CALEDONIA MINING CORPORATION

Transcription

1 CALEDONIA MINING CORPORATION ww.caledoniamining.com Expanding, Low-Cost, Zimbabwean Gold Producer Company Presentation August December 2011 December 2014

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 Mining Corporation ( 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 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 Blanket Gold Mine, Zimbabwe Caledonia Mining Overview Caledonia s main operating asset 49% owned - fully indigenised 2014 production guidance 40koz Low-cost: 2014 Q1-3 cash-cost $656/oz; AISC $988/oz $70m, internally funded growth to approx. 80koz by 2021 Caledonia Group Robust net cash position: $27.9m at September 30, 2014 Low PE Ratio; High dividend yield Dividend Paying 1.5 cents Canadian per share per quarter from January 2014 Continuation of quarterly dividend confirmed for % yield at share price of 67 cents Low-cost production, growing resource base and exploration potential coupled with balance sheet strength underpins future growth 3

4 Valuation Parameters High Yield; Low PE Ratio Source: Bloomberg Low rating is due largely to negative perceptions about Zimbabwe Blanket is fully indigenised and has significant, fully-funded growth plans Investor concerns about Zimbabwe are over-done! 4

5 Political Stability Zimbabwe Investor Concerns Political continuity: ZANU-PF in power since 1980 New government is pragmatic and pro-business No civil disorder; established, functional government administration Indigenisation 51% of all businesses must be owned by Zimbabweans Caledonia implemented its indigenization in 2012 and is the only listed, fully indigenized Zimbabwean gold miner IZ shareholders include community (10%) and workers (10%) Caledonia continues to control Blanket Inflation Hyper-inflation up to early 2009 destroyed the economy Zim dollar abolished in early 2009: functional currency is US$ Mild deflation: modest or zero increase in input costs Exchange Controls Manageable exchange controls: no interruptions to cash remittances from Blanket to Caledonia (dividends, management fee and South Africa procurement margin) 5

6 Blanket Gold Mine, Zimbabwe The First Indigenised Zimbabwean Gold Miner Indigenisation completed and implemented in Q % of Blanket donated to local community 41% of Blanket sold to 3 parties for US$30.09 million Zimbabweans given full credit for resources in the ground Caledonia continues to consolidate Blanket US$30.09M sale transaction is vendor-financed by Blanket Purchasers repay their loans from 80% of their attributable Blanket dividends $30m vendor-finance receivable is not shown on Caledonia s balance sheet Minimal effect on Caledonia s medium term net cash receipts from Blanket As an indigenised entity, Blanket can now implement its growth strategy Caledonia 49% Blanket $30m facilitation funding Employees 10% Local Partners 15% Government 16% Community 10% 6

7 Track Record of Cost Control Temporary increase due to lower production 9 months to 30 September 2014: cash cost $656/oz; AISC $988/oz Good cost control, amenable mine environment, efficient metallurgical plant and labour structure Q costs per ounce increase due to lower production Revised Investment Plan is expected to double production to 80,000 ounces and result in substantially lower costs per ounce Fixed costs spread over more production 7

8 Blanket Gold Mine, Zimbabwe One of Africa s Lowest Cost Listed Gold Producers 8

9 Production Lower production in Q3 due to lower achieved grade Average achieved grade in Q3 was 3.34g/t Lower grades in Q3 due to: Depletion of historic higher grade areas Internal dilution Logistical constraints on 22 Level restrict production to approx. 1,200tpd Without upgraded transport on 22 Level, the focus on production tonnage will be at the expense of essential development work Revised Investment Plan addresses logistics and provides long term access to deeper levels for production and exploration 9

10 Revised Investment Plan Improved Logistics; Accelerate Access to Deeper Resources Increase Underground Material Handling A new Tramming Loop on 22 Level (750m below surface) increases tramming capacity (ore and waste) from 400tpd to 1,000tpd Modest capital cost ($0.8m approx.); complete by July 2015 Continue No. 6 Winze 630m to 870m Rapid access to Blanket zone below 750m o production starts Jan 2016; ramp-up to 500tpd by mid-2017 Resume sinking from 870m after completion of Central Shaft New Central Shaft Surface to 1,080m Capital cost $23m Commence Aug 2015; complete in July m diameter; 4-compartment; 3,000tpd; men, material and equipment Access for horizontal development in 2 directions on 2 levels below 750m Scope for operational efficiency and de-risks current single-shaft status 10

11 Revised Investment Plan Proposed infrastructure Central Shaft No. 4 Shaft 22 Level (750m) Tramming Loop No. 6 Winze No. 6 Winze allows early access to the Blanket zone below 750m Tramming Loop allows L22 handling of waste arising from the sinking of the Central Shaft from 630m 3,000 tpd Central Shaft provide access to 26 and 30 Levels in 2 directions: improved operational efficiency and resource development below 750m Larger 3mx3m haulages on 26 and 30 levels: high-speed, high volume access to all mining areas Future access below 1,000m by deepening the Central Shaft, No. 4 Shaft, No. 6 Winze 11

12 Revised Investment Plan Open New Mining Areas below 750m Central Shaft No. 4 Shaft Lima Tramming Loop 500t/d 800t/d 500t/d No. 6 Winze Target production of 1,800tpd from below 750m 12

13 Revised Investment Plan Projected Production Projected production in terms of the revised Life of Mine Plan is set out below Revised Life of Mine Plan has been independently reviewed and conformed by Minxcon, Johannesburg. Preliminary Economic Analysis and Revised will be published before December 17, 2014 Projections exclude any production from the satellite properties (GG and Mascot) for which there is currently no resource 13

14 Blanket Gold Mine, Zimbabwe Metallurgical Plant: Efficient with Surplus Capacity Over 93% gold recovery. Surplus capacity Hoisting capacity: 3,000tpd CIL capacity: 3,800tpd Crushing and milling capacity (after installation of planned new mills): 3,600tpd Targeted ore production 1,800tpd 1,800tpd of surplus capacity to treat additional ore (subject to metallurgical test work) 14

15 Resources Mineral Reserves and Resources at December 31, 2013 (at $1,300 gold) Tonnes (000 s) Grade (g/t) Gold (k.oz) Proven Reserves 1, Probable Reserves 2, Total Reserves 3, Indicated Resources Inferred Resources 2, Total Reserves and Resources 6, Only material above pay-grade is added to inventory: Historically a high resource to reserve conversion has been achieved Deep level exploration from underground drilling and exploration Slower but more accurate drilling Additional 500,000 tonnes of inferred 3.9g/t identified from on-mine exploration 15

16 Capital Structure, Financials Summary Profit and Loss (C$ m except per share data) Year months 2014 Revenues EBITDA Profit after Tax (0.5) 6.9 EPS - basic (6.1) 10.5 EPS - adjusted Capital Structure Shares in issue (m) 52.1 Options (m) 2.7 Cash (30 September 2014) C$26.9m Net Assets (30 September 2014) C$58.0m Listing and Trading Share price (10 November 2014) C$0. Market capitalisation (C$ m) C$53.1m 52 week low/high (C$) day trading volume 6.4% Shareholders % Management 2.9 Allan Grey 12.3 USA (mainly retail) 41.6 Canadian (mainly retail) 29.0 UK (retail and institutional)

17 Directors and Management Management Directors Chief Executive Steve Curtis Chairman Leigh Wilson (USA) Chief Finance Officer Mark Learmonth Non Executive Director Stefan Hayden (S Africa) Chief Operating Officer Dana Roets CEO Steve Curtis (S Africa) VP Exploration Dr Trevor Pearton Independent Director Johan Holtzhausen (S Africa) Blanket Mine Manager Caxton Mangezi Independent Director Jim Johnstone (Canada) Management is based in Johannesburg, South Africa, except Mr Mangezi who lives at Blanket Mine Caledonia s management team recently strengthened by the appointment of Dana Roets as COO Strong in-country support in Zimbabwe from Blanket s Indigenous Shareholders, including Mr. Nick Ncube, Blanket s chairman Non Executive Director Independent Director Richard Patricio (Canada) John Kelly (USA) Independent directors bring additional technical, legal, financial and commercial expertise Recent re-structure of Caledonia s board improves effectiveness 17

18 Dividend Policy Committed to Shareholder Returns November 2013 Caledonia announced a new dividend policy: 2014 dividend of 6 Canadian cents payable cents/quarter Total 2015 dividend cost: C$3.1m 8 times covered by cash resources 2.5 times covered by net cash generated August 2104, Caledonia guides that the quarterly dividends of at least 1.5 cents are expected to continue for 2015 Board will review dividends guidance for 2016 in mid-2015, based on company performance and prevailing conditions 18

19 Investment Case Fully Indigenised Reduces Zimbabwe political risk Creates a platform for growth Cash-generative Profitable and cash generative at current or lower gold price Strong Balance Sheet Over $25m of cash, held in UK, South Africa and Canada Growing Production to double via internally-funded expansion Growth expected to reduce average production costs Committed to Shareholder Returns Dividend policy had matured into quarterly dividends Dividend guidance extended to October 2015 Undervalued Low PE; high yield reflects perceived Zimbabwe risk. Scope for re-rating as risk perceptions moderate Potential earnings growth as expansion plans are implemented 19

20 Contacts Caledonia Mining Share Codes: TSX - CAL; OTCQX CALVF; AIM - CMCL Mark Learmonth Tel: marklearmonth@caledoniamining.com PR (UK): BlytheWeigh Tim Blythe, Halimah Hussain AIM Broker/Nomad: Numis Securities & WH Ireland Research: Edison Investment Research 20