CALEDONIA MINING CORPORATION

Transcription

1 CALEDONIA MINING CORPORATION Presentation to MineAfrica, London, December 3, 2012 ww.caledoniamining.com Company Presentation August December 2011 December 2012

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 TSE: CAL. OTCQX: CALVF. AIM: CMCL. Mining, exploration and development, focused on attractive assets in Africa Blanket Gold Mine, Zimbabwe (49%) 40,000oz pa Low-cost producer Exploration funded by strong internal cash flow Fully indigenised Nama base metals project, Zambia Highly prospective area: adjacent to a new VALE copper mine development 2011 exploration identifies a new, copperbearing zone Planned initial dividend in February

4 Q Results Highlights Gold production: 12,918oz Cash costs: US$508/oz Operating cash flow (before capex): C$ 6.8m Normalised EBITDA: $11.7m adjusted for non-cash indigenisation and foreign exchange items Attributable loss after tax: $7.24m after a non-recurring, non-cash expense of $14.1m relating to the completion of indigenisation at Blanket Cash at September 30, 2012: $24.6m Held in US$ and C$ outside Zimbabwe 4

5 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. 5

6 Blanket Gold Mine, Zimbabwe Gold Production Quadruples since Q Q production temporarily affected by maintenance work Q production expected to be lower than Q3 as the ore grade normalises 6

7 Blanket Gold Mine, Zimbabwe Gold Production Tonnes milled per quarter increases 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 returns 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. Improved gold recoveries due to recent investments and assisted by higher grades Q , % 11,560 Q , % 12,918 Source: Caledonia Q MD&A 7

8 Blanket Gold Mine, Zimbabwe Costs Sustained reduction in cash costs per ounce Temporary increase in costs in Q due to lower production and non-recurring consumable items Reduction in Q cash costs due to higher gold production Blanket is a low-cost African and global producer 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 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 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$30.09m Reserve Bank of Zimbabwe approval received for the repatriation of sale proceeds Caledonia has received its Certificate of Compliance US$30.09 sale transaction is vendor-financed by Blanket Reflects the absence of third party funding for Zimbabwean transactions Purchasers repay their facilitation 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 plan and implement its growth strategy 11

12 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; Down-Dip at Blanket, below 750 meters At Blanket s portfolio of satellite properties brownfield short production lead time low capital cost crushed ore trucked to Blanket All of Blanket s exploration and development can be funded from Blanket s internal cash flows 12

13 Blanket Gold Mine, Zimbabwe Surplus Metallurgical Plant Capacity Investments in the Blanket s underground and metallurgical plant are reinforced by the surplus plant capacity 40,000oz gold production equates to plant throughput of 1,000tpd Over 3,000 tpd of hoisting and crushing capacity currently installed. 1,800tpd milling capacity currently installed 3,800tpd CIL capacity currently installed Additional ore Blanket or from it s satellite projects can be processed at Blanket without capital investment or increased fixed overheads: only marginal mining and consumable costs Throughput of 1,800tpd would result in 70,000oz per annum of gold production 13

14 Blanket Gold Mine, Zimbabwe Exploration: Blanket Level 22 Haulage (750m BSC) extension will connect No. 4 Shaft to resources at Eroica and Lima and provide platforms for exploration drilling for continuations of ore-shoots below 750 m No 6 Winze Project: expected additional 700tpd ramping-up from late No. 6 Winze Project

15 Blanket Gold Mine, Zimbabwe Satellite Projects and Developments Blanket has 18 brownfield exploration projects all within easy trucking distance of the Blanket Met. Plant Immediate focus: GG Mascot Project Area, Crushed ore will be trucked to Blanket which has surplus capacity Increased throughput at Blanket will further reduce costs per ounce as fixed overheads are spread over higher production 15

16 Zambian - Nama Base Metals Project Substantial Copper Opportunity Caledonia holds Licences covering approx 800 sq. km. adjacent to Konkola and Vale/ARM properties 2011 drilling identified a new copper-bearing mineralised zone at Konkola East Target 16

17 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 confirms the 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% open to the west Caledonia is working towards issuing a NI compliant copper resource statement by end Q

18 Proposed Initial Dividend Proposed initial dividend of 0.5 cents per share Formal dividend declaration after Reduction in Stated Capital: 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 18

19 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 Budgeted and projected investment requirements are internally funded new equity not required to implement growth Consistently strong operational performance at Blanket Proposed initial dividend on an attractive yield 507m shares in issue and Penny share status is unattractive for many investors Proposed R/S is a strategic decision reflecting Caledonia s emergence as a selfsustaining miner 19

20 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 Blanket s post indigenisation Board approves 5 year growth plan funded from internal resources Work continues at Mascot and GG: first production targeted for end of 2013 Work has commenced on a new No 6 Winze project to access deeper ores at Blanket: targeting 70% increase in ore production commencing late 2015 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 20

21 Conclusion Superior Shareholder Returns Sources: Company Announcements 21

22 Contacts Caledonia Mining Website: Share Codes: TSE - CAL; OTCQX CALVF; AIM - CMCL Stefan Hayden, President and CEO Tel: shayden@caledoniamining.com Mark Learmonth, Vice President Tel: marklearmonth@caledoniamining.com Research: Edison Investment Research 22

23 Summary Financials Summary Profit and Loss Summary Profit and Loss (C$'m) 3 Months to Sept 30 9 Months to Sept * * 2012 Revenues Royalty Operating costs Depreciation Gross Profit Admin expenses Share based payments Indigenisation expenses Foreign exchange Operating Profit/(loss) Finance charges Profit before tax Income tax Profit/(loss) after tax Attributable profit/(loss) EPS (basic) (cents) * Re-stated by re-allocating withholding taxes from Administrative expenses to Income Tax expense 23

24 Summary Financials Summary Profit and Loss - Adjusted Caledonia s Q results were adversely affected by a significant non-recurring, noncash accounting charge relating to the implementation of Indigenisation at Blanket. The adjustments shown below re-state Caledonia s attributable profit to reflect its underlying commercial performance Summary Profit and Loss - Adjusted (C$'m) 3 Months to Sept 30 9 Months to Sept * * 2012 Profit/(loss) after tax add back: Share based expense - indigenisation Indigenisation expenses Un-realised fx Adjusted profit Adjusted attrib. Profit Adjusted EPS (cents) * Re-stated by re-allocating withholding taxes from Administrative expenses to Income Tax expense 24

25 Summary Financials Summary Balance Sheet Summary Balance Sheet (C$'m) Dec 31 Sept Fixed Assets Inventories Prepayments Trade receivables Cash and equivalents Total current assets Total Assets Long term liabilities Trade creditors Advanced dividend accrual Income taxes payable Bank overdraft Total liabilities Capital and reserves Total equity and liabilities

26 Summary Financials Summary Cash Flow Summary Cash Flow (C$'m) 9 Months to June Cash flow from operations Indigenisation donation Advance payment Taxation paid Net capital investment Financing Increase in cash Cash b/fwd Cash c/fwd