note 18)			13,484				–				–				–				–				–				13,484
Intercompany balances			45,237				17,806				48				–				(115,866	)			52,775				–
Segment liabilities:
Current (excluding intercompany)			(35,200	)			(2,413	)			–				(1,970	)			–				(1,666	)			(41,249	)
Non-current (excluding intercompany)			(20,078	)			–				–				(5,033	)			43				(212	)			(25,280	)
Intercompany balances			(16,040	)			(35,837	)			–				(7,333	)			115,866				(56,656	)			–

 

For the six months ended June 30, 2023		Blanket				South Africa				Bilboes oxide mine				E&E projects				Inter-group eliminations adjustments				Corporate and other reconciling amounts				Total
Revenue			64,152				–				2,314				–				–				–				66,466
Inter-segmental revenue			–				5,832				–				–				(5,832	)			–				–
Royalty			(3,327	)			–				(116	)			–				–				–				(3,443	)
Production costs			(32,567	)			(5,674	)			(7,534	)			–				5,199				–				(40,576	)
Depreciation			(6,199	)			(71	)			(21	)			–				648				(21	)			(5,664	)
Net foreign exchange (loss) gain			(2,716	)			(138	)			(100	)			–				(5	)			882				(2,077	)
Administrative expenses			(83	)			(1,578	)			(2,059	)			–				6				(5,408	)			(9,122	)
Net derivative financial instrument expense			–				–				–				–				–				(488	)			(488	)
Equity-settled share-based expense			–				–				–				–				–				(331	)			(331	)
Cash-settled share-based expense			–				–				–				–				386				(657	)			(271	)
Other expenses			(1,240	)			–				(859	)			–				–				–				(2,099	)
Other income			43				13				121				–				–				9				186
Management fee			(1,629	)			1,629				–				–				–				–				–
Finance income			–				9				–				–				–				–				9
Finance cost			(1,724	)			212				(1	)			–				–				(320	)			(1,833	)
Profit (loss) before tax			14,710				234				(8,255	)			–				402				(6,334	)			757
Tax expense			(4,207	)			(125	)			(44	)			–				(99	)			(300	)			(4,775	)
Profit (loss) after tax			10,503				109				(8,299	)			–				303				(6,634	)			(4,018	)

 

 

 

 

 

24

Operating Segments (continued)

 

As at June 30, 2023		Blanket				South Africa				Bilboes oxide mine				E&E projects				Inter-group eliminations adjustments				Corporate and other reconciling amounts				Total
Segment assets:
Non-Current (excluding intercompany)			192,373				325				–				83,307				(6,822	)			103				269,286
Current (excluding intercompany)			31,031				3,570				–				798				(30	)			9,236				44,605
Expenditure on evaluation and exploration assets (note 12)			–				–				–				69,837				–				–				69,837
Expenditure on property, plant and equipment (note 13)			22,077				(369	)			872				–				(2,023	)			(11,438	)			9,119
Intercompany balances			43,473				14,351				–				–				(141,193	)			83,369				–
Segment liabilities:
Current (excluding intercompany)			(30,290	)			(1,793	)			–				(55	)			–				(4,793	)			(36,931	)
Non-current (excluding intercompany)			(12,692	)			(43	)			–				(774	)			(17	)			(253	)			(13,779	)
Intercompany balances			(23,322	)			(34,542	)			–				(6,812	)			141,193				(76,517	)			–

 

Major customer

 

Revenues received from Fidelity amounted to $24,749 (2023: $48,728) for the six months ended June 30, 2024.

 

The Group has made $63,886 (2023: $17,738) of sales to AEG up to June 30, 2024, representing 29,539 ounces (2023: 9,083 ounces). Management believes this new sales mechanism reduces the risk associated with selling and receiving payment from a single refining source in Zimbabwe. It may allow for the Company to raise debt funding secured against offshore gold sales.

 

The Bullion trade receivables outstanding have been paid in full, after the period end.

 

25

Supplemental disclosure of cash flow items

 

		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
Finance cost (note 11)			797				1,061				1,529				1,833
Net loan note movements included in Loan notes (note 21)			(85	)			145				(43	)			(355	)
Non cash - Unwinding of rehabilitation provision (note 20)			-				30				(198	)			(36	)
Non cash - Finance cost on leases			(2	)			(5	)			(5	)			(11	)
Finance cost paid			710				1,231				1,283				1,431

 

 

 

 

 

 

 

25

Supplemental disclosure of cash flow items (continued)

 

		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
Tax paid
Opening balance of net income tax payable			22				2,128				(1,110	)			1,284
Current tax expense			4,935				1,682				7,544				3,915
Acquisition of Bilboes Gold tax liability (note 5)			-				-				-				10
Foreign currency movement			116				(401	)			(280	)			(455	)
Closing balance of net income tax payable			(3,878	)			(2,408	)			(3,878	)			(2,408	)
Tax paid			1,195				1,001				2,276				2,346
Acquisition of property, plant and equipment
Additions (note 13)			5,838				6,008				9,436				9,119
Net property, plant and equipment included in prepayments			656				(77	)			662				1,218
Net property, plant and equipment included in trade and other payables			323				137				(328	)			294
Change in estimate for decommissioning asset - adjustment capitalised in property, plant and equipment (note 20)			80				(59	)			868				(29	)
Acquisition of property, plant and equipment			6,897				6,009				10,638				10,602
Dividends paid
Opening balance dividends due			4,481				1,598				1,048				1,883
Dividends declared			-				5,439				6,129				7,578
Dividends declared and outstanding BETS			39				(86	)			63				(86	)
Closing balance dividends due			(1,608	)			(4,058	)			(1,608	)			(4,058	)
Dividends paid			2,912				2,893				5,632				5,317

 

26

Subsequent events

 

There were no significant subsequent events between June 30, 2024 and the date of issue of these financial statements other than included in the preceding notes to the condensed consolidated interim financial statements.

 

Retirements

 

Caledonia awarded discretionary payments to selected employees over 60 years of age that are expected to result in an expected outflow of $2.4m in fiscal 2024 (excluding Share-based payment awards granted that remained unaffected).

 

Dividends

 

Dividends of $2.7 million were declared and paid by the Company during July 2024.

 

DIRECTORS AND OFFICERS at August 12, 2024

 

 

 

CORPORATE DIRECTORY as at August 12, 2024

 

 

30

 

Exhibit 99.2

 

 

 

CALEDONIA MINING CORPORATION PLC

August 12, 2024

 

Management Discussion and Analysis

 

This management discussion and analysis (“MD&A”) of the consolidated operating results and financial position of Caledonia Mining Corporation Plc (“Caledonia” or the “Company”) is for the quarter ended June 30, 2024 (“Q2 2024” or the “Quarter”). It should be read in conjunction with the Unaudited Condensed Consolidated Interim Financial Statements of Caledonia for the Quarter (the “Interim Financial Statements”) which are available from the System for Electronic Data Analysis and Retrieval at SEDAR+ (https://www.sedarplus.ca/) or from Caledonia’s website at www.caledoniamining.com. The Interim Financial Statements and related notes have been prepared in accordance with IFRS Accounting Standards, as issued by the International Accounting Standards Board (“IFRS”). In this MD&A, the terms “Caledonia”, the “Company”, the “Group”, “we”, “our” and “us” refer to the consolidated operations of Caledonia Mining Corporation Plc and its subsidiaries unless otherwise specifically noted or the context requires otherwise.

 

Note that all currency references in this document are in US Dollars (also “$”, “US$” or “USD”), unless stated otherwise.

 

 

 

 

 

 

 

 

Table of Contents

1.   OVERVIEW	3
2.   SUMMARY	3
3.   SUMMARY FINANCIAL RESULTS	8
4.   OPERATIONS	19
4.1   Safety, Health and Environment	19
4.1.1   Blanket	19
4.1.2   Bilboes oxide mine	19
4.2   Social Investment and Contribution to the Zimbabwean Economy – Blanket	20
4.3    Gold Production – Blanket	21
4.4   Underground – Blanket	21
4.5   Metallurgical Plant	21
4.6   Costs	21
4.7   Capital Projects – Blanket	22
4.8   Indigenisation	22
4.9   Bilboes	23
4.10   Zimbabwe Commercial Environment	24
4.11   Solar project	26
4.12   Opportunities and Outlook	27
5   EXPLORATION	28
6.   INVESTING	30
7.   FINANCING	31
8.   LIQUIDITY AND CAPITAL RESOURCES	31
9.   OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL COMMITMENTS AND CONTINGENCIES	32
10.   NON-IFRS MEASURES	33
11.   RELATED PARTY TRANSACTIONS	37
12.   CRITICAL ACCOUNTING ESTIMATES	37
13.   FINANCIAL INSTRUMENTS	40
14.   SECURITIES OUTSTANDING	41
15.   RISK ANALYSIS	41
16.   FORWARD LOOKING STATEMENTS	41
17.   CONTROLS	43
18.   QUALIFIED PERSON	43

 

 

1.

OVERVIEW

 

Caledonia is a Zimbabwean focussed exploration, development, and mining corporation. Caledonia owns a 64% stake in the gold-producing Blanket mine (“Blanket”), and 100% stakes in the Bilboes oxide mine, the Bilboes sulphide project (together with the Bilboes oxide mine “Bilboes”) and the Motapa and Maligreen gold mining claims, all situated in Zimbabwe. Caledonia’s shares are listed on the NYSE American LLC (“NYSE American”), depositary interests in Caledonia’s shares are admitted to trading on AIM of the London Stock Exchange plc and depositary receipts in Caledonia’s shares are listed on the Victoria Falls Stock Exchange (“VFEX”) (all under the symbols “CMCL”).

 

2.

SUMMARY

 

	Q2		H1		Comment
	2024	2023	2024	2023
Gold produced (oz)	21,174	18,512	38,650	34,653	Gold produced in the Quarter was 14% higher than the second quarter of 2023 (the “comparative quarter”, “comparable quarter” or “Q2 2023”) 20,773 ounces of gold was produced at Blanket in the Quarter (Q2 2023: 17 436 ounces), a 19% increase from the comparable quarter due to higher tonnage and grade offset by lower gold recovery. 401 ounces of gold were produced from the Bilboes oxide mine in the Quarter (Q2 2023: 1,076 ounces). Although the mine was placed on care and maintenance at the end of September 2023, leaching of the heap leach pads continues for as long as it makes a cash contribution.
Consolidated On-mine cost per ounce ($/oz)1	926	1,084	966	1,135	On-mine cost per ounce in the Quarter reduced from the comparable quarter due to lower on-mine cost at the Bilboes oxides mine that has been placed on care and maintenance from September 30, 2023. and higher gold ounces sold at Blanket.
All-in sustaining cost (“AISC”) per ounce 1	1,253	1,357	1,273	1,383	The AISC per ounce in the Quarter decreased by 7.7% compared to the comparative quarter, predominantly due to the higher gold ounces sold and lower on-mine cost. AISC includes the benefit of the solar plant electricity saving ($38 per ounce for the Quarter).
Average gold price ($/oz)1	2,300	1,949	2,179	1,909	The average gold price reflects international spot prices.
Gross profit2 ($’000)	22,933	10,933	36,748	16,783	Gross profit for the Quarter increased from the comparable quarter, due to higher gold revenue and lower production costs.

 

 

 

	Q2		H1		Comment
	2024	2023	2024	2023
Net profit (loss) attributable to shareholders ($’000)	8,429	(513)	10,560	(5,542)	Net profit for the Quarter increased relative to the comparative quarter due to a higher gross profit a net foreign exchange loss, lower finance and other costs, offset by an increase in the tax expense compared to the comparative quarter.
Basic IFRS earnings (loss) per share (“EPS”) ($)	0.43	(0.01)	0.53	(0.31)	Basic IFRS EPS reflects the increase in IFRS profit attributable to shareholders from the EPS loss in the comparable quarter.
Adjusted EPS ($)1	0.51	0.10	0.78	(0.17)	Adjusted EPS excludes, inter alia, net foreign exchange gains and losses, deferred tax and fair value movements on derivative financial instruments.
Net cash from operating activities ($’000)	19,086	(2,226)	23,973	(3,102)	The higher operating profit increased the net cash from operating activities in the Quarter.
Net cash and cash equivalents ($’000): -     Beginning of the period Apr 1 -     End of the period June 30	(14,160)   (1,366)				Net cash increased by $12.8 million due to higher operating profit.

 

¹ Non-IFRS measures such as “On-mine cost per ounce”, “AISC”, “average gold price” and “adjusted EPS” are used throughout this document. Refer to section 10 of this 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.

 

Production at Blanket

 

Quarterly gold production at Blanket was 20,773 ounces, a 19% increase from the comparative quarter. The increase was due to higher tonnes milled and an improved grade offset by lower metallurgical recoveries.

 

Blanket sold 21,363 ounces in the Quarter. This represented a 19% increase from the comparable quarter, when 17,911 ounces were sold. The ounces sold in the Quarter includes a net movement of 591 ounces of gold work in progress. 6,442 ounces of gold were produced in July 2024, which was 1,379 ounces lower than July 2023 (7,829 ounces).

 

Production and cost guidance for the year ending December 31, 2024 remains between 74,000 and 78,000 ounces and cost guidance is maintained at an on-mine cost per ounce of between $870 and $970 and AISC of between $1,370 and $1,470 per ounce.

 

Blanket mineral resource and mineral reserve increase

 

Following the announcements of encouraging drilling results at Blanket on July 10, 2023 and January 30, 2024, Caledonia announced an increase to the mineral resources and mineral reserves estimates at Blanket on May 15, 2024.

 

The drilling results increased Blanket's 1300 S-K mineral reserve and mineral resource ounces by 111% and 36% respectively, with a 7% and 23% increase in mineral reserve and mineral resource grade respectively.

 

Blanket's NI 43-101 mineral reserve and measured and indicated ("M&I") mineral resource ounces increased by 106% and 63% respectively, with a 5% and 14% increase in mineral reserve and M&I mineral resource grade respectively. Blanket’s inferred mineral resource ounces increased by 26% with an increase in inferred mineral resource grade of 28%.

 

Blanket's life of mine is estimated to 2034, based only on the updated mineral reserves estimate.  Management believes that the inferred mineral resources may, based on past successful conversion rates, further extend the life of the mine past 2040.

 

Bilboes sulphide project Preliminary Economic Assessment and new Feasibility Study

 

On June 3, 2024 the Company announced it had published a Preliminary Economic Assessment (“PEA”) on the Bilboes sulphide project. The PEA proposes to advance the Bilboes gold project in a single-phase development instead of multiple phases. This followed an evaluation of different development options, revealing that the single-phase approach is expected to yield superior returns and optimise the uplift in net present value (“NPV”) per Caledonia share.

 

The Bilboes gold project is expected to yield approximately 1.5 million ounces of gold (based on measured and indicated mineral resources) over a 10-year life of mine at an all-in sustaining cost of $968 per ounce and has an estimated payback period of 1.9 years at a gold price of $1,884 per ounce.

 

A new single-phase feasibility study has been commissioned that is expected to be delivered during the first quarter of 2025. 

 

Funding solutions are being progressed in tandem with work on the new feasibility study.

 

 

 

 

Devaluation of the Zimbabwean dollar (RTGS$) and introduction of the new currency known as the ZiG

 

The RTGS$ devalued from RTGS$ 6,104: US$1 on December 31, 2023 to RTGS$ 22,055: US$1 on March 31, 2024 and to RTGS$ 30,674:US$1 by April 5, 2024. The significant rate of devaluation in the RTGS$ led the Government of Zimbabwe to introduce a new currency which is referred to as the “ZiG” on April 5, 2024 pursuant to the Presidential Powers (Temporary Measures) (Zimbabwe Gold Notes and Coins) Regulations, 2024.

 

According to the 2024 Monetary Policy Statement issued by the Governor of the Reserve Bank of Zimbabwe (“RBZ”) on April 5, 2024, the ZiG is a structured currency which is anchored by a composite basket of foreign currency and precious metals (mainly gold) held as reserves for this purpose by the RBZ. The ZiG replaced the RTGS$ with immediate effect and was introduced at a rate of ZiG13.56:US$1 on April 5, 2024. On the same date, all RTGS$ balances were translated from RTGS$ to ZiG using an exchange rate of ZiG1: RTGS$ 2,499. The ZiG co-circulates with other foreign currencies in the economy. The retention threshold on gold receipts remained unchanged: gold producers will continue to receive 75% of their revenues in US dollars and the balance in local currency i.e. the ZiG.

 

The significant devaluation of the RTGS$ in the first five days of the Quarter resulted in foreign exchange losses of $2m in the Quarter. The losses were predominantly incurred on the RTGS$-denominated receivables for gold sales, VAT receivables and cash and cash equivalents which reduced in value in US dollar terms between the date on which the receivable was recognised and the date on which the receivable was settled.

 

The ZiG was more stable against the US$ since its introduction, compared to the RTGS$. The ZiG closed at an official exchange rate of ZiG13.70:US$1 on June 30, 2024. $100,000 of the foreign exchange losses was attributed to the foreign currency fluctuations of the ZiG to the US$.

 

Proposed solar sale

 

Due to the unique operating environment in Zimbabwe and Caledonia’s significant in-country expertise, Caledonia opted to build the solar plant using its own resources rather than relying on an external party to build and own the solar plant by using its own financial resources and selling the resultant power to Blanket on a long-term contract. Accordingly, Caledonia constructed the solar plant at a cost of $14.2 million. As the solar plant is now fully commissioned and is working as planned, Caledonia no longer needs to own the solar plant, provided it retains long term access to the power it produces.

 

In the second quarter of 2023 management embarked on a process to sell the solar plant. Various offers were received, and a bidder has been given exclusivity to further negotiate the sale of the plant after proving their ability to operate and fund solar plants of similar size and complexity. The offer was received from a reputable global renewable energy operator and management is in an advanced stage of executing agreements to sell the solar plant. The new owners will exclusively supply Blanket with electricity from the plant, on a take-or-pay basis. In recent months the terms of the transaction have been revised to cater for the extension to Blanket's life of mine following the increase in Blanket's mineral reserves and resources, which increased the term of the power purchase agreement which in turn has implications for the overall transaction value. This transaction is expected to realise a profit on Caledonia's investment in the plant, and release cash for reinvestment in Caledonia’s core business of gold mining that yields higher returns to our shareholders. Management is engaging with the relevant government authorities to obtain the necessary regulatory approvals for the transaction, before the transaction is agreed between the parties.

 

Management Changes

 

Mr. James Mufara was appointed as Chief Operating Officer on May 1, 2024.

 

Mr. Steve Curtis did not stand for re-election as a non-executive director at the May 7, 2024 annual general meeting. Mr. Curtis remains a consultant to the Company.

 

 

 

Strategy and Outlook: increased focus on growth opportunities

 

The immediate strategic focus is to:

 

·

maintain production at Blanket at the targeted range of 74,000 to 78,000 ounces for 2024 and at a similar level for 2025;

·

complete the Caledonia feasibility study on the Bilboes sulphide project, evaluate funding solutions and commence development of the sulphide project; and

·

continue with exploration activities at Motapa.

 

The strategy and outlook of Caledonia is further discussed in section 4.12 of this MD&A.

 

Dividend

 

To streamline the administration relating to board processes, future dividends are expected to be declared at the same time as the publication of quarterly results (i.e. in the middle of March, May, August, and November. Payment of the dividends will be subject to the usual regulatory and administrative procedures i.e. approximately four weeks after the dividend has been declared. This change noted above relates only to the timing of future dividends; This change does not denote any change in the Company's dividend policy.

 

 

 

 

 

 

 

 

 

 

 

3.

SUMMARY FINANCIAL RESULTS

 

The table below sets out the consolidated profit or loss for the Quarter and the comparative period prepared under IFRS.

 

Consolidated Statements of profit or loss and other comprehensive income (Unaudited)
($’000’s)
			3 Months ended June 30								6 Months ended June 30
			2024				2023				2024				2023
Revenue			50,107				37,031				88,635				66,466
Royalty			(2,475	)			(1,963	)			(4,409	)			(3,443	)
Production costs			(20,460	)			(20,726	)			(39,420	)			(40,576	)
Depreciation			(4,239	)			(3,409	)			(8,058	)			(5,664	)
Gross profit			22,933				10,933				36,748				16,783
Net foreign exchange loss			(2,014	)			(3,610	)			(6,153	)			(2,077	)
Administrative expenses			(3,664	)			(3,183	)			(6,275	)			(9,122	)
Net derivative financial instrument expenses			(174	)			(54	)			(476	)			(488	)
Equity-settled share-based expense			(305	)			(221	)			(506	)			(331	)
Cash-settled share-based expense			(4	)			9				(57	)			(271	)
Other expenses			(664	)			(1,461	)			(1,264	)			(2,099	)
Other income			185				168				349				186
Operating profit			16,293				2,581				22,366				2,581
Net finance costs			(794	)			(1,057	)			(1,520	)			(1,824	)
Profit before tax			15,499				1,524				20,846				757
Tax expense			(5,151	)			(1,273	)			(7,681	)			(4,775	)
Profit (loss) for the period			10,348				251				13,165				(4,018	)
Other comprehensive income
Items that are or may be reclassified to profit or loss
Exchange differences on translation of foreign operations			178				(330	)			34				(699	)
Total comprehensive income for the period			10,526				(79	)			13,199				(4,717	)
Profit (loss) attributable to:
Owners of the Company			8,429				(513	)			10,560				(5,542	)
Non-controlling interests			1,919				764				2,605				1,524
Profit (loss) for the period			10,348				251				13,165				(4,018	)
Total comprehensive income attributable to:
Owners of the Company			8,607				(843	)			10,594				(6,241	)
Non-controlling interests			1,919				764				2,605				1,524
Total comprehensive income for the period			10,526				(79	)			13,199				(4,717	)
Earnings (loss) per share ($)
Basic earnings (loss) per share			0.43				(0.01	)			0.53				(0.31	)
Diluted earnings (loss) per share			0.43				(0.01	)			0.53				(0.31	)
Adjusted earnings (loss) per share ($)
Basic			0.51				0.10				0.78				(0.17	)
Dividends paid per share ($)			0.14				0.14				0.28				0.28

 

Revenue in the Quarter was 35.3% higher than the comparative quarter due to a 14.7% increase in the quantity of gold sold and an 18% increase in the average price of gold sold. Sales in the Quarter exclude 1,066 ounces of gold that was held as work-in-progress at June 30, 2024 and which were sold early in July 2024, and include 1,657 ounces of gold sold that were held as work-in-progress as at March 31, 2024.

 

The royalty rate payable to the Zimbabwe Government was unchanged at 5%.

 

Production costs comprise the costs of electricity, labour, administrative and other costs such as insurance, software licencing and security that are directly related to production.

 

Analysis of IFRS production costs between Blanket and Bilboes
		3 months ended June 30 ($’000)								6 months ended June 30 ($’000)
		2024				2023				2024				2023
Blanket			19,663				16,546				37,839				33,051
Bilboes			797				4,180				1,581				7,525
Total			20,460				20,726				39,420				40,576
On mine cost per ounce ($/oz) (section 10)			926				1,084				966				1,135

 

Total production costs (i.e. at Blanket and Bilboes) decreased by 1.3% in the Quarter compared to the comparative quarter. The reduction was due to the lower operating costs at the Bilboes oxide mine, offset by higher operating costs at Blanket. The Bilboes oxide mine was put on care and maintenance with effect from September 30, 2023; however, leaching of the heap leach pads has and will continue for as long as it makes a positive cash contribution. At Blanket, production costs increased by 18.8% due to higher production and are 1% lower on a per ounce sold basis in the Quarter compared to the comparative quarter.

 

A narrow focus on the direct costs of production does not fully reflect the total cost of gold production. Accordingly, cost per ounce data for the Quarter and the comparative quarter have been prepared in accordance with the Guidance Note issued by the World Gold Council on June 23, 2013 and is set out in the table below on the following bases:

 

i.

On-mine cost per ounce3, which shows the on-mine costs of producing an ounce of gold and includes direct costs that are incurred at the mine;

ii.

All-in sustaining cost per ounce3, which shows the on-mine cost per ounce plus royalty paid, additional costs incurred outside the mine (i.e., at offices in Harare, Bulawayo, Johannesburg and Jersey), costs associated with maintaining the operating infrastructure and resource base that are required to maintain production at the current levels (sustaining capital investment), the share-based expense (or credit) arising from the awards made to employees under the 2015 Omnibus Equity Incentive Compensation Plan (“OEICP”) less silver by-product revenue; and

iii.

All-in cost per ounce3, which shows the all-in sustaining cost per ounce plus the costs associated with activities that are undertaken with a view to increasing production (expansion capital investment).

 

 

 

 

 

 

 

 

 

Cost per ounce of gold sold
(US$/ounce)
		Bilboes oxide mine																Blanket																Consolidated
		3 months ended Jun 30								6 months ended Jun 30								3 months ended Jun 30								6 months ended Jun 30								3 months ended Jun 30								6 months ended Jun 30
		2024				2023				2024				2023				2024				2023				2024				2023				2024				2023				2024				2023
On-mine cost per ounce3			1,992				3,905				1,903				6,372				906				915				947				951				926				1,084				966				1,135
All-in sustaining cost per ounce3			2,136				4,005				2,014				6,470				1,236				1,198				1,258				1,204				1,253				1,357				1,273				1,383
All-in cost per ounce3			2,136				4,026				2,014				8,977				1,420				1,470				1,401				1,473				1,433				1,614				1,413				1,727

³On-mine cost per ounce, all-in sustaining cost per ounce and all-in cost per ounce are non-IFRS measures. Refer to section 10 for a reconciliation of these amounts to IFRS.

 

A reconciliation of costs per ounce to IFRS production costs is set out in section 10.

 

 

 

 

 

On-mine cost

 

Production costs are detailed in note 6 to the Interim Financial Statements. On-mine cost includes the procurement margin paid to CMSA and represents a fair value that Blanket would pay for consumables if they were sourced from a third party.

 

The consolidated on-mine cost per ounce for the Quarter was 14.6% lower than the comparative quarter due to the substantial reduction in the on-mine cost per ounce at the Bilboes oxide mine. The decrease in consolidated on-mine cost per ounce compared to the comparative quarter is illustrated in the graph below.

 

 

 

 

The cost of oxide mining at Bilboes contributed a reduction of $149 per ounce compared to the comparable quarter after it was placed on care and maintenance with effect from September 30, 2023. Leaching activities related to the heap leach pad have continued and will continue for as long as it makes a cash contribution. Bilboes is discussed further in section 4.9.

 

Blanket's on-mine cost per ounce decreased by 1.0% from $915 per ounce in the comparative quarter to $906 per ounce in the Quarter.

 

Electricity use at Blanket increased due to the continued use of infrastructure such as the No. 4, 6 Winze, Lima and Jethro shafts in addition to the Central shaft. Electricity costs also increased due to higher maximum demand charges. Electricity use is expected to reduce over the next 2-3 years as mining transitions from the old mine infrastructure, above 750 meters underground, to areas below 750 meters which are accessed via Central shaft.

 

Other initiatives such as the installation of power factor correction equipment at Blanket is expected to reduce the maximum demand charges which have contributed to the higher electricity cost and alleviate low voltage occurrences, which require the use of expensive diesel generation to provide back-up power. The phasing out of old equipment with a higher power consumption compared to new equipment is also expected to reduce the power consumption over time.

 

The inter-company benefit of the solar plant (owned by Caledonia) is not recognised in on-mine cost because the solar plant sells power to Blanket at a price per kilowatt/hour which reflects Blanket's historic blended cost per unit of power. The economic benefit of the solar plant is therefore recognised by Caledonia, rather than by Blanket, and the benefit ($38 per ounce of gold produced in the Quarter) is reflected in the AISC rather than the on-mine cost. The solar plant has the added benefit of stabilising the Blanket electrical grid by improving the power factor and in turn reducing the generator use to supplement reactive power. The proposed sale of the solar plant to a third party should have no effect on the terms or quality of supply from the solar plant to Blanket.

 

In April 2023 Blanket concluded a power supply agreement with the Intensive Energy Users Group (“IEUG") and the Zimbabwean power utility to allow the IEUG to obtain power outside Zimbabwe which is "wheeled” to the IEUG members. During the Quarter Blanket paid less for IEUG sourced energy but the incidences of power outages and low voltage occurrences did not reduce due to the poor condition of the Zimbabwe grid which meant that diesel costs continued to be incurred to supplement the low voltage occurrences.

 

Labour costs at Blanket increased during the Quarter due to a higher headcount, holiday overtime, high bonus provisions (due to above-target production being achieved in the Quarter), and inflationary increases compared to the comparative quarter. In the Quarter, on a per ounce basis the labour cost at Blanket increased by $24 per ounce from the comparable quarter.

 

Consumable costs per ounce at Blanket in the Quarter decreased by $33 per ounce due to higher ounces sold in the Quarter compared to the comparative quarter which meant that fixed consumable costs were spread across more ounces.

 

Other production costs remained stable and reduced on a per ounce basis by $7 per ounce in the Quarter compared to the comparative quarter.

 

All-in sustaining cost

 

All-in sustaining cost includes inter alia administrative expenses incurred outside Zimbabwe and excludes the intercompany procurement margin and the benefits of solar power as this reflects the consolidated cost incurred at the Group level. The all-in sustaining cost per ounce for the Quarter was 7.7% lower than the comparative quarter due to higher ounces sold and lower on mine costs. AISC excludes inter group charges such as the procurement margin and the margin on the sale of solar power which are included in the on-mine cost.

 

AISC was lower than in the comparable quarter because of the reduction in the cost at the Bilboes oxide mine in the Quarter partly offset by a higher proportion of the capital and administrative expenditures which are allocated to sustaining cost rather than all in cost.

 

The decrease in AISC per ounce in the Quarter compared to the comparative quarter is illustrated in the graph below:

 

 

 

 

 

 

 

 

All-in cost

 

All-in cost includes investment in expansion projects at Blanket and Bilboes which remained at a high level in the Quarter due to the continued investment, as discussed in section 4.7 of this MD&A. All-in cost does not include pre-feasibility investment in exploration and evaluation projects.

 

The depreciation charge in the Quarter increased because of an increase in the depreciable cost base following the commissioning of the Central shaft and the new tailings storage facility.

 

Net foreign exchange movements in the Quarter relate to profits and losses arising on monetary assets and liabilities that are held in currencies other than the USD - principally the RTGS$ (in the first week of the Quarter prior to the replacement of the RTGS$ with the ZiG as discussed in section 4.10), but also, to a much lesser effect, the ZiG, South African Rand and the British pound. The net foreign exchange loss in the Quarter amounted to $2 million and the net losses were predominantly due to the significant devaluation of the RTGS$ exchange rate against the USD before it was replaced by the ZiG on April 5. Foreign exchange losses were predominantly incurred on the RTGS$-denominated bullion receivables for gold sales, taxation receivables and cash and cash equivalents which reduced in value in US dollar terms between the date on which the receivable was recognised and the date on which the receivable was settled.

 

Administrative expenses are detailed in note 8 to the Interim Financial Statements and include the costs of Caledonia’s offices and personnel in Harare, Johannesburg, Bulawayo, the UK and Jersey which provide the following functions: technical services, finance, procurement, investor relations, corporate development, legal and company secretarial.

 

Administrative expenses
		3 months ended June 30 ($’000)								6 months ended June 30 ($’000)
		2024				2023				2024				2023
Investor relations			102				159				237				322
Listing fees			172				353				321				592
Directors (Caledonia and Blanket)			191				144				380				331
Employee cost			2,145				1,435				3,350				2,815
Professional consulting fees and advisory services			450				155				685				3,192
Other			604				937				1,302				1,870
Total			3,664				3,183				6,275				9,122

 

Administrative expenses in the Quarter were 15.1% higher than the comparative quarter, predominantly due to an increase in employee cost for the shared services centre in Zimbabwe which, in due course, will provide services to both Blanket mine and to the Bilboes sulphide project. In the comparable quarter these costs were incurred as a cost of production for the Bilboes oxide mine. These resources have now been reallocated to the shared services centre and classified as administrative expenses.

 

Other expenses are detailed in note 10 to the Interim Financial Statements. During the Quarter, community and social responsibility cost amounted to $390,000 and is further explained in section 4.2. Other expenses include Intermediate Monetary Transaction Tax of $247,000 for the Quarter that is chargeable on the transfer of physical money, electronically or by any other means and ranges from 1% to 2% per transaction performed in Zimbabwe.

 

The tax expense comprised:

 

Analysis of consolidated tax expense for the Quarter
($’000’s)			Blanket				South Africa				UK				Bilboes and CHZ				Total
Income tax			4,583				71				-				-				4,654
Withholding tax
Management fee			-				37				-				-				37
Deemed dividend			81				-				-				5				86
CHZ dividends to GMS-UK			-				-				160				-				160
Deferred tax			209				5				-				-				214
			4,873				113				160				5				5,151

 

The overall effective taxation rate for the Quarter was 33.2% (2023: 83.5%). The effective tax rate bears little relationship to reported consolidated profit before tax. The effective tax rate is higher than the enacted rate due to the following reasons:

 

·

The rate of income tax in Jersey, the tax domicile of the parent company of the Group (i.e. the Company), is zero, which means there is no tax benefit to be realised by offsetting administrative expenses and expenses incurred in respect of derivatives, and share-based payments

 

·

Zimbabwean taxable income is calculated in both ZiG$ and USD, whereas the group reports in USD. Large devaluations in the RTGS$ (pre April 5, 2024) against the USD resulted in foreign exchange movements on the RTGS$ tax payable which had an effect on the income tax calculation.

 

The effective taxation rate for Blanket was 26% (2023: 28.6%). Deferred tax predominantly comprises the difference between the accounting and tax treatments of capital investment expenditure. Most of the tax expense comprised income tax and deferred tax incurred in Zimbabwe.

South African income tax arises on intercompany profits arising at Caledonia Mining South Africa Proprietary Limited (“CMSA”).

 

Zimbabwe withholding tax arose on the dividends paid from Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”) to the Company’s subsidiary in the UK Greenstone Management Services Holdings Limited (“GMS-UK”).

 

Basic IFRS EPS for the Quarter improved from a loss of 0.6 cents in the comparative quarter to a profit of 42.9 cents in the Quarter. Adjusted EPS for the Quarter excludes inter alia the effect of foreign net exchange movements and deferred tax. Adjusted EPS improved to 51.3 cents from a profit of 10.0 cents in the comparative quarter. A reconciliation from Basic IFRS EPS to adjusted EPS is set out in section 10.3.

 

Quarterly dividends of 14 cents per share was paid on April 26, 2024 and July 26, 2024.

 

 

The table below sets out the consolidated statements of cash flows for the Quarter and the comparative quarter prepared under IFRS.

 

Consolidated Statements of Cash Flows (Unaudited)
($’000’s)
			3 months ended June 30								6 months ended June 30
			2024				2023				2024				2023
Cash inflow from operations			20,988				2				27,523				666
Interest received			3				4				9				9
Finance costs paid			(710	)			(1,231	)			(1,283	)			(1,431	)
Tax paid			(1,195	)			(1,001	)			(2,276	)			(2,346	)
Net cash inflow (outflow) from operating activities			19,086				(2,226	)			23,973				(3,102	)
Cash flows used in investing activities
Acquisition of property, plant and equipment			(6,897	)			(6,009	)			(10,638	)			(10,602	)
Acquisition of exploration and evaluation assets			(733	)			(139	)			(1,163	)			(283	)
Acquisition of put options			(168	)			(811	)			(408	)			(811	)
Net cash used in investing activities			(7,798	)			(6,959	)			(12,209	)			(11,696	)
Cash flows from financing activities
Dividends paid			(2,912	)			(2,893	)			(5,632	)			(5,317	)
Payment of lease liabilities			(38	)			(35	)			(75	)			(72	)
Shares issued – equity raise (net of transaction cost)			-				4,834				-				15,658
Proceeds from loans and borrowings			2,032				-				2,032				-
Loan note instrument – Motapa payment			-				(1,288	)			-				(6,687	)
Loan note instrument – solar bond issue receipts (net of transaction cost)			1,939				2,500				1,939				7,000
Net cash from (used in) financing activities			1,021				3,118				(1,736	)			10,582
Net increase (decrease) in cash and cash equivalents			12,309				(6,067	)			10,028				(4,216	)
Effect of exchange rate fluctuations on cash and cash equivalents			485				(30	)			(362	)			(187	)
Net cash and cash equivalents at beginning of the period			(14,160	)			3,190				(11,032	)			1,496
Net cash and cash equivalents at end of the period			(1,366	)			(2,907	)			(1,366	)			(2,907	)

 

Cash flows from operating activities in the Quarter is detailed in note 23 to the Interim Financial Statements. Cash inflows from operations before working capital changes in the Quarter were $19.8 million, compared to $4.9 million in the comparative quarter.

 

 

The table below illustrates the operating cash flow for the Quarter and the last 8 preceding quarters:

 

Cash generated from operations before working capital changes
($'000's)	Q2 2022	Q3 2022	Q4 2022	Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024
Operating cash flow	13,499	13,731	7,099	51	4,865	16,303	297	10,508	19,778

 

Cash generated from operations before working capital changes in the Quarter improved significantly from the comparable quarter due to increased gold sales, the higher average gold price and lower costs incurred at the Bilboes oxide mine after it had been placed on care and maintenance at the end of September 2023.

 

Cash inflows from operations were increased by working capital inflows of $1.2 million in the Quarter due to decreased trade payables offset by increased ZiG prepayments to local suppliers that demand prepayments to avoid the risk of devaluation.

 

Finance costs which comprise Interest on the solar loan notes, rehabilitation liability, unwinding interest and overdraft interest increased from the comparable quarter.

 

The acquisition of property, plant and equipment relates to the investment at Blanket as discussed further in section 4.7; the investment in exploration and evaluation assets relates to the exploration work at Motapa and Maligreen.

 

Dividends for the Quarter comprise $2.7 million paid to shareholders of the Company and $0.2 to Blanket’s minority shareholders. A quarterly dividend of 14 cents per share was declared on March 27, 2024 which was paid on April 26, 2024 and a further dividend was declared on July 1, 2024 which was paid on July 26, 2024. The effect of exchange rate fluctuations on cash held reflects gains or losses on cash balances held in currencies other than the US Dollar. The effect on cash balances forms part of an overall foreign exchange gain or loss arising on all affected financial assets and liabilities.

 

 

The table below sets out the condensed consolidated statements of Caledonia’s financial position at the end of the Quarter and December 31, 2023 prepared under IFRS.

 

Summarised Consolidated Statements of Financial Position (Unaudited)
($’000’s)	As at		Jun 30 2024				Dec 31 2023
Total non-current assets				275,743				274,074
Income tax receivable				274				1,120
Inventories				20,401				20,304
Derivative financial assets				20				88
Trade and other receivables				7,882				9,952
Prepayments				5,287				2,538
Cash and cash equivalents				15,412				6,708
Assets held for sale				13,484				13,519
Total assets				338,503				328,303
Total non-current liabilities				25,280				23,978
Cash-settled share-based payments – short term portion				454				920
Income tax payable				4,152				10
Lease liabilities – short term portion				114				167
Loan note instruments – short term portion				855				665
Trade and other payables				18,803				20,503
Overdraft and term loans				16,778				17,740
Liabilities associated with assets held for sale				93				128
Total liabilities				66,529				64,111
Total equity				271,974				264,192
Total equity and liabilities				338,503				328,303

 

Property, plant and equipment additions at Blanket amounted to $6.3 million (rehabilitation change in estimate excluded and inclusive of intercompany mark-up) in the Quarter. The additions predominantly related to capital development and the construction of the new tailings storage facility (“TSF”) at Blanket.

 

Inventories include 1,066 ounces of gold which were held by Fidelity Gold Refinery (Private) Limited (“FGR”) in transit to Al Etihad Gold Refinery DMCC (“AEG”) which was sold in early July 2024 (March 31, 2024: 1,657 ounces).

 

Trade and other receivables are detailed in note 15 to the Interim Financial Statements and include $3.9 million (December 31, 2023: $5.4 million) due from FGR and AEG (payable in ZiG and USD respectively) in respect of gold sales prior to the close of business on June 30, 2024. All outstanding amounts due from FGR and AEG were received in full after the end of the Quarter. $3.6 million of the total trade and other receivables (December 31, 2023: $3.8 million) was due from the Zimbabwe Government in respect of VAT refunds. $1.4 million in respect of VAT refunds comprises ZiG denominated VAT refunds. The outstanding VAT receivables have either been repaid after the end of the Quarter or have been recovered by way of allocating the refunds against income tax payables due to the Government of Zimbabwe.

 

Prepayments represent deposits and advance payments for goods and services, predominantly paid in ZiG. Prepayments increased by $2.7 million due to larger prepayments made to RTGS$ (from April 5, 2024 ZiG) suppliers and thereby lock-in the cost of goods and services to hedge against the weakening of the RTGS$ against the USD.

 

The income tax payable amount of $4.7m was paid after Quarter end.

 

Overdrafts are used for short-term working capital funding requirements in Zimbabwe. Expiration dates and terms of the overdrafts and short-term loans are set out in section 7.

 

The table below illustrates the distribution of the consolidated cash across the jurisdictions where the Group holds its cash:

 

Geographical location of net cash ($’000’s)
		Jun 30,				Sep 30,				Dec 31,				Mar 31,				Jun 30,
As at		2023				2023				2023				2024				2024
Zimbabwe			(7,373	)			(8,052	)			(13,751	)			(15,708	)			(3,393	)
South Africa			834				1,208				1,051				919				750
UK/Jersey/Dubai			3,632				3,652				1,668				629				1,277
Total net cash and cash equivalents			(2,907	)			(3,192	)			(11,032	)			(14,160	)			(1,366	)

 

Assets held for sale comprises the book value of the solar plant which is the subject of an ongoing sale process as discussed in section 4.11.

 

The following information is provided for each of the eight most recent quarterly periods ending on the dates specified. The amounts are extracted from underlying financial statements that have been prepared using accounting policies consistent with IFRS.

 

($’000’s except		Jun 30,				Sep 30,				Dec 31,				Mar 31,				Jun 30,				Sep 30,				Dec 31,				Mar 31,				Jun 30,
per share amounts)		2022				2022				2022				2023				2023				2023				2023				2024				2024
Revenue			36,992				35,840				34,178				29,435				37,031				41,187				38,661				38,528				50,107
Profit/(loss) attributable to owners of the Company			11,378				8,614				(8,029	)			(5,030	)			(513	)			4,506				(3,162	)			2,131				8,429
EPS – basic (cents)			87.7				63.3				(62.2	)			(30.3	)			(0.6	)			24.1				(17.6	)			10.6				42.9
EPS – diluted (cents)			87.7				63.3				(62.2	)			(30.2	)			(0.6	)			24.0				(17.6	)			10.6				42.9
Net cash and cash equivalents			10,862				6,167				1,496				3,189				(2,907	)			(3,192	)			(11,032	)			(14,160	)			(1,366	)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.

OPERATIONS

 

4.1

Safety, Health and Environment

4.1.1

Blanket

 

The following safety statistics have been recorded for the Quarter and the preceding eight quarters.

 

Blanket Safety Statistics
Classification		Q2 2022				Q3 2022				Q4 2022				Q1 2023				Q2 2023				Q3 2023				Q4 2023				Q1 2024				Q2 2024
Fatal			0				0				0				1				0				0				0				0				0
Lost time injury			2				1				1				0				5				2				2				1				0
Restricted work activity			1				1				2				6				7				5				0				5				9
First aid			3				0				0				1				0				0				0				1				0
Medical aid			3				1				2				4				0				1				2				1				3
Occupational illness			0				0				0				0				0				0				0				0				3
Total			9				3				5				12				12				8				4				8				15
Incidents			10				14				6				14				3				10				10				11				13
Near misses			7				6				1				4				4				4				7				5				2
Disability Injury Frequency Rate			0.36				0.22				0.33				0.80				1.35				0.71				0.20				0.66				0.98
Total Injury Frequency Rate			1.08				0.34				0.56				1.36				1.35				0.81				0.40				0.88				1.31
Man-hours worked (000’s)			1,672				1,788				1,801				1,760				1,780				1,982				2,009				1,817				1,829

 

Blanket’s safety performance compares favourably with other deep level underground gold mines; however, the safety performance at Blanket is a continuous focus area for management.

 

4.1.2

Bilboes oxide mine

 

The following safety statistics have been recorded for the Quarter and the preceding quarters since acquisition.

 

Bilboes Oxide Mine Safety Statistics
Classification			Q1 2023				Q2 2023				Q3 2023				Q4 2023				Q1 2024				Q2 2024
Minor injury			0				2				0				0				2				0
Lost time injury			0				0				0				0				0				0
Occupational Health			0				0				0				0				0				0
Total			0				2				0				0				2				0
Incidents			9				15				2				4				1				1
Near misses			2				5				2				0				0				0
Lost Time Injury Frequency Rate			0				0				0				0				0				0

 

 

4.2

Social Investment and Contribution to the Zimbabwean Economy – Blanket

 

Blanket’s investment in community and social projects (“CSR”) which are not directly related to the operation of the mine or the welfare of Blanket’s employees, the payments made to the Gwanda Community Share Ownership Trust (“GCSOT”) in terms of Blanket’s indigenisation, and payments of taxation and other non-taxation charges to the Zimbabwe Government and its agencies are set out in the table below.

 

Payments to the Community and the Zimbabwe Government
($’000’s)
Period	Year	CSR Investment	Payments to GCSOT	Payments to Zimbabwe Government (excl. royalties)	Royalties	Total
Year	2013	2,147	2,000	15,354	4,412	23,913
Year	2014	35	-	12,319	3,522	15,876
Year	2015	50	-	7,376	2,455	9,881
Year	2016	12	-	10,637	2,923	13,572
Year	2017	5	-	11,988	3,498	15,491
Year	2018	4	-	10,140	3,426	13,570
Year	2019	47	-	10,357	3,854	14,258
Year	2020	1,689	184	12,526	5,007	19,406
Year	2021	1,163	948	16,426	6,083	24,620
Year	2022	888	1,200	12,060	7,124	21,272
Year	2023	1,491	550	11,871	7,316	21,228
Q1	2024	344	-	2,609	1,893	4,846
Q2	2024	376	225	2,322	2,432	5,355

 

CSR initiatives fall under seven pillars of education, health, women's empowerment and agriculture, environment, charity, youth empowerment and conservation.

 

The main CSR programme at Blanket relates to the refurbishment of the maternity clinic, the primary and secondary schools, and the youth centre at Sitezi, which is located approximately 17km from Blanket. Activities in respect of this project during the Quarter include:

 

·

Installation of seven interactive boards in five classrooms and two laboratories at Sitezi Secondary School. Science laboratory equipment was also delivered to the school and thirty-five desktop computers were deployed to the computer laboratory. Work on the renovation of the administration block also commenced in the Quarter;

·

Construction of the waiting mothers’ shelter which began in the last quarter of 2023 is 98% complete;

·

The bulk of materials, such as batteries and other accessories, for the solar plant to supply power to the clinic, secondary school and primary school was procured in the last quarter and installation of the solar panel stands was completed in the Quarter. The solar power will help maintain cold chains for medical supplies and samples at the clinic and provide lighting and energy supply to the clinic and the two schools for powering IT equipment such as computers and interactive boards.

·

To ensure a secure and stable supply of water in the community, five boreholes were drilled, with two of them yielding water, that is at Connemara Primary School and at Zhokwe. One drinking trough for cattle watering was completed in the Quarter, and the construction of three more is expected to be completed in the next quarter.

 

·

Work on upgrading the Sabiwa Stadium to meet the requirements of the Zimbabwe Football Association for Division 1/Premier Soccer League stadia in the country continued with the planting of the pitch lawn completed. The caretaker’s cottage was constructed in the Quarter with painting and installation of plumbing still outstanding. Construction of male and female toilet blocks commenced and was at roof level at close of Quarter. The stadium, which had been used exclusively by Sabiwa High School, will cater for footballing activities for the entire local community.

 

Blanket undertook road repairs of a section of the old Gwanda Road which had been undercut by artisanal miners posing danger of road collapse.

 

A donation of $50,000 was made to Mater Dei Hospital to renovate sections of the hospital and a dividend of $400,000 was paid to GCSOT in July, 2024. GCSOT has a 10% shareholding in Blanket.

 

Further information on Blanket’s CSR activities is included in Caledonia’s ESG reports which are published annually on the company’s website

 

4.3

Gold Production – Blanket

 

Blanket - Production Statistics
	Year	Tonnes Milled (t)	Gold Head (Feed) Grade (g/t Au)	Gold Recovery (%)	Gold Produced (oz)
Year	2021	665,628	3.36	93.9	67,476
Q1	2022	165,976	3.69	94.1	18,515
Q2	2022	179,118	3.71	93.9	20,091
Q3	2022	198,495	3.53	93.6	21,120
Q4	2022	208,444	3.37	93.7	21,049
Year	2022	752,033	3.56	93.8	80,775
Q1	2023	170,721	3.11	93.8	16,036
Q2	2023	179,087	3.22	94.0	17,436
Q3	2023	208,902	3.46	93.7	21,772
Q4	2023	211,730	3.17	93.6	20,172
Year	2023	770,440	3.25	93.8	75,416
Q1	2024	175,101	3.23	93.9	17,050
Q2	2024	208,682	3.31	93.7	20,773
July	2024	68,287	3.14	93.5	6,442

 

Gold production for the Quarter was 19.1% higher than the comparative quarter due to the higher tonnages grade offset by lower recovery. Tonnes milled and grade are discussed in section 4.4 of this MD&A; gold recoveries are discussed in section 4.5 of this MD&A.

 

Production in July 2024 amounted to 6,442 ounces: production in July was adversely affected by a fall-of-ground in the high-grade Eroica section. Alternative mining areas were accessed by the end of July and management is confident that Blanket will achieve its production guidance for 2024 of between 74,000 and 78,000 ounces of gold.

 

4.4

Underground – Blanket

 

A total of 208,682 tonnes were milled in the Quarter, which is 16.5% higher than the comparative quarter; the recovered grade for the Quarter was 2.8% higher than the grade in the comparative quarter.

 

4.5

Metallurgical Plant

 

Recoveries in the Quarter were 93.7% compared to 94.0% in the comparative quarter.

 

4.6

Costs

 

Costs and cost per ounce are discussed in Section 3.

 

 

4.7

Capital Projects – Blanket

 

The main capital development projects are focussed on additional development on producing levels (26, 30 and 34 levels); a future fourth production level (38 level) to be added in due course via a twin decline that commenced in February 2023. 5,121 development metres were achieved in the Quarter compared to 4,258 metres in the previous quarter.

 

Work on key development areas in the Quarter are detailed below:

 

·

The 750 Lima Diamond Drilling crosscut and chamber were completed at the end of the Quarter.

·

Work continued on the 990 Eroica North Hanging Wall Extraction haulage and draw points. This extension was necessary to facilitate the mining of exploration drilling platforms in the northern region.

·

The 510 Lima extraction haulage and draw point crosscuts was completed in the quarter. Run-of-mine development work is set to commence in the third quarter to establish Lima 510 as a replacement block.

·

The 990 Haulage north and shunting bays project was completed. This extension was necessary to create additional drilling platforms for exploration purposes.

·

The 990 Blanket Quartz Reef Hanging Wall North Extraction haulage and draw point crosscuts project continued.

·

34L Conveyor incline project was completed in April 2024.

·

1110 Haulage north and shunting bays project has now been extended to the Eroica orebodies. Additionally, exploration Diamond Drilling cubbies are being developed at 30-meter intervals on this haulage. The 34-38 level decline return airway and connection crosscuts project were affected by ventilation and lashing challenges due to spillage handling related delays, orepass hangups, and preferential hoisting of ore instead of waste.

 

The anticipated total cost of the new TSF is $25.1 million which will be incurred over a period of 3 years (2023: $11.4 million, 2024: $5.4 million and 2025: $8.3 million). Work on the TSF commenced in March 2023 and the first phase of the project was completed at the end of February 2024. Deposition on the new TSF commenced on October 30, 2023 and all of Blanket’s tailings were deposited on the new facility from the beginning of 2024. Work on Phase 1B of the new TSF started in March 2024 and is expected to be completed in the third quarter of 2024. The new TSF is double-lined (clay and a plastic membrane), in compliance with international best-practice; the new TSF, when complete, will have a life until 2043 at the projected deposition rate of 900,000 tonnes per annum.

 

4.8

Indigenisation

 

As set out in previous MD&As, transactions that implemented the indigenisation of Blanket (which expression in this section and in certain other sections throughout this MD&A refers to the Zimbabwe company that owns Blanket) were completed on September 5, 2012 following which Caledonia owned 49% of Blanket. In January 2020, following a change to legislation, Caledonia increased its shareholding in Blanket to 64% by the issue of new shares in Caledonia to Fremiro Investments (Private) Limited (“Fremiro”), one of Blanket’s indigenous shareholders, following which Fremiro held approximately 6.3% of Caledonia’s enlarged issued share capital.

 

Further information relating to the indigenisation transactions and the accounting treatment thereof are set out in the most recent annual MD&A (“Q4 2023 MD&A”) and in Note 5 to the Interim Financial Statements.

 

The outstanding balance of the facilitation loans at June 30, 2024 was $12.7 million (December 31, 2023: $13.4 million).

 

 

4.9

Bilboes

 

Sulphides feasibility study

 

The main objective at Bilboes is to construct a large, multiple open-pit operation to extract sulphide mineralisation. A feasibility study in respect of the Bilboes sulphide project was prepared by the previous owners which targeted mine and processing operations to produce an average of 168,000 ounces of gold per annum over a 10-year life of mine.

 

The PEA, that was published on June 3, 2024, identified the best allocation of capital between different approaches for the development of the Bilboes sulphide project.

 

The PEA proposes to advance the Bilboes gold project in a single-phase development instead of multiple phases. This followed after an evaluation of different development options, revealing that the single-phase approach is expected to yield superior returns.

 

A major aspect of the revised development plan relates to the design of the TSF, which is a significant component of the total capital expenditure for the project. Caledonia has drawn upon its recent experience of constructing the TSF at Blanket on a modular basis to reduce the initial capital cost of the project. This will be the main area of focus when the work that has already been done is upgraded to the level of a feasibility study. There is currently a very high level of activity globally in the field of tailings facilities, which means that the relevant consulting firms do not have sufficient capacity to cope with the demand for their services. Accordingly, we have been advised that this aspect of the work required to prepare a feasibility study is expected to be completed in the first quarter of 2025.

 

Per the PEA, the Bilboes gold project is expected to yield approximately 1.5 million ounces of gold (based on measured and indicated mineral resources) over a 10-year life of mine at an all-in sustaining cost of $968 per ounce and has an estimated payback period of 1.9 years at a gold price of $1,884 per ounce.

 

PEA Highlights:

 

Total production (m.oz)	1.518
Life of Mine (years)	10
Total capital cost ($'m)	403
Peak Funding ($'m)	309
Net Present Value (10%) ($'m)	309
IRR (%)	34
AlSC ($/oz)	968
Payback period	1.9 years

 

A new single-phase feasibility study has been commissioned that is expected to be delivered during the first quarter of 2025. 

 

Funding solutions are being progressed in tandem with work on the new feasibility study.

 

Oxide mining activities

 

In the fourth quarter of 2022, a small operation was started to mine and process oxide mineralisation at Bilboes. The oxide mining activities were restarted predominantly with the objective to generate cash flows to pay for the existing cost structures at Bilboes Holdings (Private) Limited (“Bilboes Holdings”). The costs arising from the oxide mining activities were higher than expected and gold production was lower than expected. The oxide mining activities were therefore placed on care and maintenance at the end of September 2023. Oxide mining activities will resume in due course in conjunction with the larger sulphide project. Leaching of ore which has already been placed on the heap leach continued in the Quarter and had no material effect on Caledonia's financial performance. Leaching activities will continue for as long as they make a positive cash contribution.

 

4.10

Zimbabwe Commercial Environment

 

Discussion of the historic development of the commercial environment in Zimbabwe is included in the Q4 2023 MD&A with specific reference to the following matters:

 

·

Monetary conditions, including the exchange rate

 

·

Electricity supply

 

·

Water supply

 

·

Taxation and royalty

 

Specific issues that have arisen in the reporting period are as follows:

 

Monetary Conditions

 

The current situation in Zimbabwe can be summarised as follows:

 

·

Blanket produces dore gold that it is obliged to deliver to FGR, a subsidiary of the Mutapa Investment Fund, which refines the gold to a purity of 99.5% on a toll-treatment basis. With effect from April 2023, 25% of the resultant gold is sold to FGR and the remaining 75% is exported by Caledonia to a refiner of its choice outside Zimbabwe for final processing. During the Quarter, all gold exports were sold to AEG. The sale proceeds for the gold sold via the offshore refiner are paid in US dollars to Blanket’s commercial bankers in Zimbabwe within 48 hours of delivery. Management believes this new sales mechanism reduces the risk associated with selling and receiving payment from a single refining source in Zimbabwe. It also creates the opportunity to use more competitive offshore refiners and it may allow for the Company to raise debt funding secured against offshore gold sales. 25% of Blanket's gold is sold to FGR at a price that reflects the prevailing London Bullion Market Association price and the official ZiG/USD exchange rate on the date of sale. Payment is made by FGR to Blanket in RTGS$ (ZiG from April 5, 2024) within 14 days of the sale. FGR deducts a refining fee of 1.24% from the ZiG sale proceeds; FGR collects half of the 5% royalty which is payable to the Government of Zimbabwe in physical gold which is deducted from the amount exported and the balance is paid in USD and ZiG to the proportionately 75:25 revenue split between USD and ZiG.

 

·

The interbank RTGS$/USD and ZiG/USD exchange rates are set out below.

 

Interbank Exchange Rates		(RTGS$:US$1)				(ZiG:US$1)
December 31, 2023			6,104.72
March 31, 2024			22,055.47
April 5, 2024			30,674.32				13.56
June 30, 2024							13.70
July 31, 2024							13.79
Aug 8, 2024							13.80

 

Devaluation of the RTGS$ in the first few days of the Quarter meant that net monetary assets held in RTGS$ devalued in USD terms. In the ordinary course of business, Caledonia has net RTGS$-denominated (from April 5, 2024 ZiG) assets comprising cash and receivables (primarily for the 25% of gold sold to FGR and VAT receivables) and liabilities (mainly comprising deferred taxes). During the first quarter of 2024 and up to April 5, 2024, management engaged more aggressively in local-currency denominated procurement to reduce its RTGS$ and ZiG-denominated cash and to lock in the prices of goods and services. Blanket made prepayments of approximately $2 million by April 5, 2024 by using RTGS$. The ZiG has been more stable against the USD from its introduction on April 5, 2024, but suppliers have been reluctant to accept credit terms when procuring in ZiG and the higher prepayment balances have continued to the end of the Quarter.

 

The large devaluation in the RTGS$ up to April 5, 2024 and the reluctance in the Zimbabwean local market to accept payment in RTGS$ resulted in large foreign exchange losses of $4.1 million in the first quarter of 2024 and $2 million in the Quarter.

 

Stability in the ZiG in relation to other currencies will, if continued, reduce the foreign exchange gains and losses accounted for in profit or loss. Net foreign exchange losses related to the ZiG amounted to $100,000 in the Quarter, which is significantly reduced from the losses experienced with the devaluation of the RTGS$.

 

At the same time as the introduction of the ZiG, the Zimbabwe authorities announced a liberalisation of the foreign exchange market in Zimbabwe. Whereas previously the exchange rate for RTGS$ was determined by the RBZ, in future the exchange rate will be determined by a process of transparent price discovery in an interbank market. To date the price discovery in an interbank market has not been determined as trading in ZiG has been relatively limited.

 

Electricity supply

 

The poor quality of electricity supply from the Zimbabwe Electricity Supply Authority (“ZESA”) is the most significant production risk at Blanket. During the Quarter, Blanket experienced interruptions to its power supply from the grid due to an imbalance between electricity demand and supply.

 

In the absence of equipment to control these surges, Blanket needs to switch to diesel power to allow mining and processing activity to continue, but generator use increases production costs and capital expenditure.

 

The following initiatives have been implemented by Blanket to alleviate the power challenges:

 

·

Blanket has 18MVA of installed diesel generating capacity (maximum of 13.6 MW at full capacity, and up to 10MW on continuous running).

·

Blanket has installed auto tap transformers on the ZESA supply line to protect equipment at No. 4 Shaft, Central shaft and the main metallurgical plant from voltage fluctuations.

·

Caledonia installed a 12.2MWac solar plant which was fully commissioned in early February 2023, and now provides approximately 20% of Blanket’s average daily electricity requirement

·

In April 2023 Blanket entered into a power supply agreement with the IEUG and the Zimbabwean power utility to allow the IEUG to obtain power outside of Zimbabwe and contribute to the Zimbabwean power grid. As a result of this arrangement, Blanket has paid a lower tariff for IEUG supplied energy from April 2023, but it has not improved the power quality received at Blanket due to the continued difficulty with the Zimbabwe grid.

 

The following initiatives are in progress, planned or are under consideration to further alleviate the power challenges Blanket faces:

 

·

Power factor connection equipment is being installed for the two winders at Central shaft to reduce the peak electricity demand, specifically focusing on power usage when starting up the Central shaft winders. The very high level of power drawn by the winders from the grid has resulted in significant penalty charges from ZESA which has contributed to the increased cost of power. The equipment is intended to reduce the reactive power (kVAR) drawn from the grid and reduce the actual power (kWh) consumed when the Central shaft winders are started up. The initiative has the further benefit of improving the power factor from 0.7 to almost 1, ensuring that power factor penalties from the utility provider are not incurred. Management plans to have the power factor correction equipment installed by the last quarter of 2024. Increasing the hoist payload and hoisting speed and improving the sequencing of hoists at the Central shaft will also allow hoisting to take place outside the peak hours that attract a lower cost per kWh. The improved sequencing will also mean that the hoisting hours are reduced thereby allowing more time for maintenance of the winders and the shaft.

·

Equipment with less efficient power use is being considered for replacement by more efficient modern equipment when the older equipment is due for replacement.

·

Further investigations are in process to reduce Blanket's overall electricity consumption by using the available shafts and machinery more efficiently.

 

·

Management is performing studies to consider an increase to the solar plant that will increase the stability of supply, enhance the power factor of the Blanket local power network and further reduce the use if diesel generators.

 

The evaluation of measures to alleviate the instability in the utility supply and further reduce the cost of diesel generated power will be an ongoing focus for management.

 

Water supply

 

Blanket uses water in the metallurgical process. The mine is situated in a semi-arid region and rainfall typically only occurs in the period November to February. The 2023/2024 rainy season was poor, and measures to reduce water consumption or to identify additional water sources (e.g. boreholes) are under consideration.  Water levels in the Blanket dam (which despite its name is a public dam, and not owned by the mine) increased in the Quarter following the opening of the Mtshabezi supply by the Zimbabwe National Water Authority (ZINWA). Blanket commissioned a new TSF in October 2023 which is lined with a HDPE geomembrane over a compacted clay layer.  The liner means that water is retained in the TSF (rather than leaching into the ground) which can be recycled back to the plant for re-use. The volume of recycled water from the TSF has increased by 81% in comparison to Q2 2023 and has resulted in a reduction in the amount of raw water extracted from the public dam.

 

Taxation and royalty

 

The main elements of the Zimbabwe tax regime insofar as it affects Blanket and Caledonia are as follows:

 

·

A royalty is levied on gold revenues at a rate of 5% if the gold price is above $1,200 per ounce; a royalty rate at 3% applies if the gold price is below $1,200 per ounce. The royalty is allowable as a deductible expense for the calculation of income tax.

·

The 5% royalty is payable in the same proportions of currencies as revenues are received. From October 9, 2022, 50% of royalty payments are payable in gold.

·

Income tax is levied at 25.75% (2023: 24.72%) on taxable income as adjusted for tax deductions in the tax year. The main adjustments to taxable income for the purposes of calculating tax are the add-back of depreciation and most of the management fees paid by Blanket to CMSA. There is a deduction of 100% of all capital expenditure incurred in the year of assessment. As noted above, the royalty is deductible for income tax purposes. The calculation of taxable income is performed using financial accounts prepared in USD and split between USD and RTGS$ (from April 5, 2024, the ZiG) based on the currency in which the transactions are denominated. Large devaluations in the RTGS$ to the USD has reduced most of the deferred tax liability denominated in RTGS$.

·

Withholding tax is levied on certain remittances from Zimbabwe i.e. dividend payments from Zimbabwe to the UK and payments of management fees from Blanket to CMSA.

 

4.11

Solar project

 

As noted in section 4.10, Blanket suffers from unstable grid power and power outages. To partially address this problem, Caledonia has constructed a 12.2 MWac solar plant which was fully commissioned in early February 2023 at a construction cost of $14.2 million and which provided approximately 20% of Blanket’s total electricity requirement during the Quarter.

 

To optimise the capital structure of the Group, Caledonia Mining Services (Private) Limited (which owns the solar plant) issued $7 million of bonds to institutional investors in Zimbabwe. The bonds have a fixed interest rate of 9.5% payable bi-annually and have a tenor of 3 years from the date of issue. During 2024 all bonds issued by CMS were transferred to CHZ and subsequent bond issues in an amount of $2 million were made by CHZ. Bond repayments are guaranteed by the Company.

 

Due to the unique operating environment in Zimbabwe and Caledonia’s significant in-country expertise, Caledonia opted to build the solar plant using its own resources rather than relying on an external party to build and own the solar plant using its financial resources and selling the resultant power to Blanket on a long-term contract. Accordingly, Caledonia constructed the solar plant using its own financial resources at a cost of $14.2 million. As the solar plant is now fully commissioned and is working as planned, Caledonia no longer needs to own the solar plant, provided it retains long term access to the power it produces.

 

Management is in an advanced stage of finalising the contractual arrangements to sell the solar plant whereby the new owners will exclusively supply Blanket with electricity from it. In recent months the terms of the transaction have been revised to cater for the extension to Blanket's life of mine, based on the increase in Blanket's mineral reserves and resources which increases the period of the power purchase agreement which in turn has implications for the overall transaction value. This transaction is expected to realise a profit on Caledonia's investment in the plant and release cash for reinvestment in Caledonia’s core business of gold mining.

 

The solar asset was classified as held for sale as at June 30, 2024 in the Interim Financial Statements.

 

4.12

Opportunities and Outlook

 

Production guidance 2024

 

Production guidance for Blanket in 2024 is estimated at between 74,000 and 78,000 ounces.

 

This is forward looking information as defined by National Instrument 51-102. Refer to section 16 of this MD&A for further information on forward looking statements.

 

On-mine cost

 

The on-mine cost per ounce at Blanket in the Quarter was $906 which is within the guidance range of $870 to $970 per ounce for 2024. Guidance is maintained.

 

All-in sustaining cost guidance

 

AISC per ounce was $1,253 during the Quarter which was lower than production guidance of $1,370 to $1,470 per ounce due to the timing of the sustaining capital spending that is planned for later in 2024. Production guidance is therefore maintained at $1,370 to $1,470 per ounce.

 

This is forward looking information as defined by National Instrument 51-102. Refer to section 16 of this MD&A for further information on forward looking statements.

 

Capital expenditure

 

Capital expenditure at Blanket in 2024 is estimated at $31.6 million (inclusive of CMSA’s mark-up). Planned capital expenditure for 2024 is planned in the following areas:

 

·

New TSF (Phase 1B) - $5.4 million;

·

Underground capital development at 30 and 34 levels - $8 million;

·

Utilities for the Central shaft infrastructure - $2.5 million;

·

Information technology infrastructure - $1.5 million;

·

Electrical engineering - $3.1 million;

·

Mill and surface engineering - $6.2 million;

·

Staff housing - $1.4 million;

·

MRM equipment - $1.3 million;

·

Deep drilling - $0.8 million; and

·

Ventilation and rock mechanics equipment $0.6m

 

 

Expenditure for the Quarter amounted to $5.8 million (inclusive of CMSA’s mark-up) at Blanket and was incurred on the following:

 

·

New TSF (Phase 1B) - $2 million;

·

Capital development at 30 and 34 levels - $1.9 million;

·

Utilities for the Central shaft infrastructure - $0.4 million; and

·

Deep drilling - $0.2 million.

 

Dividend

 

Caledonia has paid a quarterly dividend since 2012, Dividends have typically been declared and paid in January, April, July and August of each year. To streamline the administration relating to board processes, future dividends are expected to be declared at the same time as the publication of quarterly results i.e. in the middle of March, May, August, and November. Payment of the dividends will be subject to the usual regulatory and administrative procedures i.e. approximately four weeks after the dividend has been declared.

 

This change noted above relates only to the timing of future dividends; This change does not denote any change in the Company's dividend policy.

 

The board will consider the continuation of the dividend as appropriate in line with other investment opportunities and its prudent approach to risk management including with regard to Blanket maintaining a reasonable level of production; receiving payment in full and on-time for all gold sales; being able to make the necessary local and international payments and being able to replenish its supplies of consumables and other items.

 

Strategy

 

The immediate strategic focus is to:

 

·

maintain production at Blanket at the targeted range of 74,000 to 78,000 ounces for 2024 and at a similar level for 2025;

·

complete the Caledonia feasibility study on the Bilboes sulphide project, evaluate funding solutions and commence development of the sulphide project; and continue with exploration activities at Motapa.

 

5

EXPLORATION

 

Caledonia’s exploration activities are focused on Blanket and Motapa.

 

Blanket

 

Drilling results at Blanket that targeted the continuity of the AR south, Eroica and Blanket orebodies’ mineralised zones yielded excellent results and, in general, the Blanket, Eroica and AR south ore bodies appear to have better grades and widths than expected. On May 15, 2024 the Company published a technical report compliant with the Securities and Exchange Commission’s Subpart 1300 of Regulation S-K-and Canada's National Instrument 43-101 which had the following highlights:

 

·

Increase in Blanket's 1300 S-K mineral reserve and mineral resource ounces by 111% and 36% respectively, with a 7% and 23% increase in mineral reserve and mineral resource grade respectively.

 

·

Increase in Blanket's NI 43-101 mineral reserve and measured and indicated ("M&I") mineral resource ounces by 106% and 63% respectively, with a 5% and 14% increase in mineral reserve and M&I mineral resource grade respectively.

 

·

Increase in Blanket's NI 43-101 inferred mineral resource ounces by 26% with an increase in inferred mineral resource grade of 28%.

 

·

Blanket's life of mine is estimated, based only on the updated mineral reserves estimate, to 2034. Management believes that the inferred mineral resources may, based on past successful conversion rates, further extend the life of mine past 2040.

 

The table below shows a comparison of the new measured, indicated and inferred mineral resources estimates under the NI 43-101 technical report to those set out in the previous NI 43-101 technical report:

 

		March 31, 2022												December 31, 2023												% Variance
Mineral Resource Classification		Tonnes				Au				Ounces				Tonnes				Au				Ounces				Tonnes				Au				Ounces
(NI 43-101)		kt				g/t				koz				kt				g/t				koz				kt				g/t				koz
Measured Total			5,065				3.32				541				6,161				3.72				737				22				12				36
Indicated Total			5,659				3.04				554				9,112				3.59				1,052				61				18				90
M&I Total			10,724				3.18				1,095				15,273				3.64				1,789				42				14				63
Inferred Total			8,995				2.92				844				8,821				3.74				1,061				-2				28				26

 

Mineral resources (December 31, 2023)

Notes:

1.

Cut-off applied 1.5 g/t.

2.

Geological loss applied:  measured 2.5%, indicated 5.0%, inferred 10.0%.

3.

Commodity price utilised: USD2,150/oz.

4.

Mineral resources are stated inclusive of mineral reserves.

5.

Mineral resources are reported as total mineral resources and are not attributed.

6.

All orebodies are depleted for mining.

7.

Totals may not add due to rounding.

 

The table below shows a comparison of the new mineral reserves estimates under the NI 43-101 technical report to those set out in the previous NI 43-101 technical report:

 

	September 1, 2022				March 1, 2024				% Variance
Mineral Reserve Classification (NI 43-101)	Tonnes	Grade	Au Content		Tonnes	Grade	Au Content		Tonnes	Grade	Au Content
	kt	g/t	kg	koz	kt	g/t	kg	koz	kt	g/t	kg	koz
Proven	1,978	3.30	6,534	210	2,129	3.21	6,838	220	8	-3	5	5
Probable	1,964	2.94	5,763	185	5,555	3.31	18,409	592	183	13	219	220
Total	3,942	3.12	12,298	395	7,684	3.29	25,247	812	95	5	106	106

 

Mineral reserves (March 1, 2024)

Notes:

1.

Mineral reserve cut-off of 2.1 g/t applied.

2.

The gold price that has been utilised in the economic analysis to convert diluted measured and indicated mineral resources in the LoM plan to mineral reserves is an average real term price of USD1,877/oz over the LoM.

3.

Mineral reserves are reported as total mineral reserves and are not attributed.

4.

Totals may not add due to rounding.

 

Motapa

 

Surface trenching of anomalous areas identified through surface geological mapping, geophysical surveys, LOZA ground penetration radar surveys and historical grid soil geochemical sampling surveys has progressed well. To date, 12,288 metres of trenches have been completed from a planned 22,212 metres. The trenching is planned to be completed in October 2024 before the onset of the rainy season.

 

As a result of the initial geological groundwork, the current trenching results and analysis of historical drill data from the 1980 – 1990’s (16,457 meters), an initial drill program comprising 4,663 metres of reverse circulation drilling (“RC”) and 3,987 meters of diamond drilling (“DD”) commenced in April 2024. As of the end of the Quarter, 2,367 metres of RC drilling and 2,688 meters of DD drilling had been completed. All samples generated are sent to Performance Laboratories in Zimbabwe for fire assay to determine the sample grade.

 

This initial drill campaign is forecast to be completed by the end of August 2024 with assay results completed by October 2024. Upon the analysis of the results, incorporating historical data, a further drill campaign is envisaged.

 

6.

INVESTING

 

An analysis of investments is set out below.

 

($’000’s)			2021				2022				2023				2024				2024
			Year				Year				Year				Q1				Q2
Property, plant and equipment
Blanket			29,323				34,267				28,240				3,596				5,823
Solar			1,581				12,198				163				-				-
Other			365				967				1,203				2				15
Total investment – property, plant and equipment			31,269				47,432				29,606				3,598				5,838
Exploration and evaluation assets
Bilboes			-				-				73,573				48				143
Connemara North			163				4				-				-				-
Glen Hume			1,176				-				-				-				-
Maligreen			-				1,430				372				7				2
Motapa			-				7,844				2,748				324				588
Other Satellite properties			243				120				-				51				-
Total investment – exploration and evaluation assets			1,582				9,398				76,693				430				733

 

Investment in property, plant and equipment at Blanket is discussed in section 4.7 and section 4.12 of this MD&A; investment in exploration and evaluation assets is as set out in section 5.

 

 

7.

FINANCING

 

Operating and investing activities at Blanket in the Quarter were funded by Blanket's operating cashflows and from Blanket’s overdraft facilities which were as set out below at June 30, 2024.

 

Overdraft facilities and term loans

Lender

Loan initiated

Expiry

Repayment terms

Principal value

Balance drawn at June 30, 2024

Undrawn amount at June 30, 2024

Stanbic Bank Limited - ZiG

Sep-23

Sep-24

On demand

ZiG 6.5 million

ZiG Nil

ZiG 6.5 million

Stanbic Bank Limited

Sep-23

Sep-24

On demand

$4 million

$3.4 million

$0.6 million

CABS Bank@

Aug-23

Jul-24

On demand

$2 million

$1.9 million

$0.1 million

CABS Bank*

Mar-24

Mar-27

On demand

$3 million

$3 million

$ Nil million

Ecobank

Mar-24

Feb-25

On demand

$4 million

$4 million

$ Nil million

Nedbank

Apr-24

Apr-25

On demand

$7 million

$4.5 million

$2.5 million

Total USD

$20 million

$16.8 million

$3.2 million

^@ $2 million CABS Bank USD denominated loan expiring in July 2024 was fully repaid.

^* Included in Loans and borrowing is a term loan from CABS that is repayable over three years.

 

All of the above overdraft facilities and term loans are unsecured.

 

Loan notes

 

As noted in section 4.11, CMS/CHZ has issued $9 million of loan notes to Zimbabwean institutional investors. Due to the expected sale of CMS, the obligations for repayment of the bonds were transferred to CHZ, a wholly owned subsidiary of Caledonia, which became the issuer of the bonds in place of CMS. Caledonia believes the development of a Zimbabwe bond market will be a long-term strategic benefit to the Company; accordingly, Caledonia wishes to retain and develop the existing relationships it has established with institutional bond investors in Zimbabwe who hold the bonds that have already been issued.

 

8.

LIQUIDITY AND CAPITAL RESOURCES

 

An analysis of Caledonia’s capital resources are set out below.

 

Liquidity and Capital Resources
($’000’s)
As at		Dec 31				Mar 31				Jun 30				Sep 30				Dec 31				Mar 31				Jun 30
		2022				2023				2023				2023				2023				2024				2024
Net cash and cash equivalents			1,496				3,189				(2,097	)			(3,192	)			(11,032	)			(14,160	)			(1,366	)
Net working capital			5,986				3,677				7,674				18,758				14,096				9,320				21,511

 

During the Quarter cash flows were positively affected by working capital movements of $1.2 million. The net working capital has improved significantly due to increased cash from operating activities. Prepayments that should normalise in future quarters offset by the income tax payable that was made after the Quarter end. Movements in Caledonia’s net cash, overdraft and working capital and an analysis of the sources and uses of Caledonia’s cash are discussed in section 3 of this MD&A. The overdraft and term facilities are held by Blanket with Zimbabwean banks with security and repayment periods as detailed in section 7. The Company’s liquid assets as at June 30, 2024 plus anticipated cashflows exceeded its planned and foreseeable commitments as set out in section 9.

 

9.

OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL COMMITMENTS AND CONTINGENCIES

 

There are no off-balance sheet arrangements apart from the facilitation loans which are not reflected as loans receivable for IFRS purposes (refer to note 5 of the Interim Financial Statements). The Company had the following discounted, contractual obligations at June 30, 2024:

 

Payments due by period
($’000’s)
Falling due			Within 1 year				1-3 Years				4-5 Years				After 5 Years				Total
Trade and other payables			18,803				-				-				-				18,803
Provisions*			93				346				331				8,646				9,416
Capital expenditure commitments			4,435				-				-				-				4,435
Lease liabilities			114				22				-				-				136
Cash-settled share-based payments			454				190				-				-				644
Loan notes (bonds)			855				8,238				-				-				9,093

^*Based on the expected timing of the cash flows and not on the gross settlement value assumptions, as valued in note 20 of the Interim Financial Statements.

 

The capital expenditure commitments relate to materials and equipment which have been ordered by CMSA and which will be sold to Blanket and predominantly relates to the new TSF.

 

Other than the proposed investment in the exploration properties, the committed and uncommitted investment will be used to maintain Blanket’s existing operations and implement the final development relating to the Central shaft and the further stages of the new TSF, as discussed in section 4.7 of this MD&A.

 

Committed and uncommitted purchase obligations are expected to be met from the cash generated from Blanket’s existing operations and Blanket’s existing borrowing facilities. The Group leases property for its administrative offices in Jersey, Harare, Bulawayo and Johannesburg; following the implementation of IFRS 16 the Group recognises the liabilities for these leases. As of June 30, 2024, the Group had liabilities for rehabilitation work on Blanket – if the mine is permanently closed – at an estimated discounted cost of $4.1 million (December 31, 2023: $4.7 million), Motapa’s liability amounted to $0.6 million (December 31, 2023: $1.4 million), Maligreen`s liability amounted to $0.8 million (December 31,2023: $0.8 million) and Bilboes’ liability amounted to $4.4 million (December 31, 2023: $4.4 million). After further review of the Motapa area the old TSF at Motapa, previously included in the rehabilitation liability, is not within the area of the mining lease and was therefore subsequently excluded from the rehabilitation liability footprint.

 

 

10.

NON-IFRS MEASURES

 

Throughout this document, we provide measures prepared in accordance with IFRS in addition to some non-IFRS performance measures. As there is no standard method for calculating non-IFRS measures, they are not a reliable way to compare Caledonia against other companies. Non-IFRS measures should be used along with other performance measures prepared in accordance with IFRS. We define below the non-IFRS measures used in this document and reconcile such non-IFRS measures to the IFRS measures we report.

 

10.1

Cost per ounce

 

Non-IFRS performance measures such as “on-mine cost per ounce”, “all-in sustaining cost per ounce” and “all-in cost per ounce” are used in this document. Management believes these measures assist investors and other stakeholders in understanding the economics of gold mining over the life cycle of a mine. These measures are calculated on the basis set out by the World Gold Council in a Guidance Note and accordingly differ from the previous basis of calculation. The table below reconciles non-IFRS cost measures to the production costs shown in the financial statements prepared under IFRS.

 

Reconciliation of IFRS Production Cost to Non-IFRS Costs per ounce
($’000’s, unless otherwise indicated)
		Bilboes Oxides																Blanket																Consolidated
		3 months ended June 30								6 months ended June 30								3 months ended June 30								6 months ended June 30								3 months ended June 30								6 months ended June 30
		2024				2023				2024				2023				2024				2023				2024				2023				2024				2023				2024				2023
Production cost (IFRS)			797				4,180				1,581				7,525				19,667				16,546				37,843				33,051				20,464				20,726				39,424				40,576
COVID-19 labour and consumable expenses			-				-				-				-				-				-				-				-				-				-				-				-
Cash-settled share-based expense			2				-				(7	)			-				(59	)			8				(149	)			(386	)			(57	)			8				(156	)			(386	)
Less exploration and safety costs			-				-				-				-				(328	)			(293	)			(548	)			(554	)			(328	)			(293	)			(548	)			(554	)
On-mine admin costs, employee incentives and intercompany adjustments			-				-				-				-				77				136				539				(162	)			77				136				539				(162	)
On-mine production cost*			799				4,180				1,574				7,525				19,357				16,397				37,685				31,949				20,156				20,577				39,259				39,474
Gold sales (oz)			401				1,071				827				1,181				21,363				17,911				39,813				33,603				21,764				18,982				40,640				34,784
On-mine cost per ounce ($/oz)			1,992				3,905				1,903				6,372				906				915				947				951				926				1,084				966				1,135
Royalty			42				107				85				116				2,433				1,856				4,324				3,327				2,475				1,963				4,409				3,443
Exploration, remediation and permitting cost			-				-				-				-				13				7				40				30				13				7				40				30
Sustaining capital expenditure#			-				-				-				-				3,460				2,734				6,041				3,713				3,460				2,734				6,041				3,713
Sustaining administrative expenses&			-				-				-				-				2,144				1,582				4,017				2,550				2,144				1,582				4,017				2,550
Silver by-product credit			-				-				-				-				(41	)			(29	)			(67	)			(54	)			(41	)			(29	)			(67	)			(54	)
Cash-settled share-based payment expense included in production cost			16				-				7				-				41				(8	)			149				386				57				(8	)			156				386
Cash-settled share-based payment expense			-				-				-				-				-				(9	)			53				271				-				(9	)			53				271
Equity-settled share-based payment expense			-				-				-				-				305				221				506				331				305				221				506				331
Procurement margin included in on-mine cost*			-				-				-				-				(1,301	)			(1,285	)			(2,675	)			(2,055	)			(1,301	)			(1,285	)			(2,675	)			(2,055	)
All-in sustaining cost			857				4,287				1,666				7,641				26,411				21,466				50,073				40,448				27,268				25,753				51,739				48,089
Gold sales (oz)			401				1,071				827				1,181				21,363				17,911				39,813				33,603				21,764				18,982				40,640				34,784

 

 

Reconciliation of IFRS Production Cost to Non-IFRS Costs per ounce
($’000’s, unless otherwise indicated)
		Bilboes Oxides																Blanket																Consolidated
		3 months ended June 30								6 months ended June 30								3 months ended June 30								6 months ended June 30								3 months ended June 30								6 months ended June 30
		2024				2023				2024				2023				2024				2023				2024				2023				2024				2023				2024				2023
AISC per ounce ($/oz)			2,136				4,005				2,014				6,470				1,236				1,198				1,258				1,204				1,253				1,357				1,273				1,383
Non-sustaining administrative expenses&			-				-				-				2,900				1,520				1,602				2,258				3,672				1,520				1,602				2,258				6,572
Permitting and exploration expenses			-				-				-								18				1				35				19				18				1				35				19
Non-sustaining capital expenditure#			-				22				-				61				2,378				3,252				3,395				5,345				2,378				3,274				3,395				5,406
Total all-in cost			857				4,310				1,666				10,602				30,327				26,320				55,761				49,484				31,184				30,631				57,427				60,086
Gold sales (oz)			401				1,071				827				1,181				21,363				17,911				39,813				33,603				21,764				18,982				40,640				34,784
All-in cost per ounce ($/oz)			2,136				4,026				2,014				8,977				1,420				1,470				1,401				1,473				1,433				1,614				1,413				1,727

^* The on-mine cost reflects the cost incurred to produce gold. The procurement margin on consumable sales between CMSA and Blanket is not deducted from on-mine cost as the cost represents a fair value that Blanket would pay for consumables if they were sourced from a third party. The procurement margin on these sales is deducted from all-in sustaining cost and all-in cost as these numbers represent the consolidated costs at a group level, excluding intercompany profit margins.

^& Administrative expenses relate to costs incurred by the Group to provide services for mining and related activities. From the last quarter of 2022 administrative expenses have been allocated between AISC and all-in cost. Prior years have been restated in the MD&A.

^# Non-sustaining costs are primarily those costs incurred at ‘new operations’ and costs related to ‘major projects at existing operations’. All other costs related to existing operations are considered sustaining.

 

 

10.2

Average gold price per ounce

 

The table below reconciles “Average gold price per ounce” to the revenue shown in the financial statements which have been prepared under IFRS.

 

Reconciliation of average gold price per ounce
($’000’s, unless otherwise indicated)
		3 months ended June 30								6 months ended June 30
		2024				2023				2024				2023
Revenue (IFRS)			50,107				37,031				88,635				66,466
Revenues from sales of silver			(41	)			(29	)			(67	)			(54	)
Revenues from sales of gold			50,066				37,002				88,568				66,412
Gold ounces sold (oz)			21,764				18,981				40,640				34,784
Average gold price per ounce (US$/oz)			2,300				1,949				2,179				1,909

 

10.3

Adjusted earnings per share

 

“Adjusted earnings per share” is a non-IFRS measure which management believes assists investors to understand the Company’s underlying performance. The table below reconciles “adjusted earnings per share” to the profit/loss attributable to owners of the Company shown in the financial statements which have been prepared under IFRS. Adjusted earnings per share is calculated by deducting payments to Blanket Employee Trust Services (Private) Limited (“BETS”) (the company that owns 10% of Blanket’s shares on behalf of an employee trust), foreign exchange gains and losses, impairments, deferred tax and inventory write-downs from the profit attributable to the owners of the Company.

 

 

 

 

 

Reconciliation of Adjusted earnings (loss) per share (“Adjusted EPS”) to IFRS Profit attributable to owners of the Company
($’000’s, unless otherwise indicated)
		3 months ended June 30								6 months ended June 30
		2024				2023				2024				2023
Profit (loss) for the period (IFRS)			10,348				252				13,165				(4,018	)
Non-controlling interest share of profit for the period			(1,919	)			(764	)			(2,605	)			(1,524	)
Profit (loss) attributable to owners of the Company			8,429				(512	)			10,560				(5,542	)
BETS adjustment			(193	)			80				(297	)			(35	)
Earnings (loss) (IFRS)			8,236				(432	)			10,263				(5,577	)
Weighted average shares in issue (thousands)			19,195				18,083				19,195				18,083
IFRS EPS (cents)			42.9				(2.4	)			53.5				(30.8	)
Add back (deduct) amounts in respect of foreign exchange movements
Realised net foreign exchange losses			3,227				5,844				6,792				6,060
- less tax			(796	)			(1,441	)			(1,676	)			(1,492	)
- less non-controlling interest			(320	)			(579	)			(674	)			(600	)
Unrealised net foreign exchange (gains)/losses			(1,213	)			(2,234	)			(639	)			(3,983	)
- less tax			382				448				195				781
- less non-controlling interest			143				224				75				330
Adjusted IFRS profit excl. foreign exchange			9,659				1,830				14,336				(4,481	)
Weighted average shares in issue (thousands)			19,195				18,083				19,195				18,083
Adjusted IFRS EPS excl. foreign exchange (cents)			50.3				10.1				74.7				(24.8	)
Add back (deduct) amounts in respect of:
Reversal of BETS adjustment			193				(80	)			297				35
Impairment of property, plant and equipment			-				851				-				851
Deferred tax			(167	)			(859	)			(60	)			76
Non-controlling interest portion of deferred tax and impairment			(3	)			9				(23	)			(96	)
Fair value losses on derivative financial instruments			174				54				476				488
Adjusted profit			9,856				1,805				15,026				(3,127	)
Weighted average shares in issue (thousands)			19,195				18,083				19,195				18,083
Adjusted EPS (cents)			51.3				10.0				78.3				(17.3	)

 

 

 

11.

RELATED PARTY TRANSACTIONS

 

Key management personnel are persons responsible for planning, directing and controlling the activities of an entity, and include directors and executive officers of the Company. The amounts paid by the Company for the services provided by key management personnel who are related parties have been determined by negotiation among the parties and are reviewed and approved by the Company’s board. These transactions are in the normal course of operation.

 

The Company has extended the consultancy agreement with Mr. Curtis, a former director of the Company and Chief Executive Officer, until December 31, 2025 with a monthly fee of US$12,500. During the Quarter, the Company expensed US$37,500 (2023: US$ $37,500) in advisory service fees to Mr. Curtis.

 

$7,500 rent was paid to Fulbon Investments (Pvt) Limited, of which Mr. Gapare is a director, which supplied office accommodation to CHZ during the Quarter.

 

12.

CRITICAL ACCOUNTING ESTIMATES

 

Caledonia’s accounting policies are set out in the Annual Financial Statements which have been publicly filed on SEDAR+. In preparing the Interim Financial Statements, management is required to make estimates and assumptions that affect the amounts represented in the Interim Financial Statements and related disclosures. Use of available information and the application of judgement are inherent in the formation of estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Discussion of recently issued accounting pronouncements is set out in note 4 of the Interim Financial Statements. Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the Interim Financial Statements is included in the following notes:

 

i)

Indigenisation transaction

 

The directors of Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”), a wholly owned subsidiary of the Company, performed an assessment, using the requirements of IFRS 10: Interim Financial Statements (IFRS 10), and concluded that CHZ should continue to consolidate Blanket and accounted for the transaction as follows:

 

·

Non-controlling interests (“NCI”) are recognised on the portion of shareholding upon which dividends declared by Blanket accrue unconditionally to equity holders as follows:

 

(a)

20% of the 16% shareholding of National Indigenisation and Economic Empowerment Fund (“NIEEF”); and

 

(b)

100% of the 10% shareholding of GCSOT.

 

·

This effectively means that NCI is recognised at Blanket at 13.2% of its net assets.

 

·

The remaining 80% of the shareholding of NIEEF is recognised as a non-controlling interest to the extent that its attributable share of the net asset value of Blanket exceeds the balance on the facilitation loans including interest.

 

The transaction with Blanket Employee Trust Services (Private) Limited (“BETS”) is accounted for in accordance with IAS 19 Employee Benefits as the ownership of the shares does not ultimately pass to the employees. The employees are entitled to participate in 20% of the dividends accruing to the 10% shareholding in Blanket if they are employed at the date of such distribution. To the extent that 80% of the attributable dividends exceeds the balance on BETS’ facilitation loan they will accrue to the employees at the date of such declaration.

 

The Employee Trust, which owns BETS, and BETS, are structured entities which are effectively controlled and consolidated by Blanket. Accordingly, the shares held by BETS are effectively treated as treasury shares in Blanket and no NCI is recognised.

 

ii)

Site restoration provisions

 

The site restoration provision has been calculated for Blanket based on an independent analysis of the rehabilitation costs as performed in 2023. For properties in the development phase the restoration costs are recognised at the current estimated cost of restoration undiscounted. For properties in the production phase assumptions and estimates are made when determining the inflationary effect on current restoration costs and the discount rate to be applied in arriving at the present value of the provision where the time value of money effect is significant. Assumptions, based on the current economic environment, have been made that management believes are a reasonable basis for estimating the future liability. These estimates take into account any material changes to the assumptions that occur when reviewed by management. Estimates are reviewed annually and are based on current regulatory requirements. Significant changes in estimates of contamination estimates, restoration standards, and techniques will result in changes to the provision from period to period. Actual rehabilitation costs will ultimately depend on future market prices for the rehabilitation. The final cost of the currently recognised site rehabilitation provision may be higher or lower than currently provided for in the statement of financial position.

 

iii)

Exploration and evaluation (“E&E”) expenditure

 

Exploration and evaluation assets are tested for impairment before the assets are transferred to mine development, infrastructure and other assets or when an indicator of impairment is identified. Exploration and evaluations assets are not depreciated.

 

The Group also makes assumptions and estimates regarding the technical feasibility and commercial viability of the mineral project and the possible impairment of E&E assets by evaluating whether it is likely that future economic benefits will flow to the Group, which may be based on assumptions about future events or circumstances e.g., such as the completion of a feasibility study indicating construction, funding and economic returns that are sufficient. Assumptions and estimates made may change if new information becomes available. If information becomes available suggesting that the recovery of expenditures is unlikely, the amount capitalised is written off in profit or loss in the period the new information becomes available. The recoverability of the carrying amount of exploration and evaluation assets depends on the availability of sufficient funding to bring the properties into commercial production, the price of the products to be recovered and the undertaking of profitable mining operations. As a result of these uncertainties, the actual amount recovered may vary significantly from the carrying amount.

 

iv)

Income taxes

 

Significant estimates and assumptions are required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Caledonia records its best estimate of the tax liability including any related interest and penalties in the current tax provision. In addition, Caledonia applies judgement in recognising deferred tax assets relating to tax losses carried forward to the extent that there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same taxable entity against which the unused tax losses can be utilised or sufficient estimated taxable income against which the losses can be utilised.

 

v)

Share-based payment transactions

 

The fair value of the amount payable to employees in respect of share-based awards, which are settled in cash, is recognised as an expense with a corresponding increase in liabilities, over the period over which the employee becomes unconditionally entitled to payment. The liability is re-measured at each reporting date. Any changes in the fair value of the liability are recognised as a personnel expense in profit or loss. Additional information about significant judgements and estimates and the assumptions used to estimate fair value for cash settled share-based payment transactions are disclosed in note 10 to the Interim Financial Statements.

 

 

vi)

Impairment

 

At each reporting date, Caledonia determines if impairment indicators exist and, if present, performs an impairment review of the non-financial assets held in Caledonia. The exercise is subject to various judgemental decisions and estimates. Financial assets are also reviewed regularly for impairment.

 

vii)

Depreciation

 

Depreciation on mine development, infrastructure and other assets in the production phase is computed on the units-of-production method over the life-of-mine based on the estimated quantities of reserves (proven and probable) and resources (measured, indicated and inferred), which are planned to be extracted in the future from known mineral deposits. Where items have a shorter useful life than the life-of-mine, the mine development, infrastructure and other assets are depreciated over their useful life. Confidence in the existence, commercial viability and economical recovery of reserves and resources included in the life-of-mine plan may be based on historical experience and available geological information. This is in addition to the drilling results obtained by the Group and management’s knowledge of the geological setting of the surrounding areas, which would enable simulations and extrapolations to be done with a sufficient degree of accuracy. In instances where management can demonstrate the economic recovery of resources with a high level of confidence, such additional resources are included in the calculation of depreciation.

 

viii)

Mineral reserves and resources

 

Mineral reserves and resources are estimates of the amount of product that can be economically and legally extracted. In order to calculate the reserves and resources, estimates and assumptions are required about a range of geological, technical and economic factors, including but not limited to quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity prices and exchange rates. Estimating the quantity and grade of mineral reserves and resources requires the size, shape and depth of orebodies to be determined by analysing geological data such as the logging and assaying of drill samples. This process may require complex and difficult geological assumptions and calculations to interpret the data. Estimates of mineral reserves and resources may change due to the change in economic assumptions used to estimate mineral reserves and resources and due to additional geological data becoming available during operations.

 

The Group estimates its mineral reserves (proven and probable) and mineral resources (measured, indicated and inferred) based on information compiled by a Qualified Person in terms of Canadian Securities Administrators’ National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and also the United States Securities and Exchange Commission’s Subpart 1300 of Regulation S-K (“Subpart 1300” or “1300 S-K”) relating to geological and technical data of the size, depth, shape and grade of the ore body and suitable production techniques and recovery rates. Such an analysis requires geological and engineering assumptions to interpret the data. These assumptions include:

 

·

correlation between drill-hole intersections where multiple reefs are intersected.

·

continuity of mineralisation between drill-hole intersections within recognised reefs; and

·

appropriateness of the planned mining methods.

 

The Group estimates and reports reserves and resources in accordance with Subpart 1300 and NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards for Mineral Resources and Mineral Reserves. Complying with the CIM code, NI 43-101 requires the use of reasonable assumptions to calculate the recoverable resources. These assumptions include:

 

·

the gold price based on current market price and the Group’s assessment of future prices;

·

estimated future on-mine costs, sustaining and non-sustaining capital expenditures;

·

cut-off grade;

·

dimensions and extent, determined both from drilling and mine development, of ore bodies; and

·

planned future production from measured, indicated and inferred resources.

 

Changes in reported mineral reserves and mineral resources may affect the Group’s financial results and position in several ways, including the following:

 

·

asset carrying values may be affected due to changes in the estimated cash flows;

·

depreciation and amortisation charges to profit or loss may change as these are calculated on the unit-of-production method or where useful lives of an asset change; and

·

decommissioning, site restoration and environmental provisions may change in ore reserves and resources which may affect expectations about the timing or cost of these activities.

 

13.

FINANCIAL INSTRUMENTS

 

i)

Commodity risk

 

From December 2022 to the date of approval of the MD&A the Company had the following put options to hedge gold price risk:

 

Purchase date	Ounces hedged	Strike price	Period of hedge
December 22, 2022	16,672 oz	$1,750	December 2022 to May 2023
May 22, 2023	28,000 oz	$1,900	June to December 2023
December 19, 2023	12,000 oz	$1,950	January to March 2024
March 7, 2024	12,000 oz	$2,050	April to June 2024
April 10, 2024	12,000 oz	$2,100	July to September 2024

 

The put options were entered into to protect the Company against gold prices lower than the strike price over the period hedged. The options are “out-of-the-money" put options which lock in a minimum price over the number of ounces that are subject to the hedge for an initial option price. These arrangements carry no further financial obligations, such as margin calls.

 

ii)

Credit risk

 

The carrying amount of financial assets as disclosed in the statements of financial position and related notes represents the maximum credit exposure. Trade and other receivables predominantly relates to gold bullion sold before the end of the Quarter and VAT receivables. The amount due in respect of bullion sales was settled at the date of the MD&A. As discussed in section 4.10, in April 2023 the Company commenced the export and sale of gold to an independent gold refiner outside Zimbabwe, which makes payment for the gold received directly into Caledonia’s bank accounts in Zimbabwe. This mechanism means that the Company is no longer exposed to credit risk from FGR in respect of the US Dollar component of its sales.

 

Certain of the VAT receivables were outside the agreed terms of such refunds as at June 30, 2024; engagements are underway with the Zimbabwe Revenue Authority to recover such amounts by way of cash receipts or offsets against other amounts of tax payable

 

iii)

Liquidity risk

 

All trade payables and the bank overdrafts have maturity dates that are repayable as set out in section 7 and section 8

 

iv)

Currency risk

 

A proportion of Caledonia’s assets, financial instruments and transactions are denominated in currencies other than the US Dollar. The financial results and financial position of Caledonia are reported in US Dollars in the Interim Financial Statements.

 

The fluctuation of the US Dollar in relation to other currencies will consequently have an impact upon the profitability of Caledonia and may also affect the value of Caledonia’s assets and liabilities and the amount of shareholders’ equity.

 

As discussed in section 4.10 of this MD&A, the RTGS$ was subject to variations in the exchange rate against the US Dollar, and the same is now the case for the replacement for the RTGS$ being the ZiG. This may result in Blanket’s assets, liabilities and transactions that are denominated in ZiG being subject to further fluctuations in the exchange rate in relation to the US Dollars. In addition, the Company may be subject to fluctuations in the exchange rate between the South African Rand and the US Dollar in respect of cash that is held in Rands in South Africa.

 

v)

Interest rate risk

 

Interest rate risk is the risk borne by an interest-bearing asset or liability due to fluctuations in interest rates. Unless otherwise noted, it is the opinion of management that Caledonia is not exposed to significant interest rate risk as it has limited debt financing. Caledonia’s cash and cash equivalents include highly liquid investments that earn interest at market rates. Caledonia’s policy focuses on preservation of capital and limits the investing of excess funds to liquid term deposits in high credit quality financial institutions.

 

14.

SECURITIES OUTSTANDING

 

At August 12, 2024, being the last day practicable prior to the publication of this MD&A, Caledonia had 19,199,860 common shares issued and the following outstanding options to purchase common shares (“Options”) granted to the employees of a PR consultancy to the Company 3PPB LLC being P Chidley and P Durham:

 

Name of option holder	Number of Options	Exercise Price	Expiry Date
P Durham	5,000	CAD11.50($7.35)	25-Aug-24
P Chidley	5,000	CAD11.50($7.35)	25-Aug-24
P Durham	5,000	USD 9.49	30-Sep-29
TOTAL	15,000

 

On June 14, 2024, 5,000 options granted to P Chidley at an exercise price of CAD11.50 and with an expiry date of August 25, 2024 were exercised for a total consideration of $ $36,750.

 

The OEICP allows that the number of shares reserved for issuance to participants under the OEICP, together with shares reserved for issue under any other share compensation arrangements of the Company, shall not exceed the number which represents 10% of the issued and outstanding shares from time to time.

 

15.

RISK ANALYSIS

 

The business of Caledonia contains significant risk due to the nature of mining, exploration and development activities. Caledonia’s business contains significant additional risks due to the jurisdictions in which it operates and the nature of mining, exploration and development. Refer to the Annual Report on Form 20-F for 2023, which was published on the Securities and Exchange Commission's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system on May 15, 2024 and which is also available on SEDAR+, for a comprehensive discussion of the risk factors and how management seeks to mitigate the risks where this is possible.

 

16.

FORWARD LOOKING STATEMENTS

 

Information and statements contained in this MD&A 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 MD&A include: implementation schedules for, and other uncertainties inherent in, the Central shaft project; production guidance; estimates of future/targeted production rates; planned mill capacity increases; estimates of future metallurgical recovery rates and the ability to maintain high metallurgical recovery rates; timing of commencement of operations; plans and timing regarding further exploration, drilling and development; the prospective nature of exploration and development targets; the ability to upgrade and convert mineral resources to mineral reserves; capital and operating costs; our intentions with respect to financial position and third party financing; future dividend payments; the proposed sale of the solar plant; exploration activities and development of the Bilboes sulphide project. 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 mineralisation 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, changes in government regulations, legislation and rates of taxation, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors.

 

Security holders, potential security holders and 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 and payment terms for gold sold to FGR, risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological or structural formations, pressures, power outages, fire, explosions, landslides, cave-ins and flooding), 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 un-anticipated 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 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 reviews forward-looking information for the purposes of preparing each MD&A; however, 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.

 

Reserves and resources estimates contained in this MD&A may have been prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System; or in accordance with the requirements of 1300 S-K adopted by the SEC. These standards differ and therefore information contained in this MD&A may not be comparable to similar information disclosed by U.S. companies or by Candian companies, respectively.

 

The requirements of NI 43-101 for identification of reserves and resources are also not the same as those of 1300 S-K, and any reserves or resources reported in compliance with NI 43-101 may not qualify as “reserves” or “resources” under 1300 S-K, and vice versa. Accordingly, the mineral reserves and mineral resources information set forth herein may not be comparable to information made public by companies that report in accordance with United States standards or by Candian companies, respectively.

 

17.

CONTROLS

 

The Company has established and maintains disclosure controls and procedures (“DC&P”) designed to provide reasonable assurance that material information relating to the Company is made known to the Chief Executive Officer and the Chief Financial Officer by others, particularly during the period in which annual filings are being prepared, and that information required to be disclosed in the Company’s annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarised and reported within the time periods specified by such securities legislation.

 

The Company’s management, along with the participation of the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of the Company’s DC&P as of June 30, 2024. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, at June 30, 2024, the Company’s DC&P were effective.

 

The Company also maintains a system of internal controls over financial reporting (“ICFR”) designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS; however, due to inherent limitations, ICFR may not prevent or detect all misstatements and fraud. The board of directors approves the financial statements and ensures that management discharges its financial responsibilities. The Audit Committee, which is composed of independent directors, meets periodically with management and auditors to review financial reporting and control matters and reviews the financial statements and recommends them for approval to the board of directors.

 

The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate ICFR and evaluating the effectiveness of the Company’s ICFR as at each fiscal year end. Management has used the 2013 Internal Control–Integrated Framework from the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO”) to evaluate the effectiveness of the Company’s ICFR at June 30, 2024. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that at June 30, 2024, the Company’s ICFR was effective.

 

There have been no changes in the Company’s ICFR during the period ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s ICFR.

 

18.

QUALIFIED PERSON

 

Mr. Harvey (NHD Economic Geology, MGSSA, MAIG) is the Company’s qualified person as defined by Subpart 1300 and NI 43-101. Mr. Harvey is responsible for the technical information provided in this MD&A except where otherwise stated. Mr. Harvey has reviewed the scientific and technical information included in this document and has approved the disclosure of this information for the purposes of this MD&A.

 

43

Exhibit 99.3

 

 

Form 52-109F2

Certification of Interim Filings

Full Certificate

 

 

I, John Mark Learmonth, Chief Executive Officer of Caledonia Mining Corporation Plc, certify the following:

 

1.

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Caledonia Mining Corporation Plc (the “issuer”) for the quarter ended June 30, 2024.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4.

Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings

 

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1

Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework – published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

 

5.2

N/A

 

5.3

N/A

 

6.

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2024 and ended on June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

 

Date: August 12, 2024

 

/s/ JM Learmonth

_______________________

John Mark Learmonth

Chief Executive Officer

 

Exhibit 99.4

 

 

Form 52-109F2

Certification of Interim Filings

Full Certificate

 

 

I, Chester Goodburn, Chief Financial Officer of Caledonia Mining Corporation Plc, certify the following:

 

1.

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Caledonia Mining Corporation Plc (the “issuer”) for the quarter ended June 30, 2024.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4.

Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings

 

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1

Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework – published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

 

5.2

N/A

 

5.3

N/A

 

6.

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2024 and ended on June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

 

Date: August 12, 2024

 

/S/ CO Goodburn

_______________________

Chester Oliver Goodburn

Chief Financial Officer

 

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