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 2023

 

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 ______

 

INCORPORATION BY REFERENCE

 

Exhibits 99.1 to 99.4 included with this report on Form 6-K are expressly incorporated by reference into this report and are hereby incorporated by reference as exhibits to the Registration Statement on Form F-3 of Caledonia Mining Corporation Plc (File No. 333-255500), as amended or supplemented.

 

 

 

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/ John Mark Learmonth
Dated: August 10, 2023	Name:	John 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 International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) 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 are 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, 2023 management evaluated the effectiveness of the Group’s ICOFR and concluded that such ICOFR was effective based on the criteria set forth 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 fulfills its responsibilities for financial reporting and internal control. The Audit Committee is composed of three 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, 2023 were approved by the Board of Directors and signed on its behalf on August 10, 2023.

 

 

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

 

Caledonia Mining Corporation Plc

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				2023				2022				2023				2022
Revenue							37,031				36,992				66,466				72,064
Royalty							(1,963	)			(1,854	)			(3,443	)			(3,612	)
Production costs			7				(20,726	)			(14,502	)			(40,576	)			(28,861	)
Depreciation			14				(3,409	)			(2,639	)			(5,664	)			(4,702	)
Gross profit							10,933				17,997				16,783				34,889
Other income							168				1				186				3
Other expenses			8				(1,461	)			(490	)			(2,099	)			(1,283	)
Administrative expenses			9				(3,183	)			(2,908	)			(9,122	)			(5,279	)
Cash-settled share-based expense			10.1				9				57				(271	)			(310	)
Equity-settled share-based expense			10.2				(221	)			—				(331	)			(82	)
Net foreign exchange (loss) gain			11				(3,610	)			4,172				(2,077	)			5,081
Net derivative financial instrument expense			12				(54	)			41				(488	)			(1,697	)
Operating profit							2,581				18,870				2,581				31,322
Finance income			13				4				2				9				3
Finance cost			13				(1,061	)			(177	)			(1,833	)			(294	)
Profit before tax							1,524				18,695				757				31,031
Tax expense							(1,273	)			(5,314	)			(4,775	)			(10,033	)
Profit/(loss) for the period							251				13,381				(4,018	)			20,998
Other comprehensive income
Items that are or may be reclassified to profit or loss
Exchange differences on translation of foreign operations							(330	)			(852	)			(699	)			(159	)
Total comprehensive income for the period							(79	)			12,529				(4,717	)			20,839
Profit/(loss) attributable to:
Owners of the Company							(513	)			11,378				(5,542	)			17,318
Non-controlling interests							764				2,003				1,524				3,680
Profit/(loss) for the period							251				13,381				(4,018	)			20,998
Total comprehensive income attributable to:
Owners of the Company							(843	)			10,526				(6,241	)			17,159
Non-controlling interests							764				2,003				1,524				3,680
Total comprehensive income for the period							(79	)			12,529				(4,717	)			20,839
Earnings/(loss) per share
Basic (loss)/earnings per share ($)							(0.01	)			0.88				(0.31	)			1.32
Diluted (loss)/earnings per share ($)							(0.01	)			0.88				(0.31	)			1.32

 

The accompanying notes on pages 6 to 34 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.

 

Caledonia Mining Corporation Plc

Consolidated statements of financial position

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

 

Unaudited							June 30,				December 31,
As at			Note				2023				2022
Assets
Property, plant and equipment			14				181,710				178,983
Exploration and evaluation assets			15				87,416				17,579
Deferred tax asset							160				202
Total non-current assets							269,286				196,764
Inventories			16				18,454				18,334
Derivative financial assets			12.1				763				440
Income tax receivable							103				40
Prepayments			17				3,940				3,693
Trade and other receivables			18				8,560				9,185
Cash and cash equivalents			19				12,785				6,735
Total current assets							44,605				38,427
Total assets							313,891				235,191
Equity and liabilities
Share capital			20				165,157				83,471
Reserves							137,433				137,801
Retained loss							(61,830	)			(50,222	)
Equity attributable to shareholders							240,760				171,050
Non-controlling interests							22,421				22,409
Total equity							263,181				193,459
Liabilities
Provisions			21				3,727				2,958
Deferred tax liabilities							2,834				5,123
Cash-settled share-based payment - long term portion			10.1				190				1,029
Loan note instruments - long term portion			22				6,896				—
Lease liabilities - long term portion							132				181
Total non-current liabilities							13,779				9,291
Cash-settled share-based payment - short term portion			10.1				660				1,188
Loan note instruments - short term portion			22				771				7,104
Lease liabilities - short term portion							136				132
Income tax payable							2,511				1,324
Trade and other payables			23				17,161				17,454
Overdraft and term loans			19				15,692				5,239
Total current liabilities							36,931				32,441
Total liabilities							50,710				41,732
Total equity and liabilities							313,891				235,191

 

The accompanying notes on pages 6 to 34 are an integral part of these consolidated financial statements.

 

Caledonia Mining Corporation Plc

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, 2021							82,667				(9,325	)			132,591				14,513				(59,150	)			161,296				19,260				180,556
Transactions with owners:
Dividends declared							—				—				—				—				(3,581	)			(3,581	)			(907	)			(4,488	)
Share-based payments:
- Shares issued on settlement of incentive plan awards			10.1				804				—				—				—				—				804				—				804
- Equity-settled share-based expense			10.2				—				—				—				82				—				82				—				82
Total comprehensive income:
Profit for the period							—				—				—				—				17,318				17,318				3,680				20,998
Other comprehensive income for the period							—				(159	)			—				—				—				(159	)			—				(159	)
Balance at June 30, 2022							83,471				(9,484	)			132,591				14,595				(45,413	)			175,760				22,033				197,793
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			10.1				351				—				—				—				—				351				—				351
- Equity-settled share-based expense			10.2				—				—				—				331				—				331				—				331
Shares issued:
- Equity raise (net of transaction cost)			20				15,658				—				—				—				—				15,658				—				15,658
- Bilboes acquisition			5				65,677				—				—				—				—				65,677				—				65,677
Total comprehensive income:
Loss 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
			Note				20

 

The accompanying notes on pages 6 to 34 are an integral part of these consolidated financial statements.

 

Caledonia Mining Corporation Plc

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				2023					2022				2023				2022
Cash inflow from operations			24				2					18,341				666				30,185
Interest received							4					2				9				3
Finance costs paid							(1,231	)				(61	)			(1,431	)			(92	)
Tax paid							(1,001	)				(1,567	)			(2,346	)			(3,226	)
Net cash (outflow)/inflow from operating activities							(2,226	)				16,715				(3,102	)			26,870
Cash flows used in investing activities
Acquisition of property, plant and equipment							(6,009	)				(13,011	)			(10,602	)			(22,745	)
Acquisition of exploration and evaluation assets							(139	)				(412	)			(283	)			(636	)
Acquisition of Put options							(811	)				(176	)			(811	)			(176	)
Net cash used in investing activities							(6,959	)				(13,599	)			(11,696	)			(23,557	)
Cash flows from financing activities
Dividends paid							(2,893	)				(2,700	)			(5,317	)			(4,488	)
Payment of lease liabilities							(35	)				(39	)			(72	)			(79	)
Shares issued – equity raise (net of transaction cost)			20				4,834					—				15,658				—
Loan note instruments - Motapa payment			22.1				(1,288	)				—				(6,687	)			—
Loan note instruments - Solar bond issue receipts			22.2				2,500					—				7,000				—
Repayment of Gold loan							—					(3,698	)			—				(3,698	)
Net cash from/(used in) financing activities							3,118					(6,437	)			10,582				(8,265	)
Net decrease in cash and cash equivalents							(6,067	)				(3,321	)			(4,216	)			(4,952	)
Effect of exchange rate fluctuations on cash and cash equivalents							(30	)				(247	)			(187	)			(451	)
Net cash and cash equivalents at the beginning of the period							3,190					14,430				1,496				16,265
Net cash and cash equivalents at the end of the period							(2,907	)				10,862				(2,907	)			10,862

 

The accompanying notes on pages 6 to 34 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, 2023 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.

 

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 voluntary 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 as issued by the IASB 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, 2022.

 

(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 and derivative financial liabilities measured at fair value (the put options included in derivative financial assets were classified as level 1 in the fair value hierarchy).

 

(c)

Functional currency

 

These unaudited condensed consolidated interim financial statements are presented in United States Dollar (“$” or “US Dollars” or “USD”), which is also the functional currency of the Company. All financial information presented in US Dollars has been rounded to the nearest thousand, unless indicated otherwise. Refer to note 11 for changes to Zimbabwean real-time gross settlement, bond notes or bond coins (“RTGS$”) and its effect on the consolidated statement of profit or loss and other comprehensive income.

 

 

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.

 

(a)

Judgement

 

Judgement is required when assessing whether the Group controls an entity or not. Controlled entities are consolidated. Further information is given in notes 4 and 5.

 

4

Significant accounting policies

 

The same accounting policies and methods of computation, except as included below, 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, 2022. In addition, the accounting policies have been applied consistently throughout the Group.

 

(a)

Exploration and evaluation assets

 

Qualifying exploration costs are capitalised as incurred. Costs incurred before the legal rights to explore are obtained are recognised in profit or loss. The costs related to speculative drilling on unestablished orebodies at the Blanket Mine, general administrative or overhead costs are expensed as incurred. Exploration and evaluation costs capitalised are disclosed under Exploration and evaluation assets. Qualifying direct expenditures include such costs as mineral rights, options to acquire mineral rights, materials used, surveying costs, drilling costs, payments made to contractors, direct administrative costs and depreciation on property, plant and equipment during the exploration phase. Costs not directly attributable to exploration and evaluation activities, including general administrative overhead costs, are expensed in the period they occur. Once the technical feasibility and commercial viability of the mining project have been determined, the property is considered to be a mine under development and moved to the mine development, infrastructure and other asset category within property, plant and equipment. Capitalised direct costs related to the acquisition, exploration and development of mineral properties remain capitalised, at their initial cost, until the properties to which they relate are ready for their intended use, sold, abandoned or management has determined there to be impairment. 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.

 

 

4

Significant accounting policies (continued)

 

(b)

Revenue

 

(i)

Fidelity Printers and Refiners Limited (“Fidelity”)

 

Revenue from the sale of precious metals is recognised when the unrefined metal is accepted at the refinery (“Lodgment date”) by Fidelity, except for the portion earmarked for export to a refiner outside of Zimbabwe. Control is transferred and the receipt of proceeds is substantially assured at point of delivery at the end refiner with the responsibility to pay. Revenue for each delivery is measured at the London Base Metal Association Tuesday PM price post-delivery less 1.25% and the quantities are determined on Lodgment date. On average settlement occurs within 14 days of delivery.

 

(ii)

Further refinement

 

A portion of unrefined metals produced by Blanket is exported by Caledonia to a refiner outside Zimbabwe, which makes payment to Caledonia's bank account in Zimbabwe. Unrefined gold continues to be processed at Fidelity a subsidiary of the Reserve Bank of Zimbabwe (“RBZ”), on a toll-treatment basis, in accordance with requirements of the Zimbabwe government for in-country refining and to allow the Zimbabwe authorities full visibility over the gold produced and exported by Caledonia. The resultant gold is exported under the gold dealing licence that is held by Fidelity to a refinery outside Zimbabwe which undertakes the final refining process. Caledonia receives the proceeds of the gold sales in its bank account in Zimbabwe within a few days of delivery to the final refiner. This arrangement in respect of production from Blanket complies with the current requirements to pay a 5 per cent royalty and that Blanket continues to receive 75 per cent of its revenues in US dollars and the balance in local currency.

 

Revenue for the unrefined metals exported to a refiner outside Zimbabwe from the sale of precious metals is recognised when the refiner outside of Zimbabwe receives the unrefined metals (“Lodgment date”). Control is transferred and the receipt of proceeds is substantially assured at the point of delivery. Revenue for each delivery is measured at the London Base Metal Association price post-delivery less a refining fee and the quantities are determined on Lodgment date. On average settlement occurs within two days of delivery.

 

5

Tribute Arrangement and Mining Agreement and Bilboes Gold Limited acquisition

 

On July 21, 2022 Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”) entered into a Tribute Arrangement, and related Mining Agreement with Bilboes Holdings (Private) Limited (“Bilboes Holdings”) to mine its oxide and transitional ore (“tribute agreement”). This tribute agreement was specific to the Bilboes oxide mine and Bilboes Holdings was in care and maintenance at the date of the agreement.

 

In terms of the tribute agreement, Bilboes Holdings granted CHZ the right to mine the Bilboes oxide mine operations for the purpose of winning gold. In terms of this right, CHZ could operate the Bilboes oxide mine using a combination of Bilboes resources and their own, to extract oxides ore and dispose of the products for CHZ’s account.

 

Subject to the stipulation in the tribute agreement, CHZ assumed all responsibility in connection with the oxide mining claims as if CHZ were the owner thereof and Bilboes Holdings remained the registered holder of the mining claims until ownership passes in terms of the Sale and Purchase Agreement, mentioned below.

 

In terms of the tribute agreement, CHZ had the right to provide instructions over the scope of works for the Bilboes oxide mine in terms of an operational plan and also has the right to terminate the tribute agreement. CHZ, therefore, had the ability to affect the variable returns of the Bilboes oxide mine and to ensure its returns are in line with the expectation of recouping its “investment” (all funds provided) at a 25% internal rate of return.

 

 

5

Tribute Arrangement and Mining Agreement and Bilboes Gold Limited acquisition (continued)

 

The Tribute agreement came into effect on August 1, 2022, when the Ministry of Mines approval was received, control was obtained through contractual arrangement.

 

The Bilboes oxide mine did not have sufficient processes in place to operate the oxide mining operations and was reliant on CHZ to provide instructions on the mining operations to create the necessary outputs. The Bilboes oxide mine was assessed as an asset and liability acquisition and not a business combination in terms of IFRS 3 Business Combinations. Directly attributable costs of bringing the Bilboes oxide mine to the location and condition necessary for it to be capable of operating in the manner intended by CHZ amounted to $872 and was accounted for as Property, plant and equipment in the December 31, 2022 Consolidated Financial statements.

 

On June 27, 2023 the decision was taken to place the Bilboes oxide mine on care and maintenance as the cost related to removing the waste and access the orebody could exceed the benefit from the gold revenues to be received. The impairment loss that was recognised amounted to $851 on impairing the Bilboes oxide asset classified under Property, plant and equipment. Mining and metallurgical processing will continue at the Bilboes oxide mine until the end of September 2023 when the contract miner's notice period comes to an end.  Leaching of material that has already been deposited on the leach pad will continue. Oxide mining and processing will resume when the stripping of the waste for the sulphide project commences and can be economically justified. At the date of approval of the Unaudited condensed consolidated financial statements the tribute agreement remained in effect.

 

In addition to the Tribute arrangement, Caledonia signed a conditional agreement (the “Sale and Purchase Agreement”) to purchase 100% of Bilboes Gold Limited (“Bilboes Gold”) on July 21, 2022. Bilboes Gold is the holding company of Bilboes Holdings that owns high-grade sulphide resources and the mentioned mining claims to the oxide mine deposit. It was agreed that Caledonia would purchase Bilboes Gold for a consideration to be settled by issue to the sellers of 5,123,044 new shares in Caledonia, comprising initial consideration shares, escrow consideration shares and deferred consideration shares. In addition to the shares, the agreement was also to grant a 1 percent net smelter royalty (“NSR”) on the Bilboes sulphide mine’s revenues to one of the sellers, Baker Steel Resources Trust Limited (“Baker Steel”), essentially instead of a number of shares that they would have been entitled to should they have agreed to accept all of their consideration in shares. The Sale and Purchase Agreement would give Caledonia the rights to the sulphide project in addition to the right to mine the Bilboes oxide mine as a result of the tribute agreement.

 

On January 6, 2023, following the satisfaction of conditions precedent, Caledonia completed the acquisition of Bilboes Gold that gave right to further evaluate and exploit the sulphide resources in addition to the oxide mining activities agreed in the tribute agreement.

 

The acquisition of Bilboes Gold was classified as an asset and liability acquisition and not a business combination in terms of IFRS 3 Business Combinations.

 

Upon completion of the transaction on January 6, 2023, the initial consideration shares were issued, in the amount of 4,425,797 common shares, to the three sellers of Bilboes Gold Limited and the NSR agreement was signed.

 

The escrow consideration shares of 441,095 common shares of Caledonia were issued to one of the sellers in settlement of a separate commercial arrangement between its subsidiary and the holding company of another seller, and upon receipt by the Company of a “share adjustment notice” instructing the issue of the shares. The share adjustment notice was only issued once approval has been obtained from the Reserve Bank of Zimbabwe for such commercial arrangement. On March 30, 2023, 441,095 escrow shares were issued after the share adjustment notice was received.

 

Deferred consideration shares of 256,152 common shares of Caledonia were admitted to trading on the AIM on April 14, 2023. Total consideration shares issued for the acquisition of Bilboes Gold amounted to 5,123,044 shares with the value of the consideration shares set at US$65.677 million. The value of the initial consideration shares issued is based on the last trading day's closing share price on NYSE American LLC before completion of US$12.82 per share.

 

 

5

Tribute Arrangement and Mining Agreement and Bilboes Gold Limited acquisition (continued)

 

Consideration paid (January 6, 2023)		$'000
Equity issues			65,676
Initial consideration shared (4,425,797 at $12.82 per share)			56,739
Escrow shares issued (441,095 at $12.82 per share)			5,655
Deferred consideration shares (256,152 at $12.82 per share)			3,283
Bilboes oxide mine assets (pre-acquisition)			(872	)
Prepayments - Bilboes pre-effective date costs			877
Total net consideration			65,681
Recognised amounts of identifiable assets and liabilities assumed (January 6, 2023)
Exploration and evaluation assets (note 15)			69,553
Inventories			76
Prepayments			5
Trade and other receivables			802
Cash and cash equivalents			54
Provisions			(704	)
Trade and other payables - external			(4,067	)
Lease liabilities			(28	)
Income tax payable			(10	)
			65,681

 

Acquisition-related costs

 

Included in administrative costs is an amount of $3.1 million payable to two advisors on the successful completion of the Bilboes Gold acquisition.

 

 

 

 

6

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 Government of Zimbabwe 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.

 

Accounting treatment

 

The directors of Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”), a wholly-owned subsidiary of the Company, performed a reassessment using the requirements of IFRS 10: Consolidated Financial Statements (IFRS 10). It was concluded that CHZ should continue to 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.

 

 

6

Blanket Zimbabwe Indigenisation Transaction (continued)

 

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. At June 30, 2023 the attributable net asset value did not exceed the balance on the respective loan account and thus no additional NCI was recognised.

•

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.

 

 

6

Blanket Zimbabwe Indigenisation Transaction (continued)

 

Accounting treatment (continued)

 

Blanket Mine’s indigenisation shareholding percentages and facilitation loan balances

 

		Shareholding				Effective interest & NCI recognised				NCI subject to facilitation loan					Balance of facilitation loan #
USD															June 30, 2023				December 31, 2022
NIEEF			16	%			3.2	%			12.8	%			8,489				9,414
Community Trust			10	%			10.0	%			0.0	%			—				—
BETS ~			10	%			—	*			—	*			4,908				5,612
			36	%			13.2	%			12.8	%			13,397				15,026

 

* 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:

 

			2023				2022
Balance at January 1			15,026				16,712
Interest incurred			259				299
Dividends used to repay loan			(1,888	)			(1,133	)
Balance at June 30			13,397				15,878

 

Advance dividend loans and balances

 

In anticipation of completing the underlying subscription agreements, Blanket Mine agreed to advance dividend arrangements with NIEEF and the Community Trust. Advances made to the Community Trust against their right to receive dividends declared by Blanket Mine on their shareholding were as follows:

 

•

a $2 million payment on or before September 30, 2012;

 

•

a $1 million payment on or before February 28, 2013; and

 

•

a $1 million payment on or before April 30, 2013.

 

These advance payments were debited to a loan account bearing interest at a rate at the lower of a fixed 7.25% per annum, payable quarterly or the Blanket Mine dividend in the quarter to the advanced dividend loan holder. The loan is repayable by way of set-off of future dividends on the Blanket Mine shares owned by the Community Trust. Advances made to NIEEF as an advanced dividend loan before 2013 have been settled through Blanket Mine dividend repayments in 2014. The advance dividend payments were recognised as distributions to shareholders and they are classified as equity instruments. The loans arising are not recognised as loans receivables, because repayment is by way of uncertain future dividends. The final payment to settle the advance dividend loan to the Community Trust was made on September 22, 2021. Future dividends to the Community Trust will be unencumbered from the date the loan was settled in full.

 

 

7

Production costs

 

			2023				2022
Blanket - salaries and wages			11,945				11,534
Bilboes - salaries and wages			1,774				—
Blanket - consumable materials			12,301				10,754
Bilboes - consumable materials			4,742				—
Consumable materials – COVID-19			—				164
Blanket - electricity costs			6,377				4,112
Bilboes - electricity costs			425				—
Safety			554				490
Cash-settled share-based expense (note 10.1(a))			386				424
Blanket - On mine administration			1,187				1,294
Bilboes - On mine administration			589				—
Solar operations and maintenance services			198				—
Pre-feasibility exploration costs			98				89
			40,576				28,861

 

8

Other expenses

 

			2023				2022
Intermediated Money Transaction Tax*			666				519
Community and social responsibility cost			582				256
Impairment of property, plant and equipment (note 14)			851				41
Impairment of exploration and evaluation assets – Connemara North (note 15)			—				467
			2,099				1,283

 

*

Intermediated Money Transfer Tax ("IMTT”) is tax chargeable in Zimbabwe on transfer of physical money, electronically or by any other means, between two or more persons. The presidential announcement made on May 7, 2022 increased the IMTT charges on all domestic foreign currency transfers from 2% to 4%,

 

9

Administrative expenses

 

			2023				2022
Investor relations			322				394
Audit fee			139				136
Advisory services fees			3,823				588
Listing fees			592				338
Directors fees – Company			301				254
Directors fees – Blanket			30				28
Employee costs			2,815				2,303
Other office administration cost			247				189
Information Technology and Communication cost			84				209
Management liability insurance			414				482
Travel costs			355				358
			9,122				5,279

 

 

10

Share-based payments

 

10.1

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 based on gold production and a performance period of one up 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 a 93%-100% probability that the performance conditions will be met and therefore a 93%-100% (2022: 93%-100%) average performance multiplier was used in calculating the estimated liability.

 

The liability as at June 30, 2023 amounted to $850 (December 31, 2022: $2,217). Included in the liability as at June 30, 2023 is an amount of $386 (2022: $424) that was expensed and classified as production costs; refer to note 7. The cash-settled share-based expense for PUs for the period amounted to $271 (2022: $310). During the period PUs to the value of $351 were settled in share capital (net of employee tax) (2022: $804) with the employee tax portion recognised in profit or loss.

 

 

10

Share-based payments (continued)

 

10.1

Cash-settled share-based payments (continued)

 

(a)

Restricted Share Units and Performance Units (continued)

 

The following assumptions were used in estimating the fair value of the cash-settled share-based payment liability on June 30:

 

			June 30, 2023									December 31, 2022
			RSUs					PUs				RSUs				PUs
Risk free rate			3.5	%				3.5	%			3.9	%			3.9	%
Fair value (USD)			12.06					11.62				12.52				12.42
Share price (USD)			12.06					11.62				12.40				12.42
Performance multiplier percentage			—					93-100%				—				93-100%
Volatility			0.00					0.99				1.29				0.91
Share units granted:			RSUs					PUs				RSUs				PUs
Grant - January 11, 2019			—					95,740				—				95,740
Grant - March 23, 2019			—					28,287				—				28,287
Grant - June 8, 2019			—					14,672				—				14,672
Grant - January 11, 2020			17,585					114,668				17,585				114,668
Grant - March 31, 2020			—					1,971				—				1,971
Grant - June 1, 2020			—					1,740				—				1,740
Grant - September 9, 2020			—					1,611				—				1,611
Grant - September 14, 2020			—					20,686				—				20,686
Grant - October 5, 2020			—					514				—				514
Grant - January 11, 2021			—					78,875				—				78,875
Grant - April 1, 2021			—					770				—				770
Grant - May 14, 2021			—					2,389				—				2,389
Grant - June 1, 2021			—					1,692				—				1,692
Grant - June 14, 2021			—					507				—				507
Grant - August 13, 2021			—					2,283				—				2,283
Grant - September 1, 2021			—					553				—				553
Grant - September 6, 2021			—					531				—				531
Grant - September 20, 2021			—					526				—				526
Grant - October 1, 2021			—					2,530				—				2,530
Grant - October 11, 2021			—					500				—				500
Grant - November 12, 2021			—					1,998				—				1,998
Grant - December 1, 2021			—					936				—				936
Grant - January 11, 2022			—					96,359				—				96,359
Grant - January 12, 2022			—					825				—				825
Grant - May 13, 2022			—					2,040				—				2,040
Grant - June 1, 2022			—					1,297				—				1,297
Grant - July 1, 2022			—					2,375				—				2,375
Grant - October 1, 2022			—					2,024				—				2,024
Grant - April 7, 2023			—					80,548				—				—
Grant - May 15, 2023			—					581				—				—
Grant -June 1, 2023			—					617				—				—
Grant June 7, 2023			—					572				—				—
RSU dividends reinvested			1,980					—				1,980				—
Settlements/terminations			(19,565	)				(385,626	)			—				(254,491	)
Total awards			—					175,591				19,565				224,408

 

 

10

Share-based payments (continued)

 

10.2

Equity-settled share-based payments

 

(a)

EPUs

 

EPUs have a performance condition based on gold production, average normalised controllable cost per ounce of gold and a performance period of up to 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, 2023 amounted to $331 (2022: $82).

 

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

 

Grant date			January 24, 2022				April 7, 2023
Number of units - granted date and reporting date			130,380				93,035
Share price (USD) - grant date			11.50				16.91
Fair value (USD) - grant date			10.15				15.33
Performance multiplier percentage at December 31, 2023			100	%			100	%

 

11

Net foreign exchange gain

 

On October 1, 2018 the RBZ issued a directive to Zimbabwean banks to separate foreign currency from RTGS$ in the accounts held by their clients and pegged the RTGS$ at 1:1 to the US Dollar. On February 20, 2019 the RBZ issued a further monetary policy statement, which allowed inter-bank trading between RTGS$ and foreign currency. The interbank rate was introduced at 2.5 RTGS$ to 1 US Dollar and traded at 5,739.80 RTGS$ to 1 US Dollar as at June 30, 2023 (December 31, 2022: 684.33 RTGS$). On June 24, 2019 the Government issued S.I. 142 which stated, “Zimbabwe dollar (“RTGS$”) to be the sole currency for legal tender purposes for any transactions in Zimbabwe”. Throughout these announcements and to the date of issue of these financial statements the US Dollar has remained the primary currency in which the Group’s Zimbabwean entities operate and the functional currency of these entities.

 

 

11

Net foreign exchange gain (continued)

 

On February 3, 2023, the RBZ issued Exchange control directive RY002/2023 stating that with effect from February 6, 2023, the US$ export retention threshold across all sectors, including companies listed on the VFEX, had been standardized to 75% of export proceeds.

 

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

 

			2023				2022
Unrealised foreign exchange gain			3,983				9,784
Realised foreign exchange loss*			(6,060	)			(4,703	)
Net foreign exchange (loss) gain			(2,077	)			5,081

 

^* Realised foreign exchange losses were predominantly recognised on Bullion sales receivables, bank balances and RTGS VAT.

 

12

Derivative financial instruments

 

The fair value of derivative financial instruments not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where available. The company did not apply hedge accounting to the derivative financial instruments and all fair value losses were recorded in the consolidated statements of profit or loss and other comprehensive income. Transaction costs are recognised in profit or loss as incurred.

 

Derivative financial instrument expenses							2023				2022
Put options			12.1	(a)			488				—
Cap and collar options and Call options			12.2	(a)			—				249
Gold loan			12.2	(b)			—				832
Call options (December 13, 2021)			12.2	(b)			—				(180	)
Call options transaction costs (March 9, 2022)			12.2	(a)			—				796
							488				1,697

 

 

12

Derivative financial instruments (continued)

 

12.1

Derivative financial assets

 

							December 31,
							2023				2022
Put options			12.1	(a)			763				440
							763				440

 

(a)

Put options

 

On December 22, 2022 the Company purchased zero cost put options to hedge 16,672 ounces of gold over a period of five months from December to May 2023 at a strike price of $1,750. All have expired at the date of these Unaudited financial statements.

 

On May 22, 2023 the Company purchased zero cost put options to hedge 28,000 ounces of gold over a period of seven months from June to December 2023 at a strike price of $1,900.

 

12.2

Derivative financial liabilities

 

							2023				December 31, 2022
Cap and collar options and Call options			12.2	(a)			—				—
Call options (December 13, 2021)			12.2	(b)			—				—
							—				—

 

(a)

Gold loan and Call options

 

On December 13, 2021 the Company entered into two separate gold loan and option agreements with Auramet International LLC (“Auramet”).

 

In terms of the agreements the Group:

 

·

received $3 million less transaction costs from Auramet at inception of the Gold loan agreement;

·

is required to make two deliveries of 925 ounces each on May 31, 2022 and June 30, 2022 in repayment of the Gold loan or pay the equivalent in cash; and

·

granted Call options on 6,000 ounces to Auramet with a strike price of $2,000 per ounce, expiring monthly in equal monthly tranches from June 30, 2022 to November 30, 2022.

 

Accounting for the Gold loan and the Call options transactions:

 

·

At inception the fair value of the Gold loan was calculated at the amount received less the fair value of the Call options.

·

As at March 31, 2022 the fair value of the gold loan was calculated by discounting the fair value of the gold deliveries at a forward rate of $1,833 due by a market related discount rate.

·

At inception and at March 31, 2022 the Call options were valued at the quoted prices available from the CME Group Inc. at each respective date.

·

Differences in the fair values were accounted for as Fair value losses on derivative financial instruments in the consolidated statement of profit or loss and other comprehensive income.

·

The Call options were classified as level 1 in the fair value hierarchy and the Gold loan as level 2.

·

Derivative liabilities are not designated as hedging instruments.

 

 

12

Derivative financial instruments (continued)

 

12.2

Derivative financial liabilities (continued)

 

Proceeds received under the Gold loan and Call options agreements were allocated as follows:

 

December 13, 2021
Net proceeds received			2,960
Fair value of Call options			208
Fair value of Gold loan			2,752

 

The Gold loan was settled in full on June 30, 2022. The remaining Call options, outstanding as at September 30, 2022, expire on October 31, 2022 and November 30, 2022 and the value is not significant.

 

(b)

Cap and collar options and Call options

 

On February 17, 2022 the Company entered into a zero cost contract to hedge 20,000 ounces of gold over a period of 5 months from March to July 2022. The hedging contract had a cap of $1,940 and a collar of $1,825 over 4,000 ounces of gold per month expiring at the end of each month over the 5-month period.

 

On March 9, 2022 in response to a very volatile gold price the Company purchased a matching quantity of Call options at a strike price above the cap at a total cost of $796 over 4,000 ounces of gold per month at strike prices of $2,100 per ounce from March 2022 to May 2022 and $2,200 per ounce from June 2022 to July 2022 in order to limit margin exposure and reinstate gold price upside above the strike price.

 

In April, 2022 Auramet and the Company each purchased matching quantities of Call options at a net settlement cost to the Company of $176 over 2,400 ounces of gold per month at strike prices of $1,886 and $1,959.50 respectively. These options were purchased to hedge against a short term increase in the gold price for the last week of April 2022. At the 2022 year end both these options expired.

 

13

Finance income and finance cost

 

			2023				2022
Finance income received - Bank			9				3
Unwinding of rehabilitation provision (note 21)			36				184
Finance cost - Leases			11				18
Finance cost - Overdraft			977				92
Finance cost - Motapa loan note payable (note 22.1)			612				—
Finance cost - Solar loan note payable (note 22.2)			197				—
			1,833				294

 

 

14

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, 2022			14,435				543				73,914				35,476				64,319				1,342				3,169				1,940				195,138
Additions*			—				—				—				31,711				3,049				243				147				12,198				47,348
Impairments@			—				—				(8,518	)			—				(998	)			—				—				—				(9,516	)
Reallocations between asset classes #			759				—				15,886				(20,734	)			4,089				—				—				—				—
Acquisition of Bilboes oxide assets (Tribute)			—				—				872				—				—				—				—				—				872
Foreign exchange movement			—				(18	)			—				—				26				(22	)			(2	)			—				(16	)
Balance at December 31, 2022			15,194				525				82,154				46,453				70,485				1,563				3,314				14,138				233,826
Additions*			—				—				—				9,103				(335	)			175				160				16				9,119
Impairments~			—				—				(872	)			—				—				—				—				—				(872	)
Reallocations between asset classes			—				—				5,734				(7,129	)			1,395				—				—				—				—
Foreign exchange movement			—				(26	)			—				—				144				(39	)			(3	)			—				76
Balance at June 30, 2023			15,194				499				87,016				48,427				71,689				1,699				3,471				14,154				242,149

*	Included in additions is the change in estimate for the decommissioning asset of $29 (2022: ($468))
@	Included in the 2022 impairments are development asset costs of $8,518 that predominantly relates to prospective areas above 750 meters at Blanket which are not included in the LoMP.  Also included in the 2022 impairments are generator cost of $791 and loader bottom decks at a cost of $101, these assets were no longer in working conditions. The carrying amount for these impaired assets were impaired to $Nil.
&	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. In December 2022, the Caledonia board approved a proposal for Caledonia Mining Services (PvT) Ltd (which owns the solar plant) to issue loan note instruments (“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 22.2 for more information on these loan note instruments.
~	On June 27, 2023 the decision was taken to place the Bilboes oxide mine on care and maintenance as the cost related to removing the waste and access the orebody could exceed the benefit from the gold revenues to be received. The impairment loss that was recognised amounted to $851 on impairing the Bilboes oxide asset classified under Property, plant and equipment. Mining and metallurgical processing will continue at the Bilboes oxide mine until the end of September 2023 when the contract miner's notice period comes to an end.  Leaching of material that has already been deposited on the leach pad will continue. Oxide mining and processing will resume when the stripping of the waste for the sulphide project commences and can be economically justified.

 

 

14

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, 2022			7,335				97				8,910				600				25,505				958				2,631				—				46,036
Depreciation for the year			1,015				137				3,990				93				4,527				163				216				—				10,141
Accumulated depreciation for impairments			—				—				(532	)			—				(775	)			—				—				—				(1,307	)
Foreign exchange movement			—				(4	)			—				—				—				(21	)			(2	)			—				(27	)
Balance at December 31, 2022			8,350				230				12,368				693				29,257				1,100				2,845				—				54,843
Depreciation for the period			503				63				1,887				46				2,670				88				122				285				5,664
Accumulated depreciation for impairments			—				—				(21	)			—				—				—				—				—				(21	)
Foreign exchange movement			—				(11	)			—				—				—				(34	)			(2	)			—				(47	)
Balance at June 30, 2023			8,853				282				14,234				739				31,927				1,154				2,965				285				60,439
Carrying amounts
At December 31, 2022			6,844				295				69,786				45,760				41,228				463				469				14,138				178,983
At June 30, 2023			6,341				217				72,782				47,688				39,762				545				506				13,869				181,710

 

 

14

Property, plant and equipment (continued)

 

Change in estimate

 

In April 2023 Management performed an operational efficiency review of its mining related equipment, which resulted in changes in the expected useful life of some of the assets included under Mine development, infrastructure and other and Plant and equipment asset classes.

 

(i)

Mine development, infrastructure and other

 

Blanket Mine commissioned Central Shaft in 2021. It is used for transporting people, ore, waste and materials. Prior to the commissioning transportation was through the older Jethro Shaft. From the commissioning of Central Shaft there was a gradual decrease in the use of Jethro Shaft and Jethro Shaft is expected to be decommissioned in 2025. Up to March 31, 2023 Jethro Shaft was depreciated over ten years, from April 1, 2023 it is depreciated over two years.

 

(ii)

Plant and equipment

 

Up to March 31, 2023 some assets including generators, load haul dump trucks, rock breakers, and drill rigs were depreciated over ten years, from April 1, 2023 they are depreciated over five years.

 

Increase in depreciation expense from April 1, 2023 to June 30, 2023
Mine development, infrastructure and other			218
Plant and equipment			419
			637

 

The above results are a change in estimates and applied prospectively from April 1, 2023.

 

 

15

Exploration and evaluation assets

 

			Bilboes Gold				Motapa				Maligreen				Connemara North				GG				Sabiwa				Abercorn				Valentine				Total
Balance at January 1, 2022			—				—				4,196				463				3,618				290				16				65				8,648
Acquisition costs:
- Mining claims acquired			—				7,844				—				—				—				—				—				—				7,844
Exploration costs:
- Consumables and drilling			—				—				1,170				—				36				—				—				—				1,206
- Contractor			—				—				—				4				—				—				—				—				4
- Labour			—				—				260				—				37				—				11				—				308
- Power			—				—				—				—				32				4				—				—				36
Impairment *			—				—				—				(467	)			—				—				—				—				(467	)
Balance at December 31, 2022			—				7,844				5,626				—				3,723				294				27				65				17,579
Acquisition costs:
- Bilboes Gold			69,553				—				—				—				—				—				—				—				69,553
Exploration costs:
- Consumables and drilling			—				55				92				—				—				—				—				—				147
- Labour			—				26				111				—				—				—				—				—				137
Balance at June 30, 2023			69,553				7,925				5,829				—				3,723				294				27				65				87,416

*	Caledonia has completed sufficient work to establish that the potential orebody at the Connemara North properties will not meet Caledonia’s requirements in terms of size, grade and width.  Accordingly, Caledonia will not exercise the option to acquire the property.

 

 

15

Exploration and evaluation assets (continued)

 

(a)

Bilboes Gold

 

Refer to note 5 for more information on the acquisition of the Bilboes Gold sulphide exploration and evaluation project.

 

(b)

Motapa

 

On November 1, 2022 Caledonia entered into a Share Purchase Agreement with Bulawayo Mining Company Limited (“Bulawayo Mining”) to acquire all the shares of Motapa Mining Company UK Limited (“Motapa”), along with its wholly owned subsidiary Arraskar Investments (Private) Limited (“Arraskar”).

 

Caledonia considers Motapa to be highly prospective and strategically important to its growth ambitions in Zimbabwe in terms of both location and scale. Motapa is a large exploration property which is contiguous to the Bilboes gold project.

 

The Motapa asset has been mined throughout most of the second half of the 20th century, Caledonia understands that during this period the region produced as much as 300,000 ounces of gold. Whilst none of the mining infrastructure remains, the evidence of historical mining will provide guidance to our exploration team in best understanding the prospectivity of the region.

 

The acquisition was accounted for as an asset acquisition as the net assets acquired do not meet the definition of a business. The purchase price of the net assets acquired was allocated to Exploration and evaluation assets based on management’s estimation of the fair value at acquisition.

 

The initial purchase price of $1 million was paid on November 1, 2022. Stamp duties of $41 were paid on November 9, 2022. There were no liabilities assumed with the acquisition of Motapa and Arraskar. The remainder of the purchase price is to be settled by way of loan notes (refer to note 22.1).

 

(c)

Maligreen

 

On November 3, 2021 the mining claims had been transferred to Caledonia over the Maligreen project (“Maligreen”), a property situated in the Gweru mining district in the Zimbabwe Midlands.

 

Maligreen is a substantial brownfield exploration opportunity with significant historical exploration and evaluation work having been conducted on the property over the last 30 years including:

 

·

An estimated 60,000 meters of diamond core and percussion drilling

·

3.5 tonnes of bulk metallurgical test work

·

Aeromagnetic and ground geophysical surveys

 

The total land area of Maligreen is approximately 550 hectares comprising two historic open pit mining operations which produced approximately 20,000 oz of gold mined from oxides between 2000 and 2002 after which the operation was closed.

 

 

15

Exploration and evaluation assets (continued)

 

(c)

Maligreen

 

On November 7, 2022 the Company published an announcement and an updated technical report on SEDAR updating the estimated mineral resources at Maligreen. The report has an effective date of September 30, 2022 and estimates measured and indicated mineral resources of 8.03 million tonnes at a grade of 1.71g/t containing approximately 442,000 ounces of gold and inferred mineral resources of 6.17 million tonnes at a grade of 2.12g/t containing approximately 420,000 ounces of gold. The upgrade to the mineral resources at Maligreen improves the geological confidence of approximately half the mineral resources from inferred to measured and indicated mineral resources from the previous mineral resources statement.

 

Since Caledonia acquired the Maligreen claims in November 2021 it has been focused on reviewing the geological work conducted at the property.

 

16

Inventories

 

			2023				December 31, 2022
Consumable stores*			17,625				17,645
Gold in progress and Ore stock-pile@			829				689
			18,454				18,334

 

*	Included in consumables stores is an amount of ($1,510) (2022: ($1,510)) for provision for obsolete stock.

 

@	Gold work in progress balance as at June 30, 2023 consist out of 995 ounces (2022: 1,122 ounces).

 

17

Prepayments

 

			2023				December 31, 2022
Suppliers - South Africa			802				254
- Zimbabwe			3,026				1,494
- Bilboes			—				802
Solar prepayments			—				104
Bilboes pre-effective date costs			—				877
Other prepayments			112				162
			3,940				3,693

 

 

18

Trade and other receivables

 

			2023				December 31, 2022
Bullion sales receivable			5,263				7,383
VAT receivables			2,418				1,001
Solar - VAT and duty receivables			720				720
Deposits for stores, equipment and other receivables			159				81
			8,560				9,185

 

The carrying value of trade receivables is considered a reasonable approximation of fair value and are short term in nature. No provision for expected credit losses was recognised in the current or prior period as none of the debtors were past due (i.e., the gross bullion sales receivable balance is comprised of performing debt). Up to the date of approval of these financial statements all of the outstanding bullion sales receivable was settled in full. The Company offset VAT receivables equating to $769 against liabilities due for other types of taxes administrated by the Zimbabwe revenue authority.

 

19

Cash and cash equivalents

 

			2023				December 31, 2022
Bank balances			10,822				4,737
Restricted cash*			1,963				1,998
Cash and cash equivalents			12,785				6,735
Bank overdrafts and short term loans used for cash management purposes			(15,692	)			(5,239	)
Net cash and cash equivalents			(2,907	)			1,496

 

*

The restricted cash amount of $963 (2022: $998) (denominated in RTGS$) held by Blanket Mine which has been earmarked by Stanbic Bank Zimbabwe as a letter of credit in favour of Caledonia Mining South Africa (Proprietary) Limited (“CMSA”). The letter of credit was issued by Stanbic Bank Zimbabwe on February 28, 2023 and had a 120-day tenure to settlement. On July 3, 2023 the letter of credit matured and cash was transferred to CMSA’s bank account, denominated in South African Rands.   Caledonia shall retain at least $1 million as the penalty sum, in a bank account held in its name in Jersey for so long as any amounts remain outstanding on the Motapa Loan note payable. The Motapa Loan note was settled on July 3, 2023 and the restriction on the cash fell away.

 

19

Cash and cash equivalents

 

Date drawn

Expiry

Repayment term

Principal value

Balance drawn at June 30, 2023

Overdraft facilities

Stanbic Bank - RTGS$ denomination

January 2023

February 2024

On demand

RTG$350 million

$Nil

Stanbic Bank - USD denomination

January 2023

February 2024

On demand

$4 million

$4 million

CABS Bank of Zimbabwe - USD denomination

April 2022

May 2023

On demand

$2 million

$Nil

Ecobank - USD denomination

November 2022

October 2023

On demand

$5 million

$5 million

Ecobank term loan - USD denomination

March 2023

October 2023

On demand

$2 million

$2 million

Nedbank Zimbabwe - USD denomination

December 2022

October 2023

On demand

$3.5 million

$2.8 million

Nedbank Zimbabwe term loan - USD denomination

April 2023

April 2024

On demand

$3.5 million

$3 million

 

 

Subsequent to the period end CABS renewed an unsecured US$2 million overdraft facility to Blanket.

 

20

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, 2022			12,756,606				82,667
Shares issued:
- share-based payment - employees (note 10.1(a))			76,520				804
December 31, 2022			12,833,126				83,471
Shares issued:
- share-based payment - employees (note 10.1(a))			24,389				351
- equity raise*			1,207,514				15,658
- Bilboes Gold Limited acquisition (note 5)			5,123,044				65,677
June 30, 2023			19,188,073				165,157

 

*

Gross proceeds of $10,770 with a transaction cost of $757 were raised by issuing depository interests on the AIM of the London Stock Exchange.   Mark Learmonth, Chief Executive Officer, and Toziyana Resources Limited, a company affiliated with Victor Gapare, executive Director of the Company, have conditionally subscribed for 3,587 Placing Shares and 11,000 Placing Shares respectively on the AIM of the London Stock Exchange, both at the Placing Price.    Gross proceeds of $5,850 with a transaction cost of $205 were raised by issuing depository receipts on the VFEX.

 

 

21

Provisions

 

Site restoration

 

Site restoration relates to the estimated cost of closing down the mines and represents the site and environmental restoration costs, estimated to be paid throughout the period up until closure due to areas of environmental disturbance present at the reporting date as a result of mining activities. Regarding Blanket Mine the costs of site restoration are discounted based on the estimated life of mine. Site restoration costs at Blanket Mine are capitalised to mineral properties on initial recognition and depreciated systematically over the estimated life of the mine. Site restoration at Maligreen and Bilboes Gold Limited are capitalised to the exploration and evaluation assets on initial recognition.

 

Reconciliation of site restoration provision		2023				December 31, 2022
Balance January 1			2,958				3,294
Unwinding of discount			36				132
Change in estimate - adjustment capitalised in Property, plant and equipment			29				(468	)
Acquisition - Bilboes			704				–
Balance June 30			3,727				2,958
Current			–				–
Non-current			3,727				2,958

 

The discount rates currently applied in calculating the present value of the Blanket Mine provision is 4.06% (2022: 4.14%), based on a risk-free rate and cash flows estimated at an average 3.10% inflation (2022: 2.40%). The gross rehabilitation costs, before discounting, amounted to $3,137 (2022: $3,137) for Blanket Mine as at June 30, 2023. The gross rehabilitation costs, before discounting, amounted to $704 for Bilboes Gold Limited as at June 30, 2023.

 

22

Loan note instruments

 

Loan note instruments - finance costs						2023				2022
Motapa loan notes			22.1				612				–
Solar loan notes			22.2				197				–
							809				–

 

Loan note instruments - Financial liabilities						2023				December 31, 2022
Motapa loan notes			22.1				575				7,104
Solar loan notes			22.2				7,092				–
							7,667				7,104

 

 

 

22

Loan note instruments (continued)

22.1

Motapa loan note instruments payable

 

On November 1, 2022 Caledonia, in connection with the Share Purchase Agreement, entered into a Loan note Instrument agreement (“Loan note” or “Notes”) with Bulawayo Mining to acquire all the shares of Motapa Mining Company UK Limited (“Motapa”), along with its wholly owned subsidiary Arraskar Investments (Private) Limited (“Arraskar”). The purchased shares are with full title guarantee and free from all Encumbrances, together with all rights attached or accruing to them. The Loan note certificates were also issued by Caledonia on November 1, 2022.

 

The aggregate principal amount of the Loan notes were limited to US$7.25 million. Interest on the Loan notes is compounded monthly an interest rate of 13% per annum. Interest shall be payable on the principal amount of the Loan notes outstanding from time to time from the issue date of the Loan notes until the date of redemption of the Loan notes at the interest rate. $5 million of the loan notes was paid on March 31, 2023 and $2.25 million is payable on June 30, 2023. $575 of the loan notes were paid on July 3, 2023 as agreed between Caledonia and each of the noteholders due to bank holidays in certain jurisdictions.

 

All notes paid by Caledonia are immediately cancelled and are not reissued.

 

Caledonia shall retain at least $1 million as the penalty sum, in a bank account held in its name in Jersey for so long as any amounts remain outstanding on the notes.

The fair value of the Loan note payable at inception was estimated to be $6,802 using the market approach method. The effective interest rate on the Loan note was estimated to be 12.75% per annum. The loan notes were subsequently measured at amortised cost.

 

A summary of the Loan notes payable were as follows:

 

Fair value November 1, 2022			6,802
Finance cost			302
December 31, 2022			7,104
Finance cost			612
Repayment			(7,141	)
June 30, 2023			575

 

22.2

Solar loan note instruments

 

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 note instruments (“bonds”). The bonds were issued by the Zimbabwean registered entity owning the solar plant, Caledonia Mining Services (PvT) Limited. The bonds carry an interest rate of 9.5% payable bi-annually and have a tenor of 3 years from the date of issue. The bond repayments are guaranteed by the Company. $7 million of bonds were in issue at the date of approval of these financial statements. All bonds were issued to Zimbabwean registered commercial entities.

 

A summary of the bonds are as follows:

 

January 1, 2023		–
Amounts received			7,000
Transaction costs			(105	)
Finance cost			197
June 30, 2023			7,092

 

 

 

23

Trade and other payables

 

		2023				December 31, 2022
Trade payables			4,678				3,502
Electricity accrual			870				2,386
Audit fee			248				284
Dividends due			4,058				1,883
Voltalia accrual			–				1,852
Bilboes oxide project payable			–				872
Other payables			1,112				651
Financial liabilities			10,966				11,430
Other employee benefits			1,318				982
Leave pay			2,897				2,462
Bonus provision			392				1,312
Accruals			1,588				1,268
Non-financial liabilities			6,195				6,024
Total			17,161				17,454

 

24

Cash flow information

 

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

 

		2023				2022
Operating profit			2,581				31,322
Adjustments for:
Impairment of property, plant and equipment			851				13
Impairment of exploration and evaluation assets (note 15)			–				467
Unrealised foreign exchange gains (note 11)			(3,983	)			(9,784	)
Cash-settled share-based expense (note 10.1)			271				310
Cash-settled share-based expense included in production costs (note 10.1)			386				424
Cash portion of cash-settled share-based expense			(1,673	)			(1,468	)
Equity-settled share-based expense (note 11.2)			331				82
Depreciation (note 14)			5,664				4,702
Fair value loss on derivative instruments			488				901
Cash generated from operations before working capital changes			4,916				26,969
Inventories			(1,005	)			302
Prepayments			(148	)			2,711
Trade and other receivables			894				21
Trade and other payables			(3,991	)			182
Cash generated from operations			666				30,185

 

25

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 comprise Caledonia Holdings Zimbabwe (Private) Limited, Blanket Mine (1983) (Private) Limited, Blanket’s satellite projects and Caledonia Mining Services (Private) Limited (“CMS solar”). The Bilboes oxide mine segment comprise the oxide mining activities. The E&E projects segment, the exploration and evaluation activities of the Bilboes sulphide resources 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) responsible for corporate administrative functions within the Group are taken into consideration in the strategic decision making process of the CEO and are therefore included in the disclosure below and combined with 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 segment profit before income tax or exploration and evaluation costs, as included in the internal management reports that are 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.

 

Information about reportable segments

 

For the six months ended June 30, 2023		Blanket				South Africa				Bilboes oxides				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	)
Other income			43				13				121				–				–				9				186
Other expenses			(1,240	)			–				(859	)			–				–				–				(2,099	)
Administrative expenses			(83	)			(1,578	)			(2,059	)			–				6				(5,408	)			(9,122	)
Management fee			(1,629	)			1,629				–				–				–				–				–
Cash-settled share-based expense			–				–				–				–				386				(657	)			(271	)
Equity-settled share-based expense			–				–				–				–				–				(331	)			(331	)
Net foreign exchange (loss) gain			(2,716	)			(138	)			(100	)			–				(5	)			882				(2,077	)
Fair value loss on derivative liabilities			–				–				–				–				–				(488	)			(488	)
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	)

 

25

Operating Segments (continued)

 

As at June 30, 2023		Blanket				South Africa				Bilboes oxides				E&E projects				Inter-group eliminations adjustments				Corporate and other reconciling amounts				Total
Geographic segment assets:
Current (excluding intercompany)			31,031				3,570				–				798				(30	)			9,236				44,605
Non-Current (excluding intercompany)			192,373				325				–				83,307				(6,822	)			103				269,286
Expenditure on property, plant and equipment (note 14)			22,077				(369	)			872				–				(2,023	)			(11,438	)			9,119
Expenditure on evaluation and exploration assets (note 15)			–				–				–				69,837				–				–				69,837
Intercompany balances			43,473				14,351				–				–				(141,193	)			83,369				–
Geographic 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	)			–

 

 

For the six months ended June 30, 2022		Blanket				South Africa				Inter-group eliminations adjustments				Corporate and other reconciling amounts				Total
Revenue			72,064				–				–				–				72,064
Inter-segmental revenue			–				8,410				(8,410	)			–				–
Royalty			(3,612	)			–				–				–				(3,612	)
Production costs			(28,129	)			(7,909	)			7,177				–				(28,861	)
Depreciation			(5,130	)			(77	)			527				(22	)			(4,702	)
Other income			2				1				–				–				3
Other expenses			(816	)			–				–				(467	)			(1,283	)
Administrative expenses			(76	)			(1,666	)			1				(3,538	)			(5,279	)
Management fee			(1,873	)			1,873				–				–				–
Cash-settled share-based expense			–				–				424				(734	)			(310	)
Equity-settled share-based expense			–				–				–				(82	)			(82	)
Net foreign exchange gain (loss)			5,165				(45	)			(154	)			115				5,081
Fair value loss on derivative liabilities			–				–				–				(1,697	)			(1,697	)
Finance income			–				3				1				–				3
Finance cost			(547	)			(14	)			–				267				(294	)
Profit (loss) before tax			37,048				576				(434	)			(6,158	)			31,032
Tax expense			(9,837	)			(37	)			1				(160	)			(10,033	)
Profit (loss) after tax			27,211				539				(433	)			(6,318	)			20,999

 

 

 

25

Operating Segments (continued)

 

As at June 30, 2022		Zimbabwe				South Africa				Inter-group eliminations adjustments				Corporate and other reconciling amounts				Total
Geographic segment assets:
Current (excluding intercompany)			37,548				3,579				(12	)			1,730				42,845
Non-Current (excluding intercompany)			166,503				1,088				(5,042	)			12,061				174,610
Expenditure on property, plant and equipment (note 14)			16,112				(1,372	)			10,616				–				25,356
Expenditure on evaluation and exploration assets (note 15)			458				–				–				4				462
Intercompany balances			36,908				10,721				(100,013	)			52,384				–
Geographic segment liabilities:
Current (excluding intercompany)			(11,263	)			(1,674	)			–				(4,213	)			(17,150	)
Non-current (excluding intercompany)			(6,420	)			(155	)			95				(776	)			(7,256	)
Intercompany balances			(12,257	)			(34,956	)			100,013				(52,800	)			–

 

Major customer

 

Revenues from Fidelity amounted to $66,466 (2022: $72,064) for the six months ended June 30, 2023.

 

The Group has made $17,738 of sales to Al Etihad Gold Refinery DMCC (“AEG” an accredited Dubai Good Delivery refinery) up to June 30, 2023, representing 9,083 ounces and has received payment in full post quarter end. 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.

 

26

Subsequent events

 

There were no significant subsequent events between June 30, 2023 and the date of issue of these financial statements other than included in the preceding notes to the condensed consolidated interim financial statements.

 

 

DIRECTORS AND OFFICERS at August 10, 2023

 

BOARD OF DIRECTORS	OFFICERS
J. L. Kelly (2) (3) (4) (6) (8)	M. Learmonth (5) (6) (7) (8)
Non-executive Director	Chief Executive Officer
Connecticut, United States of America	Jersey, Channel Islands
S. R. Curtis (5) (6) (8)	D. Roets (5) (6) (7) (8)
Non-executive Director	Chief Operating Officer
Johannesburg, South Africa	Johannesburg, South Africa
J. Holtzhausen (1) (2) (4) (5) (6)	C.O. Goodburn (6) (7)
Chairman Audit Committee	Chief Financial Officer
Non-executive Director	Johannesburg, South Africa
Cape Town, South Africa
	A. Chester (7) (8)
M. Learmonth (5) (6) (7) (8) Chief Executive Officer	General Counsel, Company Secretary and Head of Risk and Compliance
Jersey, Channel Islands	Jersey, Channel Islands
N. Clarke (3) (4) (5) (6) (8)	BOARD COMMITTEES
Non-executive Director East Molesey, United Kingdom	(1)  Audit Committee
	(2)  Compensation Committee
	(3)  Corporate Governance Committee
G. Wildschutt (1) (3) (4) (6) (8)	(4)  Nomination Committee
Non-executive Director	(5)  Technical Committee
Johannesburg, South Africa	(6)  Strategic Planning Committee
	(7)  Disclosure Committee
D. Roets (5) (6) (7) (8)	(8)  ESG Committee
Chief Operating Officer
Johannesburg, South Africa
G. Wylie (1) (2) (4) (5) (6)
Non-executive Director
Malta, Europe
V. Gapare (5) (6) (8)
Executive Director
Harare, Zimbabwe

 

CORPORATE DIRECTORY as at August 10, 2023

 

CORPORATE OFFICES	SOLICITORS
Jersey	Mourant Ozannes (Jersey)
Head and Registered Office	22 Grenville Street
Caledonia Mining Corporation Plc	St Helier
B006 Millais House	Jersey
Castle Quay	Channel Islands
St Helier
Jersey JE2 3NF	Borden Ladner Gervais LLP (Canada)
	Suite 4100, Scotia Plaza
South Africa	40 King Street West
Caledonia Mining South Africa Proprietary Limited	Toronto, Ontario M5H 3Y4
No. 1 Quadrum Office Park	Canada
Constantia Boulevard
Floracliffe	Memery Crystal LLP (United Kingdom)
South Africa	165 Fleet Street
	London EC4A 2DY
Zimbabwe	United Kingdom
Caledonia Holdings Zimbabwe (Private) Limited
P.O. Box CY1277	Dorsey & Whitney LLP (US)
Causeway, Harare	TD Canada Trust Tower
Zimbabwe	Brookfield Place
	161 Bay Street
Capitalisation (August 10, 2023)	Suite 4310
Authorised:                      Unlimited	Toronto, Ontario
Shares, Warrants and Options Issued:	M5J 2S1
Shares:                            19,188,073	Canada
Options:                                20,000
	Gill, Godlonton and Gerrans (Zimbabwe)
SHARE TRADING SYMBOLS	Beverley Court
NYSE American - Symbol “CMCL”	100 Nelson Mandela Avenue
AIM - Symbol “CMCL”	Harare, Zimbabwe
VFEX - Symbol “CMCL”
	Bowman Gilfillan Inc (South Africa)
BANKER	11 Alice Lane
Barclays	Sandton
Level 11	Johannesburg
1 Churchill Place	2196
Canary Wharf
London E14 5HP	AUDITOR
	BDO South Africa Incorporated
NOMINATED ADVISOR	Wanderers Office Park
Cenkos Securities Plc	52 Corlett Drive
6.7.8 Tokenhouse Yard	Illovo 2196
London	South Africa
EC2R 7AS	Tel: +27(0)10 590 7200
MEDIA AND INVESTOR RELATIONS	REGISTRAR AND TRANSFER AGENT
BlytheRay Communications	Computershare
4-5 Castle Court	150 Royall Street,
London EC3V 9DL	Canton,
Tel: +44 20 7138 3204	Massachusetts, 02021
	Tel: +1 800 736 3001 or +1 781 575 3100

 

36

Exhibit 99.2

 

CALEDONIA MINING CORPORATION PLC

August 10, 2023

 

Management’s Discussion and Analysis

 

This management’s 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, 2023 (“Q2 2023” 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 www.sedar.com or from Caledonia’s website at www.caledoniamining.com. The Interim Financial Statements and related notes have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. 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 thousands of US Dollars (also “$”, “US$” or “USD”), unless stated otherwise.

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

Table of Contents

 

1	OVERVIEW		3
2	SUMMARY		3
3	SUMMARY FINANCIAL RESULTS		7
4	OPERATIONS		16
	4.1.1	Safety, Health and Environment –	16
	Blanket		16
	Bilboes oxide mine		17
	4.2	Social Investment and Contribution to the Zimbabwean Economy - Blanket	17
	4.3	Gold Production - Blanket	18
	4.4	Underground - Blanket	19
	4.5	Metallurgical Plant	19
	4.6	Production Costs	19
	4.7	Capital Projects - Blanket	21
	4.8	Indigenisation	22
	4.9	Bilboes	23
	4.10	Zimbabwe Commercial Environment	24
	4.11	Solar project	27
	4.12	Opportunities and Outlook	27
5	EXPLORATION		28
6	INVESTING		29
7	FINANCING		30
8	LIQUIDITY AND CAPITAL RESOURCES		31
9	OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL COMMITMENTS AND CONTINGENCIES		31
10	NON-IFRS MEASURES		32
11	RELATED PARTY TRANSACTIONS		37
12	CRITICAL ACCOUNTING ESTIMATES		37
13	FINANCIAL INSTRUMENTS		40
14	DIVIDEND HISTORY		41
15	MANAGEMENT AND BOARD		41
16	SECURITIES OUTSTANDING		42
17	RISK ANALYSIS		42
18	FORWARD LOOKING STATEMENTS		44
19	CONTROLS		45
20	QUALIFIED PERSON		46

 

 

 

 

 

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, 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	Q2	H1	H1	Comment
	2023	2022	2023	2022
Gold produced (oz)	18,512	20,091	34,653	38,606	Gold produced in the Quarter was 7.9% lower than the second quarter of 2022 (the “comparative” or “comparable quarter”) mainly due to lower grade and lower than budget tonnes milled. Gold production from Blanket was below expectation due to several factors which adversely affected the implementation of the mine plan in certain mining areas. Management has focused intensively on the problem areas and production in late June and in July has shown a marked improvement.   1,076 ounces of gold were produced from the Bilboes oxide mine in the Quarter, an increase from the 105 ounces produced in the first quarter of 2023.   The Bilboes oxide mine was intended to be a small-scale, low-margin, short-term project. Due to the uncertainty that the oxide project can operate profitably, it will be returned to care and maintenance at the end of September 2023. The oxide mineralisation will be mined as part of the larger sulphides project.

 

 

 

	Q2	Q2	H1	H1	Comment
	2023	2022	2023	2022
On-mine cost per ounce ($/oz)1	1,084	692	1,135	695	On-mine cost per ounce in the Quarter increased by 56.7%. 81% of the increase was due to the high cost per ounce at the Bilboes oxide mine. The remainder of the increase was due to higher on-mine costs at Blanket where lower production meant that fixed costs were spread across fewer production ounces. On-mine costs at Blanket were also affected by higher electricity usage, which contributed approximately $138 per ounce to the overall increase in on-mine costs per ounce compared to the comparative quarter.
All-in sustaining cost (“AISC”)1	1,357	984	1,383	918	The AISC per ounce in the Quarter increased by 37.9% compared to the comparative quarter due to the higher on-mine cost per ounce.  AISC deducts the benefit of the solar plant electricity saving ($46.84 per ounce) in the Quarter.
Average realised gold price ($/oz)1	1,949	1,840	1,909	1,844	The average realised gold price reflects international spot prices.
Gross profit2  ($’000)	10,933	17,997	16,783	34,889	Gross profit for the Quarter decreased from the comparable quarter due to higher production costs, in particular at the Bilboes oxide mine and increased depreciation.
Net (loss) profit attributable to shareholders ($’000)	(513)	11,378	(5,542)	17,318	Net loss for the Quarter includes a lower gross profit and a foreign exchange loss of $3.6m compared to a foreign exchange gain of $4.2m in the comparable quarter.
Basic IFRS (loss) earnings per share (“EPS”) (cents)	(0.6)	87.7	(30.8)	132.3	IFRS EPS reflects the movement in IFRS profit attributable to shareholders and the effect of new shares issued.
Adjusted EPS (cents)1	10.0	56.2	(17.3)	118.8	Adjusted EPS excludes inter alia net foreign exchange gains and losses, deferred tax and fair value movements on derivative financial instruments.
Net cash from operating activities ($’000)	(2,226)	16,715	(3,102)	26,870	Net cash from operating activities in the Quarter decreased predominantly due to lower gross profit, $6.1m of realised foreign exchange losses and $4.3m of negative working capital movements.
Net cash and cash equivalents ($’000)	(2,907)	10,862	(2,907)	10,862	Net cash decreased due to the negative contributions to cash flows from operating activities from the Bilboes oxides mine.

¹ Non-IFRS measures such as “On-mine cost per ounce”, “AISC”, “average realised 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.

 

Fatality at Blaket mine

 

On August 7, 2023, an accident took place at Blanket. As a result an employee of GMG Pty Ltd, a company contracted to Blanket, succumbed to his injuries in hospital. The accident related to the maintenance of trackless equipment. Caledonia and Blanket express their sincere condolences to the family and colleagues of the deceased. Management has provided the necessary assistance to the Ministry of Mines Inspectorate Department in its enquiries into the incident. Caledonia takes the safety of its employees very seriously and measures have been taken to reinforce adherence to prescribed safety procedures. Safety is discussed further in section 4.1.

 

Encouraging drilling results at Blanket

 

The ongoing underground drilling program at Blanket targets the Eroica ore body and has yielded encouraging results. Approximately 5,600 meters ("m") of drilling were completed between January 2023 and the end of May 2023. Initial results indicate that the existing Eroica ore body has a better grade and width than was generally expected. In due course, this new information will be reflected in a revised resource statement and an updated technical report in respect of Blanket. Exploration is discussed further in section 5.

 

Equity raises

 

The Company conducted equity raises by way of placings in the previous quarter and the Quarter that targeted institutional investors in the UK, Europe, South Africa and Zimbabwe. The equity raises were over-subscribed; depositary interests in respect of 781,749 shares were issued to investors in the UK, Europe and South Africa on March 30, 2023 and Zimbabwe depositary receipts in respect of 425,765 shares were issued on April 14, 2023. The placings raised $16.6 million before expenses.

 

The proceeds are to be used for the Bilboes sulphide project feasibility study, a shared services centre in Zimbabwe, the establishment of an international procurement arm to supply future operations and for exploration drilling at Motapa.

 

On May 18, 2023 the Company entered into an "At the Market" or "ATM" sales agreement with its broker in the United States pursuant to which the Company may, at its discretion, from time to time, sell up to $30 million worth of shares on the NYSE American at market prices. No shares have been sold pursuant to this agreement as at today’s date.

 

Quarterly Production at Blanket Mine and the Bilboes oxide mine

 

Blanket Mine

 

Quarterly gold production at Blanket Mine was 17,436 ounces, 13.2% lower than the 20,091 ounces produced in the comparative quarter. Production at Blanket in the Quarter, although improved from the previous quarter, was still below expectations. This was due to several factors which impacted the implementation of the mine plan in certain mining areas and included a high level of missed blasts and errors in blasting accuracy which contributed to inadequate face advances. Management has focused intensively on the production challenges and production in late June and in July has shown a marked improvement: production in July was 7,829 ounces – an annualised rate of over 93,000 ounces which supports the maintenance of annual production guidance for Blanket for the year to December 31, 2023 of between 75,000 and 80,000 ounces. On-mine cost guidance at Blanket of between $770 and $850 per ounce is also maintained as costs per ounce are expected to be lower in the second half of the year due to the expected increase in production compared to the first six months of 2023. The on-mine cost in July was $715 per ounce.

 

Bilboes oxide mine

 

1,076 ounces of gold were produced from the Bilboes oxide mine in the Quarter, showing an increase from the 105 ounces produced in the first quarter of 2023. There was no production at the Bilboes oxide mine in 2022. The Bilboes oxide mine was intended as a small-scale, low-margin, short-term project the primary objective of which was to cover the cost of the Bilboes operation before the start of the larger sulphide project. Due to the lack of certainty that the oxide operation can operate on at least a cash-neutral basis, it will be returned to care and maintenance with effect from October 1, 2023.

 

Mining and metallurgical processing will continue at the Bilboes oxide mine until the end of September; thereafter leaching of material that has already been deposited on the leach pad will continue. Oxide mining and processing will resume when the stripping of the waste for the sulphide project commences.

 

The Company withdrew guidance in April 2023 for the Bilboes oxide mine. 

 

Revised marketing arrangements for gold

 

Since listing on the VFEX and following completion of the Bilboes acquisition, Caledonia has considered various avenues to achieve the direct export of its gold. Unrefined gold continues to be processed at Fidelity Gold Refinery (Private) Limited ("FGR"), a subsidiary of the Reserve Bank of Zimbabwe ("RBZ"), on a toll-treatment basis. The gold is exported from FGR to a refinery outside Zimbabwe, which undertakes the final refining and sells the final gold on behalf of Caledonia. Caledonia receives the proceeds of the gold sales directly into its bank account in Zimbabwe within a few days of delivery to the final refinery.

 

Retirement of Chairman

 

On May 5, 2023 the Company announced the retirement of Leigh Wilson from his role as Director and Non-Executive Chairman of the Company. John Kelly, who was already a Non-Executive Director of the Company, has been appointed as Mr. Wilson's successor.

 

Strategy and Outlook: increased focus on growth opportunities

 

The immediate strategic focus is to:

 

·

maintain production at Blanket at the targeted range of 75,000 - 80,000 ounces for 2023;

 

·

continue deep level drilling at Blanket with the objective of further upgrading inferred mineral resources, thereby extending the life of mine;

 

·

complete the Caledonia feasibility study on the Bilboes sulphide project to determine the best implementation strategy and estimate the funding requirements, and commence development of the sulphide project; and

 

·

commence exploration at Motapa.

 

The strategy and outlook of Caledonia is further discussed in section 4.10 of this MD&A.

 

3.

SUMMARY FINANCIAL RESULTS

 

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

 

Condensed Consolidated Statements of profit or loss and Other comprehensive income (Unaudited)
($’000’s)
			3 months ended June 30								6 months ended June 30
			2023				2022				2023				2022
Revenue			37,031				36,992				66,466				72,064
Royalty			(1,963	)			(1,854	)			(3,443	)			(3,612	)
Production costs			(20,726	)			(14,502	)			(40,576	)			(28,861	)
Depreciation			(3,409	)			(2,639	)			(5,664	)			(4,702	)
Gross profit			10,933				17,997				16,783				34,889
Other income			168				1				186				3
Other expenses			(1,461	)			(490	)			(2,099	)			(1,283	)
Administrative expenses			(3,183	)			(2,908	)			(9,122	)			(5,279	)
Net foreign exchange (loss) gain			(3,610	)			4,172				(2,077	)			5,081
Cash-settled share-based expense			9				57				(271	)			(310	)
Equity-settled share-based expense			(221	)			-				(331	)			(82	)
Net derivative financial instrument expenses			(54	)			41				(488	)			(1,697	)
Operating profit			2,581				18,870				2,581				31,322
Net finance costs			(1,057	)			(175	)			(1,824	)			(291	)
Profit before tax			1,524				18,695				757				31,031
Tax expense			(1,273	)			(5,314	)			(4,775	)			(10,033	)
Profit (loss) for the period			251				13,381				(4,018	)			20,998
Other comprehensive income
Items that are or may be reclassified to profit or loss
Exchange differences on translation of foreign operations			(330	)			(852	)			(699	)			(159	)
Total comprehensive income for the period			(79	)			12,529				(4,717	)			20,839
Profit (loss) attributable to:
Owners of the Company			(513	)			11,378				(5,542	)			17,318
Non-controlling interests			764				2,003				1,524				3,680
Profit (loss) for the period			251				13,381				(4,018	)			20,998
Total comprehensive income attributable to:
Owners of the Company			(843	)			10,526				(6,241	)			17,159
Non-controlling interests			764				2,003				1,524				3,680
Total comprehensive income for the period			(79	)			12,529				(4,717	)			20,839
(Loss) earnings per share (cents)
Basic			(0.6	)			87.7				(30.8	)			132.3
Diluted			(0.6	)			87.7				(30.8	)			132.3
Adjusted earnings (loss) per share (cents)
Basic			10.0				56.2				(17.3	)			118.8
Dividends paid per share (cents)			14.0				14.0				28.0				28.0

 

Revenue in the Quarter was 0.1% higher than the comparative quarter despite a 5.5% decrease in the quantity of gold sold as this was offset by a 6% increase in the average realised price of gold sold.

 

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

 

Production costs

 

Production costs increased by 42.9% in the Quarter compared to the comparative quarter and the on-mine cost per ounce increased by 56.6% in the Quarter from the comparative quarter.

 

The on-mine cost per ounce and the AISC per ounce increased in the Quarter compared to the comparative quarter as illustrated in the graphs below.

 

 

 

The cost of oxide mining at Bilboes contributed $317 per ounce to the overall increase in the on-mine cost per ounce. The large amount of waste that was moved to access the oxide mineralisation proved costly and Bilboes had an on-mine cost of $3,095 per ounce in the Quarter. Due to the uncertainty that the Bilboes oxide project can operate profitably, it will return to care and maintenance at the end of September 2023. Oxide material at Bilboes will be mined and processed in conjunction with the Bilboes sulphide project, as was planned for in the current Bilboes project feasibility study. The net book value of the Bilboes oxide mine of $851,000 was impaired, as the oxides mine cannot be run economically without extracting the sulphide mineralisation. Leaching of the oxide ore on the heap leach pad will continue until the end of the year to recover gold deposited on the leach pad prior to the termination of oxide mining. Bilboes is discussed further in section 4.9.

 

Production costs at Blanket for the Quarter increased from the comparative Quarter by 14.5% and Blanket's on-mine cost increased from $692 per ounce in comparative Quarter to $915 per ounce in the Quarter. Production costs at Blanket increased predominantly due to the higher than anticipated use of electricity due to the continued heavy use of infrastructure such as the No. 4 Shaft and Jethro shaft which had been expected to be used more sparingly following the commissioning of the Central Shaft.

 

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 higher than expected diesel costs were incurred to supplement the low voltage occurrences. Management is conducting a study on how to alleviate the effect of the low voltage occurrences in the most economical manner.

 

The benefit of the solar plant is not recognised in on-mine costs because the solar plant (100%-owned by Caledonia) sells power to Blanket at a price per kilowatt/hour which reflects Blanket's historic blended cost per unit. The economic benefit of the solar plant is therefore recognised by Caledonia, rather than by Blanket, and the benefit (approximately $46.84 per ounce of gold produced) is reflected in the AISC rather than the on-mine cost.

 

Labour costs at Blanket decreased predominantly because of the lower production bonuses paid in the Quarter compared to last year offset by increased overtime hours, increased employment numbers at Blanket, inflationary increases and an increase in the government mandated minimum wage.

 

Consumable costs per ounce at Blanket in the Quarter decreased due to higher repair and maintenance costs incurred in the comparative Quarter.

 

Various government service payments increased in the Quarter compared to the comparative quarter which increased on-mine costs by $10 per ounce compared to the comparative quarter.

 

Administrative expenses are detailed in note 9 to the Interim Financial Statements and include the costs of Caledonia’s offices and personnel in Johannesburg, the UK and Jersey which provide the following functions: technical services, finance, procurement, investor relations, corporate development, legal and company secretarial. Administrative expenses in the Quarter were 9.5% higher than the comparative quarter predominantly due to the appointment of more technical services staff and the cost of taking over Bilboes staff members.

 

The depreciation charge in the Quarter increased because of increase in the depreciable cost base following the commissioning of the Central Shaft and the solar plant. A reassessment of the useful lives of some plant and equipment items also increased the depreciation charge. The useful life of the Jethro shaft reduced due to the availability of the new Central Shaft and the useful life of certain generators, load haul dumpers, dump trucks and drill rigs reduced due to their current condition (refer to note 13 of the Interim Financial Statements). This was somewhat offset by the lower production ounces in the Quarter over which a large part of the cost base is depreciated.

 

Other expenses are detailed in note 8 to the Interim Financial Statements.

 

Net foreign exchange movements relate to gains and losses arising on monetary assets and liabilities that are held in currencies other than the USD. Large foreign exchange losses in the Quarter arose due to the delays of up to 3 weeks by FGR in the settlement of the RTGS$ denominated bullion receivables. This coincided with a period during which the RTGS$ devalued sharply against the USD from ZWL$2,770 on June 6, 2023 to ZWL$6,927 on June 21, 2023 and resulted in significant realised foreign exchange losses.

 

The tax expense comprised of the following:

 

Analysis of consolidated tax expense/(credit) for the Quarter
($’000’s)			Zimbabwe				South Africa				UK				Bilboes				Total
Income tax			1,488				64				-				-				1,552
Withholding tax
Management fee			-				41				-				-				41
Deemed dividend			91				-				-				-				91
CHZ dividends to GMS-UK			-				-				-				-				-
Deferred tax			(402	)			(53	)			-				44				(411	)
			1,177				52				-				44				1,273

 

The overall effective taxation rate for the Quarter was 83.5% (2022: 28.4%). The effective tax rate bears little relationship to reported consolidated loss before tax for the following reasons:

 

·

Operating losses incurred at the Bilboes oxide mine cannot be offset against profits arising elsewhere in the group – thus they reduce profit before tax, with no commensurate reduction in the tax expense;

·

Zimbabwean taxable income is calculated in both RTGS$ and USD, whereas the group reports in USD. Large devaluations in the RTGS$ against the USD result in substantial foreign exchange movements on the RTGS$ tax payable which have a significant effect on the income tax calculation;

·

100% of capital expenditure is tax deductible in the year in which it is incurred for tax purposes, whereas depreciation only commences when a project enters production; timing differences can alter the effective tax rate based on the capital expenditure for a quarter; and

·

The rate of income tax in Jersey, which is the tax domicile of the parent company of the Group (i.e. the Company), is zero which means there is no benefit to be realised by offsetting expenses incurred in Jersey against taxable profits.

 

The effective taxation rate for Blanket was 28.6% (2022: 28.8%), which broadly corresponds to the enacted income tax rate in Zimbabwe which remained unchanged at 24.72%. Zimbabwe income tax payments are made in the same proportion of RTGS$ and USD as revenue is received. Deferred tax predominantly comprises the difference between the accounting and tax treatments of capital investment. 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 management fees paid to CMSA and on dividends paid from Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”) to the Company’s subsidiary in the UK Greenstone Management Services Holdings Limited (“GMS-UK”).

 

IFRS basic EPS for the Quarter decreased by 101% from a profit of 87.7 cents in the comparative quarter to a loss of 0.6 cents. Adjusted EPS for the Quarter excludes inter alia the effect of foreign net exchange movements and deferred tax. Adjusted EPS reduced by 82.3% from a profit of 56.2 cents in the comparative quarter to 10.0 cents for the Quarter. A reconciliation from IFRS EPS to adjusted EPS is set out in section 10.3.

 

A dividend of 14 cents per share was paid in the Quarter. Caledonia’s dividends are discussed further in section 14.

 

Risks that may affect Caledonia’s future financial condition are discussed in section 17.

 

 

 

 

 

 

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

 

Condensed Consolidated Statements of Cash Flows (Unaudited)
($’000’s)
			3 months ended June 30								6 months ended June 30
			2023				2022				2023				2022
Cash inflow from operations			2				18,341				666				30,185
Interest received			4				2				9				3
Net finance costs paid			(1,231	)			(61	)			(1,431	)			(92	)
Tax paid			(1,001	)			(1,567	)			(2,346	)			(3,226	)
Net cash (outflow)/inflow from operating activities			(2,226	)			16,715				(3,102	)			26,870
Cash flows used in investing activities
Acquisition of property, plant and equipment			(6,009	)			(13,011	)			(10,602	)			(22,745	)
Acquisition of exploration and evaluation assets			(139	)			(412	)			(283	)			(636	)
Acquisition of put options			(811	)			(176	)			(811	)			(176	)
Net cash used in investing activities			(6,959	)			(13,599	)			(11,696	)			(23,557	)
Cash flows from financing activities						<