TORONTO, ONTARIO
-- (Marketwired)
-- 03/31/15
Caledonia Mining Corporation (TSX:CAL)(OTCQX:CALVF)(AIM:CMCL) ("Caledonia" or the "Company") announces its operating and financial results for the fourth quarter ("Q4" or the "Quarter") and the year ended December 31, 2014 (the "Year"). All results are reported in Canadian dollars unless otherwise indicated. Following the implementation of indigenisation in September 2012, Caledonia owns 49 per cent of the Blanket Mine ("Blanket") in Zimbabwe. Caledonia continues to consolidate Blanket and the operational and financial information set out below is on a 100 per cent basis unless indicated otherwise.
Commenting on the results for 2014, Steve Curtis, Caledonia's CEO said:
"2014 was another challenging year due to the lower gold price and lower production. Despite the tough environment Caledonia still generated $3m of cash and paid $3.2 million in dividends to its shareholders after $6.8m was invested at the Blanket Mine. Blanket also achieved a creditable All-in Sustaining Cost of $969 per ounce of gold (2013: $973/oz) for the year albeit on 8.3% fewer ounces of gold production.
"Towards the end of 2014 Caledonia announced a revised investment plan under which approximately $70 million will be invested at the Blanket Mine over the next 7 years, with the objectives of doubling production and reducing costs. Implementation of the revised plan remains on track.
"In December 2014 the Company published a Preliminary Economic Assessment which confirmed the robust economics of the revised plan which has an internal rate of return of 267 per cent.
"Caledonia's cash generation in 2014 remained strong and Caledonia increased its net cash from C$23.4 million to C$26.8 million as at December 31, 2014.
"The commercial environment in Zimbabwe continues to show signs of improvement. In Q4 of 2014 the royalty rate payable to the Zimbabwe government was reduced from 7 per cent of turnover to 5 per cent. In early 2015 the discount payable on gold sales was reduced from 1.5 per cent to 1.25 per cent and the 2015 round of wage negotiations has been settled rapidly with an average increase agreed at 3 per cent."
Shareholder Conference Call
A presentation of the 2014 results and outlook for Caledonia is available on Caledonia's website (www.caledoniamining.com). Management will host a "Question and Answer" call at 10am Toronto time on April 2, 2014. Details for the call are as follows:
Date: April 2, 2015
Time: 10.00 Toronto/1500 London /1600 Johannesburg, Zurich, Frankfurt
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Dial-in telephone number Password PIN
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Canada Toll free 1 800 608 0547 Caledonia 5401477#
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USA toll free 1 866 966 5335 Caledonia 5401477#
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UK 0808 109 0700 Caledonia 5401477#
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Other +44 20 3003 2666 Caledonia 5401477#
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Operating and Financial Review
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Q4 2013 Q4 2014 Year 2013 Year 2014 Comment
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Gold produced 11,429 10,417 45,527 41,771 Gold production in
(oz) 2014 was adversely
affected by the lower
head grade.
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On-mine cost 666 704 613 652 On-mine costs for
(US$/oz)(1) 2014 were higher than
2013 due to lower
sales which means
that on-mine fixed
costs are spread over
fewer ounces. On-mine
costs in Q4 of each
year are higher than
the annual average
due to the effect of
work-in-progress.
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All-in 1,196 1,118 973 969 AISC decreased in Q4
Sustaining and the Year due to
Cost (US$/oz) lower royalties,
("AISC")(1) lower refining
charges, lower
community costs (for
the Year only) and
lower sustaining
capital investment
the combined effects
of which were reduced
by higher
administrative costs.
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Gold Sales (oz) 9,454 9,604 45,048 42,927 Sales in Q4 2014 were
higher than Q4 2013
despite lower
production due to the
lower level of work
in progress at
December 31, 2014.
Sales in 2014 were
lower than 2013 due
to lower production.
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Average 1,277 1,180 1,402 1,245 Lower realised gold
realised gold prices in Q4 2014 and
price Year 2014 primarily
(US$/oz)(1) due to the lower gold
price.
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Gross profit 4.5 4.4 29.9 20.5 Lower gross profit in
($'m)(2) 2014 compared to 2013
mainly due to the
lower realised gold
prices and lower
production and sales.
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Net (14.3) (0.5) (3.1) 4.9 Net loss in Q4 2013
(loss)/profit and the Year 2013 was
attributable after an impairment
to charge of $14.2m in
shareholders respect of the Nama
($'m) project in Zambia.
Net loss in Q4 2014
was due to higher
general and
administrative
expenses and a high
tax charge in the
Quarter. Profit for
2014 was adversely
affected by lower
gold production and
the lower realised
gold price.
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Adjusted basic (0.7) 1.6 27.6 12.1 Adjusted basic
(loss)/earning earnings per share
s per share(3) excludes impairment
(cents) charges, foreign
exchange profits or
losses,
indigenisation
expenses, deferred
taxation and tax
adjustments in
respect of prior
years and the costs
of the Zambian
operation.
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Cash and cash 25.2 26.8 25.2 26.8 Caledonia's cash is
equivalents held in Canadian, UK
($'m) and South African
banks.
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Cash from 2.8 2.2 14.7 Cash flow in Q4 and
operating 13.7 the year were lower
activities due to the lower
($'m) realised gold price
and, for the year,
the lower number of
ounces sold the
effect of which was
reduced by lower tax
payments.
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Payments to the 3.6 2.6 19.5 12.4 Payments include
community and direct and indirect
Zimbabwe taxes, royalties,
government licence fees and
($'m) levies. The total of
such payments in 2014
was lower primarily
due to lower income
tax payable on the
reduced profit,
withholding tax and
reduced royalty
payments due to the
lower prevailing gold
price.
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(1) Non-IFRS measures such as "On-Mine Cost per ounce", "All-in Sustaining
Cost per ounce" and "average realised gold price" are used throughout this
document. Refer to Section 10 of the Company's published MD&A for a
discussion of non-IFRS measures.
( 2 ) Gross profit is after deducting royalties, production costs and
depreciation but before administrative expenses.
(3) Adjusted earnings per share ("EPS") is a non-IFRS measure which aims to
reflect Caledonia's ordinary trading performance. The adjusted EPS
calculation excludes any share based expense arising on the implementation
of indigenisation and the impairment and the foreign exchange profit, all of
which are included in the calculation of EPS under IFRS. Refer to Section 10
of the Company's published MD&A for a discussion of non-IFRS measures.
Dividend Policy and Shareholder Matters
On November 25, 2013 Caledonia announced a revised dividend policy in terms of which it intended to pay a dividend of 6 Canadian cents per share in 2014, split into 4 equal quarterly payments of 1.5 Canadian cents per share. The first quarterly dividend was paid on January 31, 2014 and subsequent quarterly dividends were paid at the end of April, July and October and at the end of January 2015. It is currently envisaged that the existing dividend policy of 6 cents per annum paid in equal quarterly instalments will be maintained in 2015. Caledonia will consider further dividends thereafter in the context of the prevailing commercial environment and expects to provide guidance for dividend payments in 2016 at about the time of the Q2 results, expected to be released in August 2015.
Strategy and Outlook
Caledonia's Board of Directors (the "Board") and Management have reviewed alternative expansion and diversification plans for Caledonia and have concluded the best returns on investment remain at the Blanket Mine in Zimbabwe, which continues to be cash generative in the current adverse market conditions and offers investment returns that exceed alternative opportunities.
On November 3, 2014, Caledonia announced its revised investment plan ("Revised Plan") and production projections for the Blanket Mine. The objectives of the Revised Plan are to improve the underground infrastructure and logistics and allow an efficient and sustainable production build-up. The infrastructure improvements will include the development of a "Tramming Loop" and the sinking of a new 6-meter diameter Central Shaft from surface to 1,080 meters.
The increased investment pursuant to the Revised Plan is expected to give rise to an increasing production profile that is expected to result in additional production from resources currently in the inferred category of approximately 70,000-75,000 ounces in 2021, this being in addition to projected production in 2021 from current mineral reserves of approximately 6,000 ounces. The Revised Plan is also expected to improve Blanket's long term operational efficiency, flexibility and sustainability.
An independent Preliminary Economic Assessment (the "PEA") and a revised supporting technical report dated December 1, 2014, entitled "A Technical Report on the Blanket Mine in the Gwanda Area, Zimbabwe" (the "Technical Report") relating to the Blanket Mine, with an effective date of December 1, 2014, was prepared in respect of the Revised Plan by Minxcon Consulting (Pty) Ltd. ("Minxcon"), in compliance with National Instrument 43-101 - Standards for Disclosure of Mineral Projects of the Canadian Securities Administrators ("NI 43-101") . The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is therefore no certainty that the PEA will be realized. The key conclusions arising from the PEA are as follows:
-- the Internal rate of Return arising from the Revised Plan was calculated
at 267 per cent(4);
-- the Net Present Value for the Blanket Mine arising from reserves and the
inferred resources used in the Revised Plan was calculated at US$147
million(4); and
-- of the gold that will need to be produced, so that the cumulative cash
flow arising from the Revised Plan becomes positive (i.e. the "Payback
Area"), only 3 per cent will come from resources that are currently
classified as inferred.
Implementation of the Revised Plan remains on plan. Progress on the implementation of each element which make up the Revised Plan is summarised below:
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Tramming Loop - Total required development: 800m
- Development completed at November 7, 2014: 16m
- Development completed at January 31, 2015: 384m
- Development completed at February 28, 2015: 450m
- Target completion: June 2015
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No. 6 Winze - Total sink (750m to 930m) - 180 meters
- Sink as at January 31, 2015 - 120 meters
- Sink as at February 28, 2015 - 140 meters
- Target completion: July 2015
- Initial production: January 2016
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Central Shaft - Site clearance has been completed; pre-sink work has
commenced
- Sinking scheduled to commence July 2015
- Winders have been purchased in early 2015 which are
sufficient for the sinking and production phases.
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Management and Board changes
On November 18, 2014, Mr. Hayden stepped down as President and Chief Executive Officer and Mr. Steve Curtis was appointed as Caledonia's President and Chief Executive Officer ("CEO") in succession to Mr. Stefan Hayden.
Mr. Curtis, a Chartered Accountant with over 30 years' experience, was previously Caledonia's Chief Financial Officer ("CFO"). Mr. Curtis has been a key member of Caledonia's management team since he joined Caledonia in April 2006 and was elected to the Board in 2008.
Mr. Curtis will be supported in his role as President and CEO by Caledonia's existing management team which has been expanded over the last 15 months and comprises Mr. Dana Roets, the Chief Operating Officer, and Mr. Mark Learmonth the Chief Financial Officer and formerly Vice President, Investor Relations and Corporate Development.
Mr. Learmonth is a Chartered Accountant and had 15 years of investment banking experience in London and Johannesburg before joining Caledonia in 2008. On December 6, 2014, Mr. Stefan Hayden resigned as a non-executive director of Caledonia.
(4) IRR and NPV are derived using an assumed real gold price of US$1,250 per
ounce; NPV is calculated using a real discount rate of 8.36 per cent.
Further assumptions are set out in the Technical Report
The Consolidated Financial Statement for the year ended December 31, 2014 and the Management Discussion and Analysis for the quarter and year ended December 31, 2014 are available from the Company's website www.caledoniamining.com and from SEDAR.
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Consolidated Statements of Comprehensive Income
(In thousands of Canadian dollars except per share amounts)
For the 3 months For the 12 months
ended Dec 31 ended Dec 31
2014 2013 2014 2013 2012
$ $ $ $ $
Revenue 12,972 12,114 59,082 65,113 75,221
Royalty (659) (893) (3,889) (4,544) (5,261)
Production costs (7,082) (5,919) (30,812) (27,412) (25,653)
Depreciation (796) (818) (3,908) (3,276) (3,392)
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Gross profit 4,435 4,484 20,473 29,881 40,915
Other (expense)/income (29) - 28 - -
Administrative expenses (2,796) (2,067) (8,157) (7,772) (4,055)
Share-based payment
expense - (68) - (68) (14,569)
Indigenisation expenses
(i) - - - - (1,700)
Foreign exchange
gain/(loss) 659 1,677 1,176 1,677 (4)
Impairment (196) (14,203) (196) (14,203) (330)
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Results from operating
activities 2,073 (10,177) 13,324 9,515 20,257
Net finance (cost)/income (69) 102 (155) (108) (81)
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Profit before tax 2,004 (10,075) 13,169 9,407 20,176
Tax expense (2,320) (4,279) (6,604) (9,897) (12,818)
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Profit/(Loss) for the
period (316) (14,354) 6,565 (490) 7,358
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Other comprehensive
income/(loss)
Items that are or may be
reclassified to profit
or loss
Foreign currency
translation differences
for foreign operations 1,440 38 3,848 2,254 (1,589)
Tax on other
comprehensive income 122 - 122 - -
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Other comprehensive
income/(loss) net of
income tax 1,562 38 3,970 2,254 (1,589)
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Total comprehensive
income/(loss) for the
period 1,246 (14,316) 10,535 1,764 5,769
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Profit/(Loss)
attributable to:
Shareholders of the
Company (480) (14,436) 4,897 (3,055) 8,720
Non-controlling interests 164 82 1,668 2,565 (1,362)
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Profit/(Loss) for the
period (316) (14,354) 6,565 (490) 7,358
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Total comprehensive
income/(loss)
attributable to:
Shareholders of the
Company 1,064 (14,345) 8,833 (726) 7,112
Non-controlling interests 182 29 1,702 2,490 (1,343)
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Total comprehensive
income/(loss) for the
period 1,246 (14,316) 10,535 1,764 5,769
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Earnings/(Loss) per share
(cents)(iii)
Basic (1.1) (27.7) 9.3 (6.1) 17.2
Diluted (1.1) (27.7) 9.3 (6.1) 17.2
Adjusted earnings per
share (cents) (ii)(iii)
Basic 1.6 (0.5) 12.1 27.7 49.9
Diluted 1.6 (0.5) 12.1 27.7 49.9
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i. Expenses relating to the Zimbabwe indigenisation transaction were
previously included in Administrative expenses. These expenses are now
presented separately as they are relevant to the understanding of
Caledonia's financial performance. The presentation of comparative
figures has been aligned accordingly.
ii. EPS is a non-IFRS measure which aims to reflect Caledonia's ordinary
trading performance. The adjusted EPS calculation excludes any share
based expense arising on the implementation of indigenisation,
impairments, tax adjustments in respect of prior years and foreign
exchange profits and losses, all of which are included in the
calculation of EPS under IFRS. Refer to Section 10 of the company's
published MD&A for a discussion of non-IFRS measures
iii.The EPS for 2012 has been restated based on the 10:1 consolidation that
took place in that year.
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Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
For the 12 months ended Dec
31,
2014 2013 2012
$ $ $
Cash flows from operating activities
Cash generated by operating activities 18,822 22,768 41,420
Net interest paid (118) (108) (81)
Tax paid (4,999) (7,974) (11,618)
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Net cash from operating activities 13,705 14,686 29,721
Cash flows from investing activities
Acquisition of Property, plant and equipment (6,786) (11,738) (7,909)
Proceeds on sale of investment - - 38
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Net cash used in investing activities (6,786) (11,738) (7,871)
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Cash flows from financing activities
Advance dividends paid - (1,987) (3,739)
Dividends paid (3,974) (5,947) -
Proceeds from the exercise of share options - 470 974
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Net cash used in financing activities (3,974) (7,464) (2,765)
Net increase/(decrease) in cash and cash
equivalents 2,945 (4,516) 19,085
Cash and cash equivalents at beginning of the
year 23,426 27,942 9,256
Effect of exchange rate fluctuations on cash
held 467 - (399)
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Cash and cash equivalents at year end 26,838 23,426 27,942
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Consolidated Statements of Financial Position
(In thousands of Canadian dollars) As at Dec 31, Dec 31, Dec 31,
2014 2013 2012
$ $ $
Total non-current assets 40,388 33,448 36,533
Inventories 7,571 6,866 5,508
Prepayments 348 177 126
Income tax receivable 111 - -
Trade and other receivables 2,040 3,889 1,718
Cash and cash equivalents 26,838 25,222 27,942
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Total assets 77,296 69,602 71,827
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Total non-current liabilities 12,980 10,094 6,928
Trade and other payables 3,791 4,600 5,775
Zimbabwe advance dividend accrual - - 1,987
Income taxes payable 1,990 1,138 1,518
Bank overdraft - 1,796 -
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Total liabilities 18,761 17,628 16,208
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Total equity 58,535 51,974 55,619
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Total equity and liabilities 77,296 69,602 71,827
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Contacts:
Caledonia Mining Corporation
Mark Learmonth
Tel: +27 11 447 2499
marklearmonth@caledoniamining.com
Blytheweigh
Tim Blythe/Halimah Hussain/Camilla Horsfall/
Megan Ray/George Yeomans
Tel: +44 20 7138 3204
Numis
JohnPrior/Paul Gillam/ James Black
Tel: +44 20 7260 1000
WH Ireland
Adrian Hadden/James Bavister
Tel: +44 20 7220 1751
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