Caledonia Mining Corporation PLC (CMCL) 2022 Q2 法說會逐字稿

Okay. Good afternoon, ladies and gentlemen, and welcome to this webinar to run through the results for the second quarter of 2022 for Caledonia Mining.

I'm Mark Learmonth, Caledonia Mining's CEO. And I'm joined today by Dana Roets, Caledonia's Chief Operating Officer; by Chester Goodburn, Caledonia's CFO; and also, in attendance, we have Camilla.

Okay. So Camilla, can you please move on to -- move through the disclaimer. I just wanted to -- by the way, just a very brief summary. Production was excellent. Not -- the gold price was sort of a modest following wind; it wasn't particularly beneficial. So the real improvement in revenue was driven by the higher production. And then, the improvement in gross profit and profitability was a combination of higher production and excellent cost control. But I think more information on that operationally from Dana and financially from Chester.

So I think we'll just move on. Okay. I'll ask Dana if he could just give us some highlights for the production for the second quarter. Dana?

Good afternoon. We had an exceptional quarter. And for that matter, a record quarter. We are building up to 80,000 ounces to be in steady state next year. And the higher production was due to increased tonnage milled and the improved grades and recoveries. And Central shaft is currently only hoisting waste, while we're increasing infrastructure around the shaft.

We basically equipped one [ore post], and then, we believe, a second ore post. And we should start hoisting reef by the end of the third quarter going forward, which will put us in good stead in the shaft, plus the infrastructure around the shaft will be fully operational. So currently, we are only hoisting all our four shafts, but it helped a lot that we could drive it all the way to the Central Shaft.

And then, at the end of the quarter, we had 12,700 tonnes of ore on the stockpile, estimated to contain about 1,500 ounces of recoverable gold, which is not in the quarterly production total. We're still confident that we will -- with the guidance of 73,000 ounces to 80,000 ounces and the July production of 6,535 ounces.

Thank you. Mark?

But Dana, I just want to give a little bit of background as to why July's production was a little bit disappointing. I think you should just talk about BM7.

Yes. During July, we lost one of our primary mills, ball mill 7, [the cube of mill brook]. Unfortunately, we couldn't repair it and it had to be sent in to be recasted; it's made of cast iron. And that should be operational by the end of August, again, so it did limit our money, which obviously been -- went through to August.

And that stockpile of us just keeps on growing. Good news is that we are busy hoist commissioning the new regrind mill, ball mill 10. And so by the end August we will be fully operational with the ball mill 7 repaired and the new regrind mill fully operational. And that will give us the capacity that we need for total milling at Blanket. And then, we will start eating into the stockpile.

Thank you, Dana. So we'll just move on. Okay. I'll ask Chester to run through the financial slides. So Chester, over to you.

Thank you, Mark, and hello, everybody. First, on the back of those production numbers, we can see that coming through on our gross profit, that's up quarter on quarter by 29%; for our half year, it was up 44%. And as Mark said, our production cost is in check; our on-mine cost is down by 2.9% quarter on quarter and down 10% on a half-year basis.

Administrative expenses, that's up quarter on quarter, mostly due to advisory services fees incurred on the Bilboes transaction, and we'll come on to that in a moment. Net foreign exchange gains amounted to $5.1 million for the half year. I think that number is a $9.7 million gain that's unrealized. And that reduces our deferred tax expense, and, in effect, reduces our effective tax rate.

[From there] it gets deducted from our adjusted earnings per share, and there you can see in our quarterly number is down by 10%. And on a half-year basis, our adjusted earnings per share is up by 4%.

Please turn the slide. Production costs, the wages and salaries was up quarter on quarter. That's to remunerate our staff for the increase in production. And our consumables are up quarter over quarter due to inflation pressures experienced on explosives, drill steels, and cyanide. Inflation is not new to Caledonia; you can see it in the global economy.

Electricity is up. Electricity is down, sorry, by $500,000 quarter on quarter. And that's due to capital initiatives that we implemented by installing the auto-tap changers at our forward shaft [incomer], reducing our utility bill, and also reducing our use of diesel gensets. All of production cost remains in check.

From the left, let's turn the slide. Administrative costs. Advisory services fees are up due to the conclusion of the Bilboes agreement. Finding awareness and various advisors, you'll see some more coming through into the team. Investor relations is up, and travel is also up, as we see in our uptick in travel of our staff members post-COVID-19 lockdowns.

Cost per ounce remains in check. All-in sustaining costs for the quarter end is up by 3% due to larger administrative costs, as explained. And for the half year, it's down by 2%.

The breakdown of tax indicates a lower deferred tax charge as a result of unrealized foreign exchange gains, the uses of deferred tax liability, then reduces our taxation charge, and also effective tax rate.

Our Zimbabwe legislations remained fairly stable over the years and so as the enacted tax rates in Zimbabwe. The increase of production has also bolstered our net cash from operating activities, that's increased quarter on quarter by 31%. On a half-year basis, that's increased by 83%.

Our cash generated -- we've invested back into Blanket and invested back into the security of supply of electricity via our solar plant. And we've also repaid some loans. Further to that, we've returned about $4.5 million over the half year to our shareholders.

If you look at our balance sheet, it shows large investments in our total assets. And largely, the result of -- the reason for the increase of our total assets. Current liabilities remained fairly stable. And as of June 30, mostly consists of what we are in [tax man] and [freight vehicles]. As you can see, our balance sheet is -- it's got a really low (inaudible).

Cash at quarter end amounted to $10.9 million. $8.9 million of that was in Zimbabwe. [Our post-closing], we delivered about $4 million to the UK and to the Jersey. We've converted a Letter of Credit to pay us in African rand for goods purchased at the Blanket Mine of $2.25 million. That was exchanged to South African rands [which is now] situated in South Africa.

Caledonia continues to remit sufficient cash from Zimbabwe. And we are not accumulating unusable or unremittable RTGS$.

Mark, I will turn over to you to Bilboes.

Yeah. These slides -- well, the following slides repeat the slides that we presented several weeks ago when we briefed shareholders on the Bilboes transaction. So I'll go through them quite quickly just as a refresher.

Well, basically, Bilboes is a large-scale, low-cost, long-life gold project located somewhere north of Bulawayo. Blanket Mine is somewhere south of Bulawayo. So there's no scope for significant sort of synergies; they're not close enough to run on a combined basis.

So we signed a sale and purchase agreement to purchase this asset for consideration of just over 5 million shares and a 1% net smelter royalty, which equates to about 28.5% of our fully diluted equity.

Bilboes has a large resource base. It's got reserves of just under 2 million ounces at 2.3 grams a tonne, measured and indicated resource of over 2.5 million, and an additional inferred resource of over 0.5 million. And there's FS as well, there's also a significant exploration potential remaining on the property.

The existing owners have a feasibility study, which we published, which caters for a very large open-pit operation, producing about average of 168,000 ounces of gold a year. I think it peaks at just under 200,000 ounces a year. It's -- given the fact, I'd say, it's large and it's got a good grade, it's got a very attractive internal rate of return of 33% at an all-in sustaining cost of $826 an ounce.

Now the CapEx to build that project at a single leap in the feasibility study is about $250 million. Now that will probably have gone up, actually, given the current environment. I want to be very clear that that we -- our approach to commercializing this property will take into account the cost of raising the funding for the property; and funding will come from three sources.

First, debt, to the extent that's available on attractive terms. Secondly, from internal cash flows, that's perhaps from Bilboes -- that's perhaps from Blanket and also from the tribute arrangement, which I'm going to talk about in a minute. And thirdly, from equity. And to be absolutely clear, we are not throwing ourselves and pretend the mercy of the markets to raise equity and knock down prices.

So frankly, if the equity price don't -- isn't conducive, we will simply fall back onto a smaller-scale first-phase project where we will fund from internal cash plus debt, and then do the second -- from the second phase, from the cash flows coming from the first phase. And that's exactly the approach that we took on the Central Shaft project, which, as you recall, we built completely using our own internal resources.

This is somewhat unusual, I guess, for a non-Zimbabwe transaction, this tribute arrangement. So even before we complete the deal -- and completion won't be until later this year at the earliest. Even before completion, we will commence, we'll invest money.

In Caledonia, we'll manage and restart a relatively small oxide operation, which should be capable of starting -- producing within a few months, and then we'll become cash neutral, so we do recover our initial cost of restarting operation within about six months. And thereafter, we'd expect it to generate a modest cash flow of between $1 million and $2 million a month for a period of about 13 months. So that cumulatively is quite a large accretion to our cash generation.

Should we move on? The current shareholders in Bilboes is a company called Toziyana, which is a vehicle controlled by Mr. Victor Gapare, who is a prominent Zimbabwean mining entrepreneur, was previously a President of the Zimbabwe Chamber of Mines, and I sat with him on the Executive Committee of the Chamber of Mines for several years. Prior to that, he was an executive of Anglo-American Corporation in Zimbabwe. So he's got half of the asset.

Baker Steel Resources Trust, those of you in the UK will not need any explanation as to who they are. They're a London-listed investment trust managed by Baker Steel Capital. They got 24% of the balances held by a Chinese investor group called Infinite Treasure.

What you see on this page is extracted from the feasibility study, the estimated monthly production. You can see it's sort of -- it's about 168,000 ounces, but peaks in sort of 2029 at nearly 200,000 ounces.

And then on the right-hand side, you see the amalgamation of Blanket production plus Bilboes production. Frankly, that's not particularly useful, because, on the Canadian regulations, we can only show production from measured and indicated. We can't amalgamate that production with expected production from inferred. And so that's why, frankly, once you get beyond 2026, under Canadian regulations, Blanket begins to look quite anemic, even though for practical purposes, we expect to continue producing at 80,000 ounces for the next 10 or 12 years.

Let's move on. This is the production cost. C1 cost is the light blue. All-in sustaining cost is the dark blue. The all-in sustaining cost moves around, largely driven by the amount of stripping that needs to take place. But it's a very competitive cost profile.

This just shows how the shareholder base changes. So post the transaction, the existing shareholders will -- existing Caledonia shareholders will hold 71.5% of Caledonia. And the Bilboes vendors will hold, as shown in the little cutaway, so you'll end up with Toziyana holding 13.5%, Baker Steel will hold 4.5%, and Infinite Treasure will hold about 10.6%.

There are several conditions precedent to the transaction, two really very important. One of them is that we will insist that we get the right to export the gold produced from Bilboes directly. So we will not sell to Fidelity, which is a government-owned refiner. We'll sell under our own auspices to an offshore, a non-Zimbabwean precious metals refiner, LBMA accredited. So probably [around] refineries.

And so around refineries will pay us directly, and we will hold 100% of the sale proceeds in US dollars with no requirement to convert the US dollars into local currency. That condition precedent cuts straight through one of the biggest concerns that investors, and certainly lenders, have about operating of gold mines in Zimbabwe, which is a current requirement to sell gold to Fidelity.

And then, a second and sort of very important commercial precedent is getting more clarification on the electricity supply to the project. Although having said that, the changes in the electricity supply, sort of, landscape in Zimbabwe are moving very quickly at the moment. So that actually has a very positive direction, and it would appear that the government is now moving to liberalize access to independent power producers for larger users such as Caledonia, Blanket, and Bilboes.

And that means that we can get direct access to power produced in the region, which is mainly hydropower from either Mozambique or Zambia. And then the Zimbabwean authorities will wiggle that power through the grid to the project. And it's -- whereas Blanket, in particular, suffers because it's at the end of a somewhat badly maintained line. Bilboes is much, much, more fortunately located, in that it's got close access to a much better maintained, lower utilized lines. So that actually all goes quite well for the Bilboes project. And then several just a little more sort of technical CP, which I won't trouble you with at this stage.

Should we move on? This just gives some context for the Bilboes assets. So what you see here is some of the other African gold development projects. And you can see, looking at recovered grade, Bilboes is far ahead of the rest; its recovered grade is just below 2 grams a tonne. And actually, I think it's worth noting that the average grade for most open-pit gold operations is now less than 1 gram a tonne. So a 2 gram a tonne recovered grade is outstandingly good. Should we move on?

This shows the size. Yes, there are one or two assets that are bigger, but Bilboes is certainly up there in terms of size, with 2 million ounces of mineable gold, with further exploration potential. Then finally, we paid a good price for it. We paid, I think, about $27 per M&I ounce, which is very competitive, and we're very pleased with that. So all of those three things together, the size, the grade, and the fact that we bought it for competitive price, bodes well for the future.

The tribute arrangement, I think I've already mentioned. So Biboes already has an on-site oxide operation, which has been running for several years. But the cost of their sale process, the Bilboes sale process, took several years longer than expected -- several years longer than they had expected. It means that they have now exhausted their readily accessible oxide material. And so now, they need capital to do a pre-strip to get down to uncover the material that's down to depth of about 40 meters.

So we will -- we've entered into a tribute. We will fund the restart of that oxide project, and we will be responsible for the implementation of the project and for all things related to the finances of the project, and we'll collect the cash. And so the initial capital cost and sort of start-up costs are estimated to be about $5 million; that's the cumulative max after about sort of 10 to 12 weeks. Then, thereafter, it becomes cash-generative quite quickly within about six months. So it should continue for about 30 months, the whole project.

So let's move on. This just shows the dividend. We stopped increasing the dividend earlier on this year, recognizing that it's quite likely that we would engage in transactions, which would mean that we have a future funding requirement.

That's not to say the dividend would never go up again in future. We have every intention of continuing to increase the dividend. That just seems that whilst we have a currently unquantified sort of funding need, it is prudent to, for the time being, keep the dividend at $0.14 per share per quarter. But the whole rationale for entering into transactions, such as Bilboes and also Maligreen, is so that, in due course, we can substantially increase the dividend per share.

So as a shareholder myself, I've got a good idea as to what I believe I could expect today from Blanket Mine. And it's important to me that having -- once we've acquired Bilboes, we've brought Bilboes into production, we've also done Maligreen, I want to become confident that I can expect a substantially increased dividend, higher than I would get, if we just stayed with Blanket. And that's the whole approach to this exercise.

Let's move on. So that's the end of the full part of the presentation. So can I suggest that Camilla opens the lines, and we'll deal with questions.

If any of you are shy and you don't want to speak, you can type a question. But I will say, I find those quite hard to deal with because without context, sometimes it could mean that you perhaps may not get the answer to the question, if we don't have sufficient context. So I'm going to say, I prefer if people actually gave us a question. So Camilla?

There aren't any questions at the moment.

No questions. Okay. Well, let's --

There is one.

I thought we've got an early afternoon off.

Hi, sorry.. Can you just run through -- your CapEx has gone up a little bit. Is that the end of the CapEx going up or --?

No. CapEx -- we have -- we figured in previous quarters that CapEx was going to go up. And that's a combination of the slightly increased cost. I mean, I can -- I'll give you my thoughts, and if, Dana, you want to chip in and add more, or, Chester, chip in and add more.

It's a combination of a more expensive development work related to Central Shaft. We're spending quite a lot of money remediating the electricity supply. So we have to replace some generators that blew up because they've been overused, and we're spending more money on auto tap changers, which will -- which is -- actually, we did some auto tap changers at the end of last year and that paid for itself remarkably quickly because it reduced our diesel consumption. So we're now replicating that exercise at the electrical equipment around Central Shaft.

So Dana, Chester, do you want to add any more to the CapEx discussion?

Mark, if I could just add that, during COVID, just take everybody back, we had half a crew finishing the shaft, equipping it for six months. And then we also had delays with the electricity, and we finished equipping the shaft, but the development going out was delayed because of that.

And what it meant was that the more expensive -- Mark spoke about more expensive -- we were coming down with declines that maintain the profile, the production profile, not running out of areas to mine. But it meant that we had to push those declines down a bit further. And that is done with tractors equipment, and that development cost is -- it was extra, and it was higher.

And then, at the same time, the electricity cost was -- because, as Mark said, we had to run the generators more because we had more dirty power and load shedding at Blanket, so that was all [externally]. We had to push up the tonnes for this year; we had to push it up by 3%. And that is why we have installed an extra ball mill because the grade drops slightly with the latest information available. So a combination of that --

Although having said that, our grade -- the grade was actually -- has been better than we'd expected [for the month].

Yeah. But -- because of that, we increased our milling capacity, which also put us in good stead for the future. So a couple of things that I saw our CapEx going up a bit this year.

Can I (multiple speaker) on electricity, can I explain something? The auto tap changers that we put in place late last year protected the electrical equipment around number four shaft and the metallurgical plant. And so the reduction in diesel consumption has flowed through into operating costs. And that's why -- one of the reasons why the online cost per ounce fell by 3% or so.

The electrical equipment around Central Shaft is not currently protected by auto tap changers. And so, that's where we are continuing to have to run the diesel generators. And that's why that contributed to the higher capital cost because the diesel usage at Central Shaft is capitalized. I just thought I'd better make that point.

Sorry, Chester. You were going to (multiple speakers)

Yes. To add to the Blanket extension, we also spent a large amount on solar. Our solar reached mechanical completion by the end of June. And a large portion of that was bought from Q2.

Certainly, we do -- we are looking -- it's fair to say that we will have some catch-up capital expenditure. I mean, you will -- you're at mine recently, then you can see it with your own eyes. There is a need to upgrade some of those office facilities and what have you. But that's -- that is by no means sort of structural stuff.

So we are getting through the worst of the CapEx burden. And I do expect over time it will fall away.

And then -- yeah, that all make sense. And then, just on the milling, what's your capacity going to be when everything's fixed and back up and running?

I will ask Dana.

We will be able to do the --

(multiple speakers)

Our milling capacity will go up to 2,400 tonnes a day. Currently, we're doing about 2,000 tonnes a day. Everything is up and running.

Okay. Wil, does that answer your question?

Yeah. Just on the catch-up, that's all, and that's fine.

Okay.

That's excess. You're going to have excess capacity anyway then, so you'll catch up your --

First, that stockpile, which continues to grow, should hopefully start shrinking.

Yeah. And then, just on the solar, do you expect any more payments? Or was it up to them to fix it?

There's quite a lot of activity relating to solar at the moment between us and the current contractor, the ZETDC. And if you don't mind, I'd rather not unpack that at this stage. But you've been there, you've seen the plant is there. It's ready to get plugged in.

So we're working as hard as we can to try and get that sort of final commissioning fixed so that we can start using the electricity from that solar project in the plant. So it comes down to the commissioning.

Okay, cool. That's it for me. Thanks.

Thank you, Wil.

We've got another question here from Tonderai.

There's a question -- sorry, yeah. There's just a question. Okay, go on.

Thanks, Mark. My first question relates to the growth through acquisitions that the company is currently going through. Maybe if you can share with us after Bilboes and probably the Maligreen, is the company looking at acquiring more assets? And is it still in Zimbabwe or in other areas?

We -- there are other assets that we would like to add to the portfolio. They are by no means as pressing as -- Bilboes is ready to go. Maligreen is a little bit further down the track. Any other assets that we were looking at would become behind Maligreen, in that it would have -- it's much more exploration focused.

So the answer is yes. Yes, I think it would be in Zimbabwe.

Okay. Thanks so much, Mark. I think that's all for me.

Okay. So I can see two written questions here.

That's also Howard (inaudible)

Yeah. Let's just deal with these two written. So can you briefly speak to any current or future exploration projects to understand?

Yes. So we do recognize -- at Blanket, in particular, we do believe there is great exploration potential at depth. So that's following the existing ore body deeper in the shallower areas of the mine -- by shallow, I mean above 750 meters -- those areas between the existing ore bodies that we've known about that have been depleting.

Also, we believe there is mineralization to the immediate north and south of the current mine area. And then further, we think there is -- we want to explore something called the banded iron stone formation, which lies about 800 meters to the east of the current mining areas. So there is plenty of exploration potential.

The impediment to us having made -- making substantive progress on that, partly the extension of the exploration at depth, we need to improve the access that we need to drill out some -- excavate some exploration [covers]. And that's in process now, and should allow that exploration to start towards the end of this year. Then, the further exploration, we need to invest in HR -- human resources and technology to improve our exploration capacity.

Dana, do you want to add anything to what I've said?

Mark, maybe just on the -- first of all, we are looking at adding people to it just to help us with, especially, looking at the opportunities, especially from surface, [Bilboes], how we're going to tackle it.

Then the other extra people that we need, as simple as you add more [drawbacks] you add more people to operate it. So -- but we want to make sure that we start drilling in the right places and do not waste money. And that's why with putting the models together, we need extra skills to do that.

It's fair to say that exploration -- that for the past seven years or so, we've been focused pretty much exclusively on digging this 4,000-foot-deep hole, filling it full of steel, and then doing horizontal development. We've now got the flexibility and the capacity to begin to take exploration much more seriously. And we are taking it more seriously. It's becoming a much higher priority in our daily lives, it's fair to say.

There's a question from somebody in Austria. Resupplies from South Africa, how many months supplies on hand, in case of South Africa lockdowns at the border? How would Bulawayo -- [logger] suppliers, suppliers of beer?

We don't have supplies of beer at the mine. So Chester, you want to answer that?

Yes. Our inventory levels (inaudible) in about $20.2 million. That's down from -- by about $1.3 million, will drive the low increase at Blanket.

To answer the question on how much inventories we've got on hand, we're going to look at our inventory and break it down. Principal items, that's about five to seven weeks. And then we've got space at the moment for quite a long time, just so in the event that something breaks down. So critical -- if you look at any closed downs in South Africa, so we can supply it for about seven weeks of having supplies at Blanket.

Look, it's fair to say that what happened over the past few years is that the mantra just in time became just in case. And I think it was the case that in certain sort of line items, the mine was carrying too much stock, which meant that our working capital was going up. So we have done a bit of an exercise to try to redress that balance.

But having said that, we don't run the mine. That's such a -- sort of on a bare-bones basis, such that if there is any interruption in difficulty at the border, the mine runs out of stuff. So it's a balancing act. But honestly, I think it has gone too far in terms of overstocking. So we're taking corrective action.

And just to add that a lot of those critical suppliers, we can get in-country. It just depends on what price we get to that. And we can get it all across the globe. So we're not reliant on one kind of [leading] suppliers.

But how much -- what's being locally supplied? I mean, as far as I know -- Dana, you're able to say what's supplied locally and what we procure in South Africa?

Mark, if you look at, basically, CapEx, we are very much dependent on South Africa and the rest of the world for that matter. But exposes -- some of it we get locally and some of it is South Africa. And then the steel balls for [the mall], for example, that's locally. So if you look at kind of all the day-to-day running stuff, it's more locally.

And that also changes over time. We compare prices on what we can get globally outside of Zimbabwe and what we can get in-country. And we try and get the right quality and at the right price for [our mine].

Yeah. Howard, can we open the line for you? You got a (multiple speakers)

Thank you. Is the difference between reported earnings and adjusted earnings the taxes related to depreciation?

That's a fantastic question. I'm so pleased that Chester can answer that question. I've got to say, Howard, this quarter was, particularly, it becomes -- some quarters, it becomes very hard to explain. And it's largely driven by the effect of foreign exchange gains and losses on the deferred tax calculation. But I'm delighted that Chester can talk to you about that. You need to keep it in less than 10 minutes, okay?

I'll do my best, Mark. It is -- that takes into account in [CIL] and non-cash items. For just the EPS, we take out non-cash items such as that large unrealized foreign exchange gain that we had of about $9.7 million that reduced our adjusted earnings per share.

We also take out deferred tax. It's a non-cash item. It's a lot smaller this quarter. So the smaller effect, as you see in our presentation there, the quarterly adjusting is a lot lower than the comparable one, mostly due to that foreign exchange devaluation that's non-cash.

Genuinely, some years ago, we started doing an adjusted earnings per share because we just -- there's often so much background noise in the IFRS results. I mean, things like massive foreign gains, sometimes we get big sort of funny income items coming from export incentive scheme.

So it was a genuine attempt to try and make it more sort of user-friendly for users. But unfortunately, often it -- that means that we create another problem for ourselves and that we end up with the effect of the foreign exchange gains then flowing through and fiddling around with deferred tax and kind of chasing our tails.

So half we would say, just leave it to IFRS, let people work it out for themselves. But often there are some huge numbers floating around the place. And that's sort of a feel -- we sort of feel as though we should try and interpret it for our shareholders. But sometimes it feels like it's more trouble than it's worth actually.

Second. Is your solar plant not yet operational? I thought it would be operational around now.

It's not been commissioned, that's the problem. Chester, you want to explain exactly what's happening?

Yes. We need to connect to the Blanket Mine group for us to commit. We need to connect to the Blanket Mine group. We need to get cooperation from the ZETDC.

Just explain, Chester, just explain who they are.

ZETDC is the utility of Zimbabwe. And they need to approve any connection to any grid (inaudible) above. We also need to get our EPC contract to do the mainstream test and finalize the commercial work on the solar plant. But the solar plant has been mechanically completed for several weeks, barring the energy management system.

So really (multiple speakers) what it comes down to is a failure to communicate between the EPC contractor and ZETDC. And it's fair to say that ZETDC are now cooperating fully, because, as I said previously, there's quite a lot of actions -- stuff happening in that particular area. I'd rather not sort of dwell on that too much at this stage.

But it's en route? It's in process?

It's en route. It's there. I mean, Wil, who asked the question earlier, was -- saw the thing like a month or so ago. It's there, and it's frustrating that all it takes is a few bits of testing to actually get the thing commissioned and operational. But I think what I would leave you with is the fact that we do have contractual protections in place to recompense us in the event of delays such as this. That's all I can say.

Okay. My final question before I comment is could you -- Mark, could you develop both Maligreen and Bilboes at the same time, both managerially and financially?

I'd say yes, but Dana would say no. Dana doesn't want to do -- no, I think, financially, it might be a bit of a stretch financially. But I think, more realistically, trying to do two projects at once in Zimbabwe, I think, may be too much of a challenge.

I mean, Dana, do you want to give some more context on that?

Yeah. If you want to build two projects at the same time, experience -- past experience with that, it becomes a headache. Ideally, our model will be there. You build one while you get the other one shovel ready to do the feasibility study and everything. So once the project starts paying for itself, then you start building a new one.

But it's -- how -- it's also fair to say that Maligreen may benefit from -- obviously, it needs a feasibility study. But Maligreen may well benefit from further incubation to see if we can actually find a bigger resource base.

Dana, be careful about that phrase, shovel ready. We learned and experienced here what shovel ready really mean and what they're shoveling.

Okay. All right. Then let me rephrase it. When we are ready to build it, feasibility's time and finance it, go ahead.

Finally, I'd like to add, Mark. For $5 million plus $55 million for Bilboes, in six months or so, you'll be generating cash, say, $1.5 million between $1 million and $2 million. So per year, that's a 30% return per year as long as it lasts. That's during startup; that makes the deal even more attractive. That's pretty fancy.

Absolutely, absolutely, absolutely.

Let's hope it lasts for four or five years.

Well, we really think that we'll -- well, we don't have a feasibility study for the oxides, so we can't really talk about it in more detail. But when we evaluated the project and when we agreed the deal, we have attributed no value to these oxides. It wasn't included in the data room. So you're quite right. This is like a bit of a windfall.

And I'll add something else that I just remembered. The attitude of [Zimbabwe] -- if that's the correct pronunciation -- towards independent power producers is really --

Absolutely.

-- really useful description of commercial changes undergoing under Zimbabwe, which people still think (multiple speakers) it's pretty risky. I would say there's some parts of Australia or Canada, and certainly Mexico, that are riskier. That's a very, very positive development.

It is. And frankly, it gets to the point where when a country like Zimbabwe is faced with the difficulties it faces, they've just got to take out the -- going to come up with the obvious solution, which is the government must step away and allow those companies like ours that have got the money (technical difficulty) to do the necessary, and it's really refreshing.

We saw something similar happened actually relating to electricity as well, like about 10 years ago, when there was a similar sort of crisis. And the government moved very quickly to fix the problem because -- don't forget -- I mean, I don't need to remind South Africans of this, that people don't like it when they're home in the dark for 12 hours a day. Isn't that correct, Dana?

And that phrase, government stepping away, it's very rare. It's very rare that a politician relinquishes that kind of control, and it's surprisingly encouraging.

Yes, for this it is --

Overall, it's really nice work, guys. One day, people will figure out that 5% yield is attractive.

Good. Okay. Any more questions?

Thanks.

Thank you, How.

You're welcome.

Tony. Are we looking for alternative logistical chains access from Mozambique? I think, we do. The solar panels did come in from Mozambique at May.

That's right, Mark. Yeah, it's down through the border post. And we've also identified other supply lines from the [office bay] (multiple speakers)

(multiple speakers) so that's coming through Namibia. We are -- we do recognize the inherent risk of relying on South Africa as a sort of source of product and as a sort of shipping conduit. We do recognize that. And so we have -- beginning to develop alternatives.

Is there any more question? Would you consider share?

No. Offering shares in lieu of dividends, we looked to that, and it's called a drip. Isn't it? Dividend reinvestment program, I think. And that caused some tax issues for some shareholder bases. So I think we just prefer to do cash, I think, at this stage.

So Dana, the mine is basically like the gold fields video. So how many vehicles are underground, how many vehicles are underground [over] three levels?

These vehicles -- when I think of these vehicles, I think of something like a Bentley Mulsanne underground. They cost about the same as a Bentley Mulsanne, don't they? And the tires are twice as expensive.

So Dana, what's the -- talk about the fleet, talk about the underground fleet?

Mark, we've got LSDs and we've got dump trucks that we use. And of those, we've got about 12 LSDs and 11 dump trucks.

Okay. Then it goes on to say, how long or how deep do you drill? So what's the daily drilling for production? I think it's 3 meters, isn't it?

It depends in our [long wells touch]. We drill about 12-meter holes, your sub levels are 15 meters apart, and you drill from level to level, and, obviously, it's about 2 meters wide. That's why it's not a full 30 meters you drill. And then if you look at our [Andre and Turpin] they will drill 2-meter holes.

Yeah. We have one blast today, which is normally about now, isn't it? It's about tea time?

Yes.

Yeah, yeah.

Great.

Good. Are we done for -- any more typed questions or any more -- anybody want to ask a question? Okay. I think we're done then.

Okay. Well, thank you. Thank you for joining. And obviously, we'll update you with further news as appropriate. But thank you very much.