Caledonia Mining Corporation PLC (CMCL) 2024 Q3 法說會逐字稿

Okay, ladies and gentlemen, welcome. Good afternoon. Welcome to this call to discuss Caledonia's results for the third quarter.

In addition to the usual discussion of financial and operating results, we'll also discuss the preliminary results of the exploration program at Motapa, which we published this morning. And I'll also make some brief comments regarding the progress at Bilboes.

I'm joined this afternoon by James Mufara, who's our Chief Operating Officer. He joined us in May by Chester Goodburn, CFO and a new person, a new face, I think to most of you will be Craig Harvey, who's our Vice President of Technical Services and he's responsible for our exploration activities. So he will say a few words about what we're doing at the top.

And then I'm joined by Victor Gapare, who's a Director and he will field questions relating to Bilboes and or the general environment in Zimbabwe.

Before we get into the presentation, I just want to make a couple of observations. The first is that Caledonia is changing very rapidly and that's reflected in the three announcements that we published this morning. First of all, we've got the financial and operating results which largely reflect the performance at Blanket.

It's fair to say that production has stabilized from what was a difficult time in 2023. But we now need to address the issue of costs and we are facing some stronger headwinds than normal, particularly in respect of higher electricity costs and labor costs and the effects of the continued currency and stability.

We are accustomed to managing these risks. And in the course of presentation, we've set out some of the steps that we've already taken to address these areas. And we'll also outline some other issues which at this stage, it is too early to quantify the effect or indeed the timing when that will come into effect.

So we've got the financial operating results relating to effectively Blanket. We've got very encouraging results from Motapa, which reaffirms and recompose our strategy of investing in Zimbabwe to create a mid-tier Zimbabwe focused gold producer. And I think that strategy is now being vindicated by what we're seeing at Motapa.

And clearly we continue the dividend. A third press release this morning was the continuation of the dividend. We have attractive and competing calls on our capital across the business, but maintaining returns to shareholders is a remains a key part of our strategy. So with that, we'll get into the presentation, regrettably we do it.

I just go back in a minute. Camilla, let me just deal with that. So yes, we had a fatality at the mine in late September. James, we'll talk a little bit more about that. Just under 19,000 ounces of gold were produced in the quarter, a little bit less than we did in the same quarter of 2023. But let's just note that was a record production quarter.

So we're very comfortable with all the production run rate of just under 19,000 ounces and we are -- we remain on track to achieve the full year guidance of between 74,000 and 78,000 ounces. As I mentioned, encouraging results that Motapa, which Craig will talk about in a moment. We've also announced the forthcoming sale of the solar plant that's been operating slightly better than expected.

We built it for at a cost of about 14 million. We're selling it for just over 22 million. We will continue to get the power that's generated from that solar project. So by no means using the benefit of getting that reliable power. And in addition, the new owner is now evaluating a second stage of that solar plant, so we can release the capital and use the capital elsewhere in our business.

We already mentioned the fact that we've declared another dividend of $0.14 and we'll talk a bit more about the flows that we're continuing with the feasibility study and we're making some progress now on funding options for the -- for that project.

So moving on, I think I've dealt with most of these things. I mentioned production, gold prices benefiting from higher gold price, an average price in the quarter of over 2,400. That's resulted in improved revenue, improved gross profit.

But the net profit to the shareholders, as Chester will outline, we then suffered the headwinds of continued foreign exchange losses and some other unusual expenses which Chester will outline in due course. So I think with that, we're going to move into the Yeah. So can I ask Craig -- sorry, can I ask, James to just run through the review of the operations of Blanket. James, could you do that?

Thank you very much Mark and good afternoon to you all. As Mark already alluded to, we regret to inform you that we lost one of our treasured employees, (inaudible) on the September 21. They said employee was in the process of installing support when this fall of ground actually occurred fatally tripping him. Despite all our efforts with the rescue team to try and bring him out to surface and resuscitate him unfortunately, he succumbed to the injuries that he had suffered in this fall of ground.

As an organization, Caledonia, we will strongly believe in a culture of care and growth and this is something that we treasure ourselves with. We also believe in total or real risk reduction all the time and we believe in learning from the incidents that would have happened.

We have given the employee's family support and we've also supported the government with the investigation that they actually took out with regards to the employee that lost their life. Subsequent to the accident, we actually employed the services of DuPont or DSS Plus to do a total diagnostic on our operations in order to see the whole of our value chain with regards to safety and health.

This work we believe will assist us in our quest for zero harm on our mines. We should believe, and totally and thoroughly believe that it's both an, moral imperative and an operational imperative. On the production of the quarter, I'm glad to announce that in terms of development, we were actually came in 7% above -- close to 7% above our plan for the quarter. This is good with regards to our future flexibility that we'll need because the development is opening up our future possibilities of flexibility.

In terms of tons, we're neck on neck with regards to, what our plan was. However, we set back because our grade was just around 4% below our plan for the quarter. This was a result of a fall of ground that we had at the beginning of July, in one of our stopes Eureka. And we couldn't actually quickly and in time have the flexibility to replace this stope.

As a result, we actually suffered this drop in our grades -- in our asset grades. We have ever since moved back into better stopes, to stabilize the grid, but it was a little bit too late to recover the quarter at that moment.

As a result of the great drop that we had, we actually ended up with, our ounces just on 6.9% below for the quarter. The improvement that we see in the development and the achievements that we see with our targets at the moment will ensure that to move, in the future, we'll isolate ourselves from incidents of inflexibility that (inaudible) hampered us in the previous quarter.

Thank you, Mark.

Okay. I think we'll move on to finance. Can I Chester, can I ask you to run through these, these pages with finance, please?

Yes. Thank you, Mark. It's good to see our revenue up by 13.6%. That's 28% due to additional prices or higher prices that we've received. Royalties remain flat at 5% of revenue, and production cost has increased by 2.9%. So it's good to see the cost of Bilboes coming down, and also the revenues of Bilboes covering the all-in cost for Bilboes.

Production cost at Blanket has increased. And as Mark has said, we've got some cost initiatives to improve on that and we'll get to that in a bit. And then depreciation has decreased, and that's due to lower ounces. It was quite pleased to see the gross profit at an increase of 37% for the quarter.

When we look at the production costs, this on a per ounce sold basis, you can see that the wages and salaries has increased and that should be due to additional headcount that we've employed at Blanket as well as overtime that we spend. And we've got some initiatives to turn that around.

Consumables increased predominantly due to once off repairs and maintenance that we've done in our engineering and metallurgical plant and that shouldn't reoccur. So I'm not too concerned about consumables. Other than that, repairs and maintenance charge, we can see that our prices are really good. And there's actually been a reduction -- slight reduction in our variable consumable costs on a per ounce basis.

Electricity has increased at Blanket and that's due to higher maximum demand charges that we are receiving. If you exceed a certain demand charge or let's say electricity load at the mines grid, the utility would increase the rates that they charge, and that increases the cost that we see. In addition, they also levy a penalty, if you have a low power factor that comes out of your grid and that has also increased our electricity charges at Blanket mine.

But we've got some initiatives and some of them have already been or is about a week away from being implemented. Online cost and administration at the mine has increased predominantly due to the re-basement of costs, due to the volatility that we've seen in the [ZiG]. And all your local suppliers have increased the cost and we can see that effect of it. But it's not a big increase in absolute terms.

Bilboes, I've spoken to that before. That's covered by the revenues and that was on a breakeven basis. If we look at the waterfall of our Q3 '23 cost and how that compares to our current online cost, we've decreased the cost significantly at Bilboes [oxide]

So good to see that turning around power, labor, consumables and other has increased as said before. And we can see that our all-in sustaining costs also increased and that's pretty much due to an increase in our share price that increases the share-based expense. So that's actually a good cost to see as our investors would be happy with the increased share price.

We've revised our cost guidance for 2024. Online cost guidance is now set at $950 to $1,050 per ounce and all-in sustaining cost is set at $1,450 and $1,550 per ounce. And that's increased predominantly due to the labor and the power costs, which we'll come on to in a bit. So these are cost control initiatives.

Firstly, power. We're about two weeks away of installing power factor correction equipment and that's expected to save approximately $1.3 million per annum and that should take effect in 2025 -- the full 2025 being installed in a couple of weeks.

We are planning to convert our central shaft winder from AC to DC and the efficiencies that you gain from a power use perspective will also decrease your cost by $1.2 million. That should be implemented within 2025. So you'll see the full effect of that coming in 2026 and part of it coming in 2025.

What we've already done is to increase our waste payload, hoisting speed and improve the sequencing of our waste at central shaft. That's helped us to increase efficiencies in our operations and that's already taken effect. So it's good to see that coming in place. And we also plan to replace equipment with more energy efficient equipment. The latter will come through on time.

It's not something that you will see immediately taking effect, but, we are looking at more energy efficient equipment. Then from a solar plant perspective, we're looking to get an external party to build a Phase 2. We expect that to be approximately a eight megawatt. And the rate that it saves, it saves approximately $1.6 million. Now this wouldn't come with a capital cost for us.

We'll just be buying the power from a third-party and in turn save on our OpEx. Further on salaries and wages, we retired 106 people of a certain age and plus, at a cost of $2.1 million. That's included in other expenses. It's not part of our OpEx, but it's expected to save our OpEx going forward by approximately $400,000. And also in addition to that, it brings about some efficiencies that we could generate by modernizing mine.

We're planning to do quite a few initiatives and hopefully that helps with the implementation of that too. We also plan to implement a new biometric clocking system and this would track staff at the Blanket model. So there's tracking of our staff movements, see where we can gain efficiencies and time studies and better allocate our better and more efficiently allocate our staff at Blanket mine.

In addition to this is to help with the rostering and preauthorization of overtime. So it allows us to allocate labor better to various areas and also track that, but also look at the overtime and make sure that this over time gets preapproved.

So we know why we're spending money over time. So we believe that well quite a bit in helping to manage our staff members.

Just before Chester goes on. So of those initiatives, some of them are very close to being implemented. Some of them will be implemented next year and we can quantify the benefits arising from those. And we're pretty clear on the timing, some of the things, replacing, replacing old equipment with more energy efficient equipment, the effect -- the benefit we can get for the introduction of the biometric plotting system at this stage.

It's too early to quantify the benefits that we might reap and also the timing thereof. But we should start to see some progress in terms of cost reduction for early next year.

S, go on Chester.

So the gross profit, as I said, it's gone up by 37%. I'm very pleased with that. Net foreign exchange losses that was quite significant in the quarter. We incurred $3.1 million of foreign exchange losses. $800,000 of that would be intercompany foreign exchange losses that are not eliminated. That's also unrealized and we don't expect that to be. So I'm not too concerned about that. That seems to strengthen the rand.

So no issue there. But what we see is $2.3 million worth of losses in Q3. And the devaluation of the ZiG. We'll get down to the detail of how we manage that and how that is broken down. But for the year, we suffer a total amount of $9.3 million worth of loss that's significant for our business.

And we can no longer ignore that and say it's not a cost related to our business. We've seen this in every quarter throughout. And we've also not counted that back for our adjusted earnings per share. So we look at this, it's quite a serious cost and we try to mitigate the effects of devaluing currencies as far as we can.

We'll get on to that in a moment and that's where we include the one of $2.1 million of retirement fees. So that you as again won't be repeated. And the fact expense increase due to high growth profits during the quarter.

Here you can see the foreign exchange breakdown for nine months and we've got the ZiG and the RTGS now. The ZiG is a new currency. The RTGS was abolished in April 5, 2024.

And you can see that I was quite pleased to see that we've got a very small cash and cash equivalence loss of about $2,000, when we have the ZiG. And that's how we manage that is to spend the ZiG. We try to spend it on fish.

We do spend it on costs to ensure that our cash gets converted to the inventory that we can use at the mine rather than keeping it in a dollar that could suffer the volatility that we've seen in this currency. In the first quarter, we had a conversion method where we locked up our cash and that incurred $2 million worth of losses on the RTGS.

And other than those to you, I'd say that the most significant items that contribute to our foreign exchange would be the sales receivable and our sales receivable and the conversion and the receipt of that cash is very much outside of our control as we receive our cash from fidelity when they are ready to pay.

So, normally that happen in about 10 to 14 days, but still in that 10 to 14 days, if there's a significant devaluation that like we've seen with the ZiG it's still comes down to the you know it affects our bottom line in terms of losses --

Can I just make a point that people may not understand there's no market for, there's no properly traded liquid market for the Zimbabwe currency. The exchange rate, the official exchange rate is just set by a committee and it typically steps down devalues in big steps.

So case in point would be the devaluation of the ZiG from 13.7% I think about 23% devaluation that happened in the space of a few seconds. So it makes it very difficult. The magnitude and the speed of the devaluations makes it very difficult to manage. But there is no hedging mechanism and there's no sort of exchange rate which allows you to move ahead of the curve. Sorry, Chester, go on.

Yeah. I think that covers it. So it's our main mitigation to prevent volatility in ZiG and losses and ZiG is not have any ZiG as far as you can. So we try to spend that expenditures. What I was also pleased about is the cash generation.

That's before the working capital changes. And again, we've got a quarter over $16 million for the quarter. If you can see our $46 million that we generated for nine months, that's more than double what we generated last year. And it's good to see that every quarter this year, our cash generation has been consistent and has been a lot higher than 23%. So we see the shift turning around from 2023 to now, good cash generation.

We have spent some money on safety stock to ensure that we've got spares available and bolster our production and not have any delays in terms of production. We don't want that, especially at the current gold prices.

And we've also increased our prepayments for long-lead items and that would be reflected in the CapEx that comes from Q4 predominantly and about $1.4 million of that prepayments related to the ZiG, where we've made some prepayments by stock rather than all the cash. So that has significantly affected our cash flow, but not in a bad way.

It helps us to ensure our production get some safety spares and also ensure that we don't suffer the evaluations in the ZiG. So just changed form. We expect that to turn around over the longer term. And it's good to see that safety equipment on the shelves. On that CapEx, that's well controlled.

We still expect CapEx to come in at $30.8 million at Blanket unexpected CapEx there might be some that grow over into next year, but the absolute number hasn't changed and that shouldn't affect. So happy to see the cash generated again in this quarter.

Good. Thank you. Thank you, Chester. Can I ask Craig to run us through the results, the Motapa results, which again we announced this morning. Craig, can I leave you to do that, please?

Thanks, Mark. Good afternoon or good morning to everybody. So basically during 2024, Caledonia kicked off a first pass pretty widely spaced drilling program at the Motapa. As you can see on the map just to the right there, we have Bilboes which shares a common boundary. So it's, I mean, they're right next to one another.

Motapa has three main trends. So we have basically the northern, central and southern trend. These three trends in total are just over 9,000 in strike land. So it's a fairly expensive piece of ground. So well, for this year, what our focus was, it was to test the continuation of sulfide zones below the historic open pit oxide that was mined typically during the 80s and 90s under Anglo American.

And so clearly we have quite a bit of data from Anglo, some old billing databases, some underground working plans from previous operators as well. And then we wanted to trench across the Motapa property to have a look for prospective of new areas that might not have been found or have been looked or had been looked over.

So we had drilled just over -- it's there, so about 9,500 meters of drilling, a combination of diamond and reverse circulation drilling. That was from a total of 68 holes, the grade in general is very, very similar to Bilboes.

So again, I've just got to stress that it's very widely spaced. It's about a 150 to maybe 200 meters between drills. So it's early days. What's maybe a little bit thinner than Bilboes, there's still a lot of work to act to actually be done. So just looking at the grades, I mean, those are six holes of, as I said, 68 in the press release, it will be available on our website as well.

The full details are there, you can look through all the holes. But something that sort of stuck out is that, yes, quite clearly, sulfides continue at depth at similar grades. But of great satisfaction is Caledonia is defined an area on the eastern portion of the Motapa Central trend, and we call it Mpudzi.

And so the fourth hole there in MPZRC02 that's just one of the holes that is from there. And so as you can quite clearly see pretty decent grade, very, very shallow, sitting at 12 meters low surface and it does appear to be oxides -- oxide material.

And this is quite significant in the fact that the Bilboes that we have that currently still has two oxide heap leach processing plants. The closest, well, they're about the same one is [3.50s away, the other one's 3.20s] fall. So we have drilled some extra holes. They are in the tables in the press release.

There are 15 holes that we actually drill there -- sorry, nine holes drilled, six of which had grade and of great interest is of all of the intersections in the Mpudzi area, 8 of the 15 intersections that we actually report with grade are above 15 meters. So [50] meters and shallow. The average of those eight intersections is 4.21 grams per ton.

And so we can drop out to the high grade one of 10.95 and the average comes back at 2.6. So that's very, very exciting for us going forward into 2025 and 2026. Our focus is going to be on clearly the Mpudzi area. We are pretty sure and pretty confident that the potential for near-term oxide mineralization is there.

And clearly we'd like to get that into the bank. The second focus is going to be drilling on the Motapa North area, which is directly basically along the Bilboes, Motapa shared boundary. And that is about a [K and a half] from the plant.

So our focus is to get that into a mineral resource of some fall or fashion, be it inferred, indicated whatever it is. and then to focus on the Mpudzi area. So I think going forward, we're very happy that we have proven up that sulfides continue depth and we will execute a standard drilling program to get that on to our books and then the Mpudzi area, very, very exciting.

Thanks, Mark. I don't know if you have any comments.

Okay. Thank you. Thank you, Craig. Should we move on? Okay. Just, just a few words about the, we continue to do work on the feasibility study. So there's no update there. All the information you see on this on this is from stuff we previously published.

We still remain on course to publish the feasibility study in the first quarter of next year. And for those of you who are familiar the main focus of the world to upgrade it from the existing PEA to a feasibility study is to upgrade the work that's been done on the tailings facility whilst that's going on, we're also now progressing our thoughts about funding.

Clearly, we had some internal thoughts when we bought Bilboes. We now have those validated by a specialist debt adviser, and we're now in the process of beginning to engage with prospective funders, we're looking at what seems to be coming into focus would be three potential funding structures using various combinations of various permutations of senior debt and mezzanine debt.

And we'll continue to flesh those out. And then in due course, very much in the hands of the speed at which the fund has moved. And in due course, we'd be able to announce the senior lender of the debt rangers. But I can't really give any indication as to how long that would be, but that's making good progress, should I think moving on.

So, look, in terms of outlook, Blanket, our immediate area of focus is to maintain production at about 75,000 ounces a year. And as you've heard, we do need to pay closer attention to the cost area of costs, particularly electricity and labor. Some of those -- some of the initiatives we're taking, we're able to quantify, some of them at this stage, we can't quantify and we can't put precise timing, but we're beginning to make progress there.

Bilboes, we expect to publish the feasibility study in the first quarter. And as I said, we are making progress on various funding options and as Craig has just outlined to you, we've got exciting results at Motapa from three areas that were renown and then from one new area, which affected we found.

And we'd expect that exploration to continue maybe a couple of years before we get to maiden resource. But given its immediate proximity to Bilboes, anything we find at Motapa should give rise to very substantial synergies as a combined Bilboes, Motapa operation. So we're taking out half an hour to go through that.

I mean we can now open this out to questions. Camilla, do you want to share that?

(Event Instructions)

(Event Instructions)

[Ian Jocelyn]

Right. Yes, I think I had a similar question last time around. But, it's kind of, you've highlighted it, I think today it's to do with the accounts where you, you obviously have the IAS, EPSs and then you have your own adjusted and you've touched on something I was going to talk about anyway.

But, and when I look at your notes, the difference, I think, correct me if I'm wrong. But the main difference between the EPS and the adjusted ones are one FX which clearly you've alighted on as being of concern. And I think the other, the other factor was, I think minority interests, which obviously takes up quite a large chunk of profit after taxes.

And, well, Chester can answer that question. But I would, Chester, I'll leave you to answer that question if you could.

So firstly on NCI, we show what is the EPS on an attributable basis. And secondly, we don't deduct the FX. The FX that we do deduct would be the intercompany FX that I spoke about. It's not that big. It's not a significant portion. Significant portion relates to the ZiG losses. And that's still deducted from EPS and adjusted EPS.

So what's the main difference? What accounts for the main difference between the two?

So, if you take out if you look adjusted earnings, we share, we take out noncontrolling interest, the deferred tax and some foreign exchange that we don't see a structural to our business. What we've done in the past was to remove the foreign exchange because we had foreign exchange gains for, well, it's a 2020, 2021 and 2022.

And so we removed those profits from adjusted earnings per share because we didn't feel that was part of our business and we didn't wanted to show a number without that. When we look at 2023 and 2024, you see large foreign exchange losses and now for this year, because we've seen significant losses of about $9.3 million, we deducted the foreign exchange losses that pertains to the (inaudible) operation. we still deducted that from EPS. So we didn't count it back in the adjusted earnings per share [calc]

And you mentioned minority interests.

Yeah, yeah. So we want to show a number that's attributable profit to our business. So we don't -- we count that back.

But isn't that, I mean perhaps I'm not understanding it isn't that money paid out, which is a whole thing.

No. Hold on. When we adjust the -- when we adjust the foreign exchange movement. We only adjusted for our share of that foreign exchange movement. Clearly, those foreign exchange movements were incurred at Blanket.

And so the minorities are Blanket. They have to stand behind their share of that. I think that's the confusion. The calculation of earnings per share is based on attributable earnings per share. So that's after the NCI.

Right. Okay. So really minority interest is standing behind their share (multiple speakers) just had a minority interest. So I thought you were just adding back the total.

What we do the adjustment for foreign exchange, the adjustment is further adjusted for the NCI components and the extent of any tax relief on the foreign exchange loss.

Got you. Okay. So it's effectively, it's the two words misled me to me thinking.

Yeah I can see.

Got you. Okay. Could I ask another question? Sure, it's to do with, I think you gave examples of putting in extra inventories to try to ensure that if you hit low grade, you're able to have flexibility, perhaps more faces to do the mining. I was just wondering if you could give me an example of how the extra inventories will help you?

The inventories are -- I think you're talking about development. And clearly we're trying to develop in as many areas as possible to give us the flexibility in the event that we have another event such as happened at Eureka. The buildup of inventory is to make sure that if we've got enough backup stock in case, say, pumps fail, we put in some new pumping systems at the bottom level of the mine or the 34 level.

If those pumps fail, that means that we end up with too much water at the bottom of the mine. Similarly, we're having to -- we bought spare parts to service the new tailings facility. And then in addition, we also increased our inventory to mean that we're spending instead of holding ZiG cash, we spend the ZiG cash and we buy whatever it is we can buy that we use in the business to minimize our foreign exchange exposure.

Right. Okay. Now I understand and I had just one last question, obviously, it's interesting and quite exciting that you discovered oxides in Motapa. And I think you mentioned, you're looking at a two year horizon for any sort of development. So would that include doing some shallow mining, taking out the oxide that (multiple speakers) --

We can definitely, we had a very unhappy experience of oxide mining, Bilboes, a couple of years ago. So we certainly, we certainly don't want to repeat that. But if we can get our hands on relatively shallow oxides, we will do and we can put it through the existing peat leach facilities that bull and turn into cash as quickly as we can. So if that's economically viable, we will do it. But we're not going to fall into the same, the same, literally the same in early 2023. So yes, if it makes sense clearly, but on a prudent basis.

And could you remind me what happened at Bilboes because obviously you thought that you could do it, but.

It turns out that the stripping ratio is too high. So we will be able to -- we will access the remaining oxides at Bilboes in due course as part of the broader sulfide package. But on a stand-alone basis, it just wasn't cost effective.

You just carrying too much earth around.

Yeah.

Got you. Okay. Well, that's been very helpful. Thank you.

Okay. We do actually have some written questions which are quite detailed. Camilla, should I try and address these questions?

Yes. Okay. (multiple speakers)

Okay. The first question was, please explain the circumstances surrounding the fall of ground in Eureka. Craig or James, do you want to talk about what happened in Eureka the fall of ground early in the third quarter?

Yes. So what happened was a very unfortunate instance where there was two structures that was very -- it was forming a whole structure, some of the people that understand this would remember. So it was forming a whole structure.

And in between, you would obviously form a wedge where our teams were supposed to proactively identify that, pin this wedge and be in a position to carry on with work. Unfortunately, we did not do that time actually.

And as a result, when they were trying to put in support, they did unfortunately not put in temporary support. The risk was not received to the extent to which it was and the fall of ground happened, unfortunately, when they were still there and we lost the man.

And then the third question was the incident at number four shaft that led that disrupted hoisting. And that was quite simply a piece of equipment was being lowered down the number four shaft. It broke loose. It fell down, it fell down the shaft and caused some damage to the shaft infrastructure and that last us about sort of week's worth of hoisting up number [four] shaft. Is that correct?

Yes, it was a week's worth of.

Yes, but that's now been resolved. There's a very detailed question about the -- which I think just I'll ask Chester to do with this. The difference between IFRS production costs on page 11 of $20.1 million and Blanket's production costs on page 12 of $19.3 million. Chester, are you able to address that easily or does that require an e-mail to the questioner?

Might require email. But if I look at page 7, that's food production costs shown on the slide not page 11. But I can --

But I don't know -- I've shared whilst -- I don't know -- this is written. So I don't know if page 11, page 11 probably refers to the MD&A or something, maybe the accounts. So I don't know what documents has been referenced to.

$19.3 million. Assume a few things here. But if it doesn't answer, let's do it an email. $19.3 million is the cost at Blanket. We do incur some costs that get added to that. And you also get the Bilboes costs.

So that's ratably sending the messages whilst we're have. So, ratably, please, if you send me your e-mail address and then I'll forward your e-mail to Chester and Chester will deal with this over e-mail. It's a bit too detailed to go into on a call like this.

The further question is the reallocated employee costs into the shared services center. It's about $2.4 million for 2024. Those are costs that we will need to carry as we go forward with Bilboes. So, yes, those will be recurring costs. So where we are at the moment is we're effectively building up head office infrastructure to service not just Blanket and Caledonia as it currently stands, but Blanket plus Caledonia plus Bilboes as we will be in the future.

And so we are in this uncomfortable period now until we get Bilboes up and running of carrying those costs. Now clearly, when Bilboes is up and running, those we do expect our all-in sustaining costs and our own mine cost to fall very, very substantially as we spread those shared services costs and the higher head office costs, they have substantially more production.

So it will work its way out in the wash over the course of the next couple of years. But we need to have got Bilboes up and running. Okay. Further question was the -- our funding in Zimbabwe, the overdraft facilities and working capital. Chester, do you want to talk about liquidity in Zimbabwe?

Yeah. So as we go forward and Mark mentioned now, we've got some cost initiatives that should bring down our operating costs going forward. So that will increase the cash generation. We don't see the working capital outflows.

We don't see that carrying on going forward. We just got the safe spaces to ensure that we don't have any delays in our production. So we don't see that cash coming through or cash expense coming through cash outflow.

So yeah, our cash position should improve going forward and for the short period of time where we've increased our inventory, we will be utilizing the full facility before the end, but it should normalize going forward.

But the point of those facilities is to use them. And I know that the Blanket is very undergeared.

Maybe I could add to that and Mark did mention the solar plant that we're planning to sell for 22 million after CGT, which generate about 19 million. Blanket is very profitable at these gold prices. So you should see an increase in the cash flows coming through in 2025. So all these factors will improve our cash flows going forward.

And then the final question was the ZiG, the adoption rate of the ZiG and do locals, does Zimbabweans still primarily transact in dollars. I guess the person who's best placed to answer that is Victor. Are you able to talk about the general acceptance or nonacceptance of the ZiG in country?

Thank you Mark. At the moment. If you look at the global transactions in ZiG, what you find is that the US dollar is somewhere between 70%, 75% and moving up to probably somewhere between 75% and 80%. So approximately 20% to 30% of transactions in ZiG are mainly in ZiG. So there is a level of acceptance.

Well, you have to use it anyway. So, but for us, because we get some of that money in ZiG dollars in a ZiG, like (inaudible) , we use it to pay taxes and buy some local consumables.

And I think the other trend in Zimbabwe is the extent to which people just don't use banks anymore. Do you want to talk about that Victor? The sort of debanking?

Yeah. A lot of Zimbabwe to some -- to a large extent, also operates a cash economy because you find the general public because most of the businesses have gone in formal and because of unemployment, a lot of people like informal traders. So those transactions in that side of things is mostly cash. So, in fact, most of those transactions actually US dollars rather than ZiG.

Yeah. Yeah. Okay. Right. That's that deal with those written questions. Any further questions, Camilla?

Yes, there are. So Howard Flinker wants to ask a question. Hold on a sec. Howard, you're unmuted.

Can you hear me?

Yes.

Oh, good. I have a few questions. Craig, you cited one hole in Motapa, did you say 15 meters or 50 meters?

I'm not quite sure what?

You said 15 or 50 meters of some grade and I didn't know which one you said?

No, it's the fourth hole that's listed there. So it is at around 50 meters below surface. It's 4 meters down the hole intersection at a grade of 10.95.

I see. 50 meter downhole. Okay, I misunderstood.

No, no, no, no, it is 15 meters --

15 below surface.

And downhole is 4 meters.

Got it. Okay. And Chester, could you please explain -- no, I'll rephrase that is a large increased administrative expense attributable to expenses at Bilboes and Motapa or is that something else?

If you look at our admin expenses increased quarter on quarter. So increased by approximately $1 million. And so that's predominantly cost compared to do the feasibility study. So we've bolstered our forces there to complete that.

Okay --

Howard, that's the point I was making earlier, which is as we -- we can't just -- over the course of the next few years, we've got to build up an owner's team to build this project and then run the project. And so we will be having costs at the head office level or a group level to build these projects. So we --

I wanted to clarify that in my mind.

Yeah. On the other slide problem arising from those sort of follow-on problem arising from those is those costs aren't actually tax deductible because they're not in a taxable entity. Okay. So that's one of the reasons why our effective tax rate looks quite high because we've got costs sitting in areas that aren't making profit and therefore are not having tax deductions. Again that will wash out eventually once we've got Bilboes up and running.

Sure. you pre-empted. My next question about taxes. Is the foreign exchange loss also tax deductible or not really.

Yes. Which is most of it. So real life portion.

Okay. And you also said you're going to save $1.2 million of electrical expense compared to -- now, I think you may compare to Now, does that mean that the financier owning the solar plant will actually save you another $1.2 million?

So the solaring saving would be 1.6 million and (multiple speakers) 1.6. Yeah, we're planning to get somebody else to do that. So it would be, it would be PPA. That's the answer. And the cost would be cheaper than, and that got estimates based on a mixture of using jet or utility.

So that's what we'll be saving to instead of using utility at a higher cost, we'll be using the solar farm at a cheaper cost. And that should save us about 1.6 million.

And is that also 1.6 million cheaper than what it is now or cheaper than what the utility would charge?

Currently, we sell -- we're selling the plant and we're going to generate cash for that. But it would be cheper than that Phase 1.

It's cheaper than what we pay at the moment. That's the point isn't that.

Okay. And second or last question, I don't know a point. Chester on your cash flow statement at the bottom. It looks as if your ending balance is a negative $7.6 million. And I think you meant the cash outflow net was $7.6 million because you do have $7.2 million on your balance sheet. So the last label on that statement is a little misleading. You might want to clarify that.

I'll have a look. I'll get back to you.

And Victor finally, could you please tell me what inflation has been in the most recent month? Maybe October in Zimbabwe. If you know?

Well, if you look at the US dollar inflation, it was less than 1% and the US dollar inflation and the ZiG inflation. If my memory says me right, might have been around 6%, 7%. I think that's to my colleagues. Does any one of you remember?

No, I could find out. I could find it out. But (multiple speakers) I need to refer it about a bit. I couldn't do it easily on this call.

Victor, did you say 6% or 7% in ZiG or 1.6?

No, no, no. I think the US dollar inflation was less than 1% month on month and the ZiG inflation was probably around 37%. I have to double check that before I confirm.

That's okay. 37 you said, right?

Yeah. No, (multiple speakers) I have to double check it and send it to you.

I just wanted to make sure I heard correctly.

Actually. Yeah. No, I have the figure. Official US dollar inflation was unchanged at 0.7% in October, while the ZiG inflation sold to 37.2% month on month after the Arab visit devalued the local unit at the end of September. These are figures released by (inaudible)

All right. Thanks, guys.

Howard, I just check the cash flow, it seems right there.

No, the cash flow is right. The label makes it appear as if your ending balance was a negative $7.6 million. And I think what you made with the cash outflow was $7.6 million, because cash on hand is $7.2 million.

Yeah, I'll send you an email but it could be negative.

Because the balance sheet shows $7.2 million in actual cash and the label will be on the cash flow statement makes it look negative.

(inaudible)

Howard, have you got any more questions?

No, Camilla. Thanks.

[Nick Dunham]. Nick, you're unmuted.

Okay. Thank you very much. Okay. Your very interesting discovery in the Motapa. Do you have a sense of how long the strike is on the undiscovered area?

Yes, on that particular one from what we've outlined from our trenching. It's about 800 meters of strike and it's made up of two possibly three zones of various ones.

Okay. So having seen the aerial filter, the satellite photos of the area, it looks fairly well trodden that the area has been worked for extensive periods of time. So how many more -- is it possible that there are many more undiscovered similar types of occurrences in that area?

Okay. So I've got to be cautious with what I say because obviously I haven't declared any forward-looking statements as such. But Bilboes has quite a comprehensive set of EPOs, claims and other patches of dirt in that immediate area. So we are busy putting all of the info together and struck from a sort of structural point of view.

There's quite a number of or quite a bit of folding and sharing that takes place at the sort of northern end of the (inaudible) greenstone belt. And as we know, gold loves shears and bends and things like that. So if you look at who our neighbors are or our closest people and if you had a look on Google earth, you would also notice further to the north, there's a couple of other historic pits, which if memory serves me correctly or if my eyeball is working, it's part of the billings properties, all very close to it.

We have lonely mine which is sitting on a structure to the south of the Motapa, but it runs into the Bilboes holdings and lonely mine, I'm not going to quote a number because I'll probably get it wrong. I'll switch numbers around.

It was 1 million ounce producer from what I understand. So I think the camp that we're in and this might be a good term for it is that Bilboes, Motapa whatever, but it's probably that Bilboes mining camp is going to become the future name for this area because I really do think that there's a lot of exciting potential in the specific area.

So Craig come back to Motapa, how much of Motapa have you done -- have you covered systematically to find these possible outstanding oxide ore deposits. (multiple speakers)

So we've covered about 60% of the area with trenches or what we want to do. I think it's now standing just on 13,000 meters out of the budgeted total of 22,000 meters I think. And so we've put a -- and I said that we have completed activities for 2024.

So as we enter the rainy seasons, it just becomes very, very difficult becomes costly. We have to keep the trenches dry. So we will pick up the remainder of the trenching activities and other surface activities, yeah, from probably about the end of March, and it runs from March until the beginning of November of next year.

Okay. Thanks, Craig.

Thank you, Nick.

And there's one more question from (inaudible)

Hi, guys. Congratulations on the very interesting results from Motapa. Sorry, I joined late, so this may have been asked already. But have you done any test work yet on the Motapa site. I understand it's very early days so probably not, but just curious?

So, I couldn't -- have done any more work.

The test work.

Test work. Okay. Sorry Craig.

Yes. So at this stage, we haven't done. But what I can say is that we have put sample material through our assay laboratory at Isabella, which is on the Bilboes property, specifically for bottle roll tests. And then those samples are halved or duplicated to be sent off for fire assays. And then obviously what that gives you is it gives you an indication of what the oxidation level is.

So if you've got a fire assay of 2 grams per ton and a bottle roll of 1 gram per ton. That means that you can realistically under oxide heap leach conditions expect to get somewhere near the 1 gram per ton. So it's very early days.

So we have the oxides that we're going to have a look at. And then as we go forward, we will also generate sample material for metallurgical testing on the sulfides at Motapa to see if they are amenable to the proposed Bilboes plant.

What's the depth of weathering? I mean, is it just Motapa Central that you see offsite potential?

No. So I mean on the Motapa North, Motapa Central, Matapa South, there has been historic oxide mining down to depths approaching somewhere between 30 and 40 meters. The weathering profile does change. It's not quite uniform. But I think, in general, we could look at a 20 possibly a 25 meter depth of weathering.

Okay. Thank you very much.

Okay. Are there any further questions?

No, I think that's it.

Okay. Just pause for -- if anyone has any further questions then put your hand up now we'll quickly send something. All right. I don't see any coming through. So look thank you for your time this afternoon. And we will be doing the same thing again when we publish our full year results, which will be towards the back end of March next year. So thank you very much for your participation. Goodbye.