CALEDONIA MINING CORPORATION

Transcription

1 CALEDONIA MINING CORPORATION ww.caledoniamining.com Sustainable Company Low-Cost Zimbabwe Presentation Gold Producer August December 2011 January 2013

2 Disclaimer This presentation does not constitute, or form part of, any offer to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in Caledonia, nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, or act as an inducement to enter into any contract or agreement thereto. Certain forward-looking statements may be contained in the presentation which include, without limitation, expectations regarding metal prices, estimates of production, operating expenditure, capital expenditure and projections regarding the completion of capital projects as well as the financial position of the Company. Although Caledonia Mining Corporation ( Caledonia ) believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be accurate. Accordingly, results could differ from those projected as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risks. Accordingly, neither Caledonia, nor any of its directors, officers, employees, advisers, associated persons or subsidiary undertakings shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying upon this presentation or any future communications in connection with this presentation and any such liabilities are expressly disclaimed. 2

3 Caledonia Group Overview TSX: CAL. OTCQX: CALVF. AIM: CMCL. Blanket Gold Mine, Zimbabwe (49%) 2012 production 45,000oz Low-cost; cash-generative; high equity return Fully indigenised Expansion to 76,000oz in 2016 Expansion internally funded Additional growth potential from Blanket s 18 other exploration projects Nama Base Metals Project, Zambia Highly prospective area: adjacent to VALE copper mine development (Lubambe) Exploration identified a new, copper-bearing zone Planned initial dividend in February

4 Gold Production Gold Production Quadrupled since Q Q production lower than Q3 as the ore grade normalises Production has stabilised at 11-12Koz/quarter New production from growth projects to commence starting late

5 Group EBITDA Strong and Sustained Increase in EBITDA Q EBITDA adjusted for nonrecurring, non-cash items relating to indigenisation and unrealised foreign exchange 5

6 Blanket Gold Mine, Zimbabwe Safety Intensive management interventions have resulted in a reduction in the TIIR* In Q Blanket won: The Occupational Safety & Health Silver Sectorial Award; and The Occupational Safety & Health Bronze Provincial Awards from the National Social Security Authority of Zimbabwe *Total Injury Incident Rate is a measurement of all accidents that have occurred regardless of injury or not expressed per 200,000 man-hours worked. This includes accidents that could have caused injuries. 6

7 Blanket Gold Mine, Zimbabwe Gold Production Tonnes milled per quarter increased in 2011 as capital projects are completed Tonnes milled in Q lower due to scheduled maintenance on No. 4 Shaft Tonnes milled in Q2 and Q returned to target rate of approximately 1,000tpd Blanket Mine Production Statistics Period Tonnes milled (t) Grade (g/t) Recovery (%) Gold Produced (oz) Q , % 7,322 Q , % 8,226 Q , % 9,743 Q , % 10,533 Q , % 9,164 Higher grades in Q2 and Q due to mine plan encountering higher grade zones than expected. Grade expected to revert to the long term average of 3.83g/t Au. Improved gold recoveries due to recent investments, and also assisted by higher grades Q , % 11,560 Q , % 12,918 7

8 Blanket Gold Mine, Zimbabwe A Low-Cost Producer Sustained reduction in cash costs per ounce Q cash costs were US$ 508/oz making Blanket one of the world s lowest cost listed gold producers 8

9 Blanket Gold Mine, Zimbabwe Cost Reductions due to Improved Efficiency Continuous investments since 2009 have improved Blanket s operating efficiency No. 4 Shaft Expansion completed in late 2010 allows increased production, thereby spreading fixed costs over more production No 4 Shaft has a highly efficient, automated loading system which reduces hoisting costs Level Ore Pass (completed Q3 2011) reduces multiple handling of ore; reduces costs and allows increased tonnage throughput Investments in crushing, milling and CIL circuits have increased recoveries and reduced the quantity of the consumables required to produce each ounce of gold o Cost/tonne processed fell from $29/t in Q1 of 2011 to $26.24/t in Q3 of 2012 o Cyanide usage (approx. $3,300/t delivered) reduced from 1.4Kg/t processed to 0.87Kg/t processed o Gold recovery increased from 92.0% in 2010 to 94.1% in Q3 of

10 Blanket Gold Mine, Zimbabwe A Low-Cost African Gold Producer Blanket s cash costs are highly competitive on a global basis Blanket s operations benefit from: o tight cost control o amenable mine environment o efficient metallurgical plant o efficient labour structure Sources: Company Announcements 10

11 Caledonia Mining Return on Shareholder s Equity Caledonia s Q return on shareholders equity significantly exceeded that of other African gold producers Sources: Company Announcements 11

12 Blanket Gold Mine, Zimbabwe The First Indigenised Zimbabwean Gold Miner Indigenisation completed in Q % of Blanket donated to local community 41% of Blanket sold for US$30.09 million Reserve Bank of Zimbabwe approval received for the repatriation of sale proceeds Caledonia has received its Certificate of Compliance US$30.09M sale transaction is vendor-financed by Blanket Reflects the absence of third party funding for Zimbabwean transactions Purchasers repay their loans from 80% of their attributable Blanket dividends Outstanding facilitation loans attract interest at LIBOR plus 10% Transaction structure gave rise to a non-cash, non-recurring share-based payment expense in Q of $14.1M Minimal adverse effect on Caledonia s net cash receipts from Blanket over the medium term As an indigenised entity, Blanket can now implement its growth strategy 12

13 Blanket Gold Mine, Zimbabwe Exploration and Development Blanket s Board, including representatives of the Indigenous shareholders, has approved a 5-year development strategy Two aspects to Blanket s development: i. At Blanket mine ii. At Blanket s portfolio of satellite properties brownfield short production lead time low capital cost crushed ore trucked to Blanket Total projected capital investment in the 5 years ( ) of approximately US$37M - Funded from Blanket s internal cash flows Target production from known resources: 76Koz per annum in Scope for further additional production from exploration projects where there are currently no defined resources 13

14 Blanket Gold Mine, Zimbabwe Surplus Metallurgical Plant Capacity Investments in the Blanket s underground and metallurgical plant are reinforced by the existing surplus plant capacity 40,000oz gold production equates to plant throughput of 1,000tpd Over 3,000tpd of hoisting capacity currently installed 3,800tpd CIL capacity currently installed Crushing and milling capacity will be increased to approx 3,000tpd after minor modifications and modest investment Additional ore from Blanket and its satellite projects can be processed at Blanket without major capital investment or increased fixed overheads: - only marginal mining and consumable costs 2016 targeted ore production from Blanket 1,900tpd: equates to annual production of 76,000oz Surplus capacity to treat additional ore from Blanket s satellite properties 14

15 Blanket Gold Mine, Zimbabwe Exploration and Development: Blanket Down-Dip Extensions to the Level 510 and 630 Haulages will open up new mining areas: expected additional 200tpd from early 2014; further 100tpd from early 2015 No. 6 Winze Project: expected additional 600tpd ramping-up from late 2015 Level 22 Haulage extension will connect No. 4 Shaft to resources at Eroica and Lima and provide platforms for exploration drilling below 750m L510 Haulage 630 Haulage 15 No 6 Winze

16 Blanket Gold Mine, Zimbabwe No.6 Winze Project Access the existing Inferred resource on the Blanket ore body below 750m Deepen the existing No.6 Winze from 750m to 1,060m Two new haulage developments at 870m (28 Level) and 990m (30 Level) Ore hoisted up No.6 Winze will then be transferred by rail cars to the No 4 shaft crushing and loading system and hoisted to surface using existing surplus hoisting capacity of No.4 Shaft Production commencing late 2015, ramping up to 600tpd (24Koz pa) during 2016 Pre-production capital cost: US$3 million 16

17 Blanket Gold Mine, Zimbabwe Satellite Projects and Developments Blanket has 18 brownfield exploration projects Immediate focus: GG Mascot Eagle Vulture Next assets to be developed: Sabiwa Abercorn Mined ore will be crushed and trucked to Blanket, which has a highly efficient metallurgical plant with surplus capacity Blanket GG Sabiwa Mascot Abercorn Eagle Vulture 17

18 Blanket Gold Mine, Zimbabwe Satellite Projects and Developments Project Current Status Indicative Production Start Pre- Production Investment (US$ 000 s) GG Shaft sinking to 120m in progress: currently at 60m Development work to commence at 60m, 90m and 120m in 2013 Mascot Existing shaft has been rehabilitated; development work to commence towards 2 identified mineralised zones Late Late Eagle Vulture Development continues towards identified zones Early Sabiwa Site clearance around area of proposed headgear completed Unknown 3,928 Abercorn Work to commence in 2013 Unknown 1,924 Modest investment and early cash flows further enhance Blanket s cash generation and allow Blanket to self-fund further projects and continue dividend payments to both Caledonia and IZ shareholders 18

19 Blanket Gold Mine, Zimbabwe Projected Investment $37M of investment at Blanket Includes investment at satellites, for which no corresponding production is currently projected All investment will be funded from Blanket s cash generation No requirement for funding from Caledonia and IZ shareholders The projected investments will increase Blanket s cash generation, profit and potentially dividend payments Allows more rapid repayment of IZ facilitation loans and interest at Libor plus 10% 19

20 Blanket Gold Mine, Zimbabwe Projected Production Annual production forecast to increase by 90% to 76Koz in 2016 Projected increase excludes any production from the satellite properties which currently have no NI compliant resources on which to base a production estimate 20

21 Zambian - Nama Base Metals Project Substantial Copper Opportunity Caledonia holds Licences covering approx. 800Km² adjacent to Konkola and Vale/ARM properties 2011 drilling identified a new copper-bearing mineralised zone at Konkola East Target 21

22 Zambian - Nama Base Metals Project Substantial Copper Opportunity Map is illustrative Mineralisation identified in work programme to date comprised further 30 holes and 8,400m of drilling 2012 work confirmed existence of a substantially larger mineralised zone ( OS2 ) than was identified in 2011 strike length of 1,300m and dip extent of 900m mineralisation intersected between 98m to 579m thickness of mineralised zone: 10 to 27m average copper grade: 0.52% Cu open to the west Caledonia is working towards issuing a NI compliant copper resource statement by end Q

23 Proposed Initial Dividend Proposed initial dividend of 0.5 cents per share Formal dividend declaration after Reduction in Stated Capital: Shareholder approval required for reduction in Stated Capital Shareholder meeting on January 24 th 2013 Dividend payment anticipated mid-february 2013 Dividend 10-times covered by Caledonia s existing cash on hand Caledonia and Blanket will continue to invest for further growth using strong internal cash flows Dividend to be reviewed annually in May each year Dividend yield: 5% at a 10-cent share price 23

24 Reverse Split Proposed 1:10 Reverse Split Subject to shareholder approval R/S proposed from a position of strength Significant cash on hand Highly cash-generative generative operations Consistently strong operational performance at Blanket Good growth prospects at Blanket, all internally funded new equity not required to implement growth Proposed initial dividend on an attractive yield 507M shares in issue and Penny share status is unattractive for many investors Shareholder meeting to approve the Reverse Split will be held on January 24 th 2013 Proposed R/S is a strategic decision reflecting Caledonia s emergence as a selfsustaining miner 24

25 Directors and Management Management Directors Chief Executive Stefan Hayden Chairman Carl Jonsson Finance Director Steve Curtis Chief Executive Stefan Hayden VP Exploration Dr Trevor Pearton Finance Director Steve Curtis Blanket Mine Manager Caxton Mangezi Indep Director Robert Babensee VP Corporate Development and IR Mark Learmonth Management is based in Johannesburg, South Africa, except Mr Mangezi who lives at Blanket Mine Independent directors, based in Canada and USA, bring technical, legal, financial and commercial expertise Indep Director Indep Director Non Executive Director Indep Director Indep Director Chris Harvey Jim Johnstone Richard Patricio Leigh Wilson John Kelly Mr Patricio is nominated by Pinetree, Caledonia s largest shareholder with an approximate 11% interest Directors and management hold 2.3% 25

26 Capital Structure, Financials Capital Structure Shares in issue (m) * Options (m) * 33.1 Fully diluted shares in issue (m) * Summary Profit and Loss (C$ 000 s except per share data) 9 month to 30 Sept 2012 Quarter Revenues 57,609 21,494 EBITDA* 31,068 12,220 Long term debt (30 Sept 2012) Short term debt (30 Sept 2012) nil C$1,791,000 Profit before Tax* 28,203 11,196 Profit after Tax* 19,417 6,165 Cash (30 Sept 2012) C$24,615,000 Net Assets (31 March 2011) C$50,839,000 * Shares and options are shown pre-consolidation EPS* - basic (cents) diluted (cents) * Adjusted for non-recurring, non-cash indigenisation expenses of $14.2m; non-recurring indigenisation costs and unrealised foreign exchange losses 26

27 Comparable Companies EV/SALES - 0.5x 1.0x 1.5x 2.0x EV/EBITDA - 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x PER - 5.0x 10.0x 15.0x 20.0x Pan African 1.23x 1.73x Amara Mining 2.8x 5.0x Amara Mining 7.4x Amara Mining Average Avocet Hambledon 1.15x 0.95x 0.74x 0.86x 0.77x 0.65x 0.43x 1.51x Pan African Avocet Average 3.7x 2.9x 3.4x 2.4x 3.2x 2.1x Average Avocet 6.7x 7.7x 7.0x 15.0x 14.4x Vatukoula 0.56x 0.50x Hambledon 0.9x 2.3x Hambledon 3.1x 0.41x Orosur 0.35x Source: Capital IQ Dec-12 Dec-13 Orosur 1.0x 1.5x Dec-12 Dec-13 Pan African 5.7x 6.8x Dec-12 Dec-13 27

28 Share price (rebased to 100) Share price performance Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 Jan 2013 Source: Datastream Caledonia Gold ($/Oz) FTSE 350 Mining 28

29 Conclusion Consistently strong operational performance at Blanket Blanket, as a fully indigenised entity, has a stable platform to implement future growth Exploration/Development activity at Blanket is now accelerating US$37M 5-year investment programme production by at least 90% to 76koz Au in 2016 Blanket is strongly cash generative: all growth funded from internal cash generation Encouraging drilling results at the Nama Base Metals Project in Zambia Caledonia has sufficient cash to continue further work Attractive dividend yield with long term growth potential 29

30 Contacts Caledonia Mining Website: Share Codes: TSX - CAL; OTCQX CALVF; AIM - CMCL Jeremy Hill, CHF Investor Relations Tel: x 238 jeremy@chfir.com Stefan Hayden, President and CEO Tel: shayden@caledoniamining.com Mark Learmonth, Vice President Tel: marklearmonth@caledoniamining.com Beth Harris, Newgate Threadneedle Tel: AIM Broker/Nomad: Canaccord Genuity Research: Edison Investment Research 30