Caledonia Mining (AMEX:CMCL) held its first-quarter earnings conference call on Monday. Below is the complete transcript from the call.

This content is powered by Benzinga APIs. For comprehensive financial data and transcripts, visit https://www.benzinga.com/apis/.

The full earnings call is available at https://stream.brrmedia.co.uk/broadcast/69dcf53466d5600014e43c01

Summary

Caledonia Mining Corporation PLC reported Q1 2026 gold production of 14,700 ounces, impacted by lower grades, but financial performance remained strong with an 18% revenue increase to over $66 million and profit after tax up nearly 70% to $19 million.

Despite increased production costs due to lower grades, the company expects costs to normalize as grades improve; initiatives include contractor appointments and a revised shift system to increase production.

The Bilboes gold project is progressing well with a feasibility study completed and a $150 million convertible bond raised; construction is expected to start in 2027 and conclude in 2028.

Exploration at Blanket Mine shows encouraging results, supporting long-term sustainability, and a new wide ore body was discovered, indicating potential resource expansion.

The company maintains a robust financial position with $161 million in cash and equivalents, supporting ongoing and future strategic initiatives.

Full Transcript

OPERATOR

Welcome to the Caledonia Mining Q1 2026 results presentation. I would like to now hand over to Mark Learmonth, who is the CEO to begin the results presentation. Mark, over to you.

Mark Learmonth — Chief Executive Officer

Thank you and welcome to this results presentation for the first quarter of 2026. Can we just move through to the presenting team? I actually can't see the slides there. Yeah, just move through to the presenting team. So as you heard, I'm Mark Learmonth, Caledonia's CEO. I'm joined by Ross Jarrard, the CFO. Victor Kapari, Executive Director. We're not altogether certain if Craig Harvey will be able to join us. We're having some connectivity issues to Johannesburg, which is where he is. So Craig may or may not join us. And then there's Maurice Mason, Vice President, Corporate Development and Investor Relations. So that's the team. Shall we move on? Okay, just by summary, as we previously announced, gold production in the first quarter was somewhat challenged. There's about 14,700 ounces of production from Blanket mine. And that was entirely due to, as you'll see in a moment, the lower grades mined during the quarter. Notwithstanding the lower production financial performance was still robust, supported by the higher gold price environment. So revenue was up 18% to just over 66 million. Profit was also higher. Profit after tax was up nearly 70% to nearly 19 million. But also very strong cash generation. In particular free cash flow more or less tripled from $4 million to $12 million in the quarter. As you might expect with lower ounces produced and particularly the effect of the lower grade that affected the cost per ounce. So cost per ounce, the all-in sustaining cost increase to 2,700. Having said that, it's worth noting that on our cost per tonne was very much in line with our expectations. So if we're going to get the. If we can get the grade back and as I show you, I think we can, these unit costs cost per ounce should normalize. It's fair to say that as again as you see in a moment, it's fair to say that after the end of the quarter, April and so far into May, production at Blanket has very much improved. And Blanket is now running expected. So that's Blanket and Bilboes gold project is proceeding very well. As you know, we published a feasibility study in late November last year. In January this year we had a very successful convertible bond raise in New York, raised $150 million. And we're now continuing to implement the rest of the funding strategy. And we're also making Good progress with DRA Global in terms of finalizing the designs and actually moving this project forward. But Victor will talk to us about that later on. As you know, we've had some very encouraging deep level exploration results at Blanket Mine. Hopefully Craig will be able to join us and give a bit more detail on that. But that continues to support the long term sustainability of Blanket Mine and recognizes the confidence that we have in the resource. As usual, Blanket Caledonia declared the usual dividend of $0.14 per quarter that will be paid shortly. And as another sort of housekeeping point, Gilad Lovu, who's a very experienced mining executive, joined the board in November 2025 at the Annual General Meeting. Last week he was appointed as chairman. Okay, so let's move on to just consider the operating results. Let's start with safety. Not much to say in terms of safety. It was a very, very good quarter with improving ratios. That really reflects our continued focus on proactive risk prevention. In particular, I'm very pleased to see there's been a substantial increase in the incidence of near miss reporting, which is one of the key ways that we used to raise safety awareness and to act proactively to address safety issues before they become a problem. So safety is very good, but clearly it continues to be an area of significant focus. It's never finished. Should we move on to the next slide? This is the usual two graphs. The top one shows grade and tonnes. The bottom one shows recovery and ounces. You'll see from the top graph, the tonnes have been stuck stable at approximately 200,000 tonnes milled a quarter. But you can see the grade, the grade fell progressively from the second quarter of last year through into quarter three and quarter four and then further into quarter one. And that reflects an issue that we've discussed previously, which is the effect of two falls of ground, which together meant that we were excluded from relatively high ton high grade areas, which we relied upon to maintain the mix of our production. So you can see the damage that the grade did is reflected in the falling production profile in the second graph where production fell quarter two last year, into quarter three, quarter four and again into quarter one. But again just the reduction in recovery that also reflects the falling grade, because the tail grade that we deposit onto the tailing facility is pretty much the lowest we're going to get, is about 0.2 grams a tonne. And so if the, if the head grade, the feed grade is lower, that means that recovery tends to go down. But having said that, if we move on to the next page, move on to the Next page you can see in a bit more granularity the progression of grade in December and into the quarter. And you can see that grade has recovered. December 2025 it was 2.55 grams a tonne, increasing to 2.6 in January, 2.7 in February and 3 in March. Currently it's running about 2.9 grams a tonne, which is actually pretty much what we expected it to be in the second quarter. So as I've already outlined to you, Blanket has now returned to the production level that we had anticipated. So those we have already started with three remediation initiatives. The first is that we have appointed a contractor, started work to accelerate access to higher grade areas. They will continue to work for the remainder of the year. And that gets us back into a position where we should be ahead in terms of development, which gives us much more operating flexibility and resilience in future. So a contract has started. The second thing that's happening is that we are implementing a revised shift system which will move the operations of mine from six days a week to seven days a week. That new shift structure is primarily intended to reduce work fatigue, which we understood was a significant problem. But it will also result in increased run of mine production on an annualized basis, an extra 100,000 tons a year, which in due course will flow through into increased production ounces produced. In the short term, the incremental production will be stockpiled, but once we've got a reasonable stockpile thereafter, additional production will be processed. And also in June, July, we expect to commission an additional ball mill, BM3, which will increase our overall milling capacity by about 200 tons a day. So those are the three initiatives that are taking place to increase and address the issues that we've faced at Blanket. And as you can see, well, as you can't see, but you will see it in the second quarter, there has been a turnaround in the performance at Blanket 9, which is an area of considerable focus for us. So that's a few brief words on operations. Can I ask Ross please to take us through the financial results?

Ross Jerrard — Chief Financial Officer

Thank you, Mark. And good afternoon everyone. As always, delighted to talk you through the results. As Mark has already discussed, it was really a concept of the higher gold price offsetting a lower production period. You'll see at the top of the table the outcome in terms of gold sold versus gold produced. There is a higher portion of ounces that sit within a bullion on the hand which does affect that in terms of timing, but largely that average gold price that you See on the table, the $4,816 an ounce is really offset by those lower ounces in terms of gold produced and sold. But pleasing for the period was the absolute cost. So you'll see the online cost in terms of dollar amount and our all in sustaining dollars spent. The amount of 23 or just under $24 million for online costs and $38 million for oil and sustaining costs. Those were largely on track with our budget and expenditures up 3% on mine costs and 9% all in sustaining costs. So we were pleased with the spend rates there. But our unit costs were negatively impacted by the lower denominator in terms of ounces. So overall activity was really good and we were pleased with the delivery by the teams. But obviously the lower production profile hit our unit costs as we exited the quarter. Our EBITDA was up 50% at just shy of $34 million. And with cash flow coming in really strongly after capital expenditure, which is again in line. There are some timing differences in in terms of capital expenditure profile, but we're really pleased with our free cash flow of $12 million, which is up some 153% on the comparative quarter. So very pleasing result financially. Albeit the dances were down and overall our earnings per share were 78% up on the comparative quarter. So if we do a little bit more of a dive into our profit and loss. So if I could turn to the next slide, please, you'll see the outcome of our revenue and that higher gold price that we achieved, resulting in revenue of $66 million for the period. Our royalties are obviously based on that top line, so they equally increased to $5.6 million for the period. Production costs were in line with the expectation and largely on track together with depreciation. So you see our gross profit is sitting at a shade over $32 million, which was a result and almost 20% up. The key movements for the quarter are really driven around our financial instruments and I'm going to do a little bit of a deep dive on the accounting treatments of that. So that net fair value gain on the financial instruments is represented in one line item, but there are a few different elements to that which I'll discuss in, in, in due course. And further down on the chart, our net finance cost is up some 200%, but that is due to the convertible senior loan notes and, and the treatment of those financial instruments. But all other line items were largely in line. And we exited the period with the profit for the period of just shy of $19 million, which we're really pleased about. If we turn the slides please and we just talk a little bit more about the cash flows. Our net cash from operating activities were up some 41% for the period we did deploy against capital expenditure as planned. There are some timing differences there, but there's nothing to report or there are no outliers that need to be highlighted. And then there's the combination of the various investing and financing which really was around our capped call options, our convertible and really the deployment of our financing program. So we had some maturity of our fixed term deposits which we deployed against our put option instruments. And they were timing of various payments there and the raising of the 150 million convertible. Some of those funds were used to acquire capped call option. And you'll see the deployment of $14 million going out of our cash flow. Further down you'll see the proceeds from the convertible notes coming in at 145 million. And overall, really at the bottom of the page, we exited the period in a fantastic position of $161 million worth of closing cash and cash equivalents, which shows that the whole financing strategy is really coming together. And you'll see that if we turn to the next slide which talks to our liquidity. So together with our cash on hand of $170 million and those drawn down bank facilities of $8.8 million, that gives us the $161 million that I've just discussed. But together with bullion on hand which represents about 3,600 ounces and some gold sales receivables, really pulls together a very robust financial liquidity position in treasury that enables us to move forward with our various decisions deployment of funds. And most exciting of all is obviously our continued development or moving forward with our development of the Bilboes project. If we move to the next slide without doing a deep dive into financial treatment of financial instruments, this is the first period that we will have disclosed the treatment of the convertible notes in the various accounting that goes with it and the fact that we don't do full set of financial statements that you would otherwise see and that will come through in due course of the half year. We just thought it was important to articulate the various accounting around the convertible and also the capped call options. So in terms of best illustrating that we raised $150 million, which you can see on the left hand side of the slide, which is the compound financial instrument of the senior loan notes under the accounting standards we have to split that into two elements. There's the host debt component and there's a derivative liability. And those two are accounted for and treated separately. One is under an amortized cost accounting treatment and the derivative liability, there's fair value through profit and loss. So it has slightly different accounting connotations. And then equally the second answer, some of the deployment of that $150 million went towards a capped call option. And that has a separate accounting treatment and also fair value to the profit and loss. So there's two arms and elements in terms of the accounting and the valuation of that. And you'll see below the chart in terms of the various line items that are represented in the primary statements that are attached to this quarterly announcement. But you'll see that we hold a derivative asset, non current asset of $14 million. That asset really comprises both our capped call options and the treatment of that, but also our hedging program. So it's a combination of a number of derivative financial instruments and then our liabilities. There's obviously the host debt component that sits there, but also there's a derivative financial statement liability. So the 97 million and the 38 million compose that $135 million compound financial instrument for the bond. And equally on the financial statements, in terms of our income statement, you'll see a net $4 million or $3.9 million. And that's a combination of a number of these fair value adjustments that go through in terms of both our put options, the movements on the financial liabilities and the financial assets. So I know that's complicated and hopefully this gives a little bit more color in terms of the accounting for it, the full financials, and I guess a lot of the movement, the color will come through at the half year with the June results. So I might pause there. It was a really good quarter, financially notwithstanding the lower ounces. But we well placed in terms of our strategy, both with, I guess, internal cash generation and our overall funding position, which I'll talk to a bit more detail as we go through Bilboes. But with that I'll hand it across. And we'll talk through the BILBOES project. So maybe, Victor, if you can talk to Bilboes.

Victor Gapare — Executive Director

Thank you, Ross. Can we move to the next slide? Okay. This particular slide and the next one really is information we have already published on the project. I won't go over it today because it's already been published and it's already in our previous presentations. What I will do is actually to give an update on where we are today. We appointed, as Mark said already, we appointed DRA as our EPCM contractor for this particular project at the moment we have DRA and ourselves, we've frozen the project scope which allows DRA to complete the detailed designs for the project commonly known as the front end engineering designs. We expect to conclude these designs maybe by the end of the third quarter into the fourth quarter of this year, which will allow us to place orders for the long lead items towards the end of the year. Really in the fourth quarter of this year. The construction for this project will take place over 2027 and 2028. Our expectation is that we should have the first gold pour towards the end of 2028. So basically that's where we are. We are busy with DRA Global. We are working with. Okay, thank you. I don't think we've lost you.

Craig Harvey — Vice President Of Technical Services

Could we. Could I ask. I think Craig has joined us. Craig, have you. Have you joined us? I hope so. I actually have managed to join us, but I'm on a mobile.

Mark Learmonth — Chief Executive Officer

Okay, good. If you could just take us through the. Oh no, hold on. Before we get on. Sorry, sorry. Before we get on to. Before we get on to Craig, I think Ross, are you going to just say a few words about the funding strategy for Bilboes.

Ross Jerrard — Chief Financial Officer

Thanks Mark. If we could turn to the next slide. It is really in one. Next one. The next slide. Billy, next slide. Thank you. Thanks Mark. And Victor, just to provide a quick update in terms of the funding strategy for Bilboes and as previously disclosed and discussed on previous calls, we have a four funding pillar strategy. The first two pillars have been completed. So we previously disclosed to you the hedging program. That's a place. And also the 150 million convertible note raise. So those are all completed and funds are received in treasury and ready for deployment. Importantly, steps three and four are in progress and well on track. Step three is the interim funding facility and that is where we're working with a consortium of Zimbabwean and South African banks to pull together 150 million facility. We're working with our co leader Rangers Stanbeck and CDZ in Zimbabwe and the data room is fully functional. We're working through all the various due diligence and we're expecting to have that facility in place by mid-2026 or July 2026 latest. And that facility is really going to be secured around the blanket mine cash flows. The wider project finance facility is also well in progress and we're working with a number of financial on that. We do acknowledge that the timeline to reach financial closure is a little bit longer term. We expect that to be completed over the next year or so. But across those various work streams, we've well progressed and we're quite excited in terms of status and positioning for our Billboard funding. If we turn to the next slide, we'll see an update in terms of the construct that I've previously spoken to. This is best read in terms of looking at the chart from right to left. So you'll see in terms of the 590 million and the makeup of that 590 million in terms of our capital cost, including working capital and capitalized interest, coming up to that quantum of spend that we expect to be able to need to deploy for bulldoz. But then looking at the two columns on the left hand side at our $3,500 gold price per ounce and the compilation of how we expect to fill that funding requirement, we now have cash on hand, as I previously articulated, of 161 million. At the top end, we have our forecast net cash flow that will come out of our operations of 125 million. And between senior debt and other facilities, in terms of what we're targeting, the gap is now $304 million. If we move that pricing deck closer to $5,000 per ounce, which is represented in the middle column, you'll see that that senior debt and other facility requirement basically halves and goes down to $154 million. So we're quite excited about where we sit in terms of our financing strategy, in terms of how that's all coming together. And actually we think that we're well placed in terms of our ability to start deploying funds and moving the Spillbows project on time and to schedule. So that hopefully gives you a good overview in terms of where we sit with our funding position. And I might turn it across to Craig Harvey now to talk about exploration.

Craig Harvey — Vice President Of Technical Services

Thanks, thanks, thanks, Ross. I'll take you through our activities of what we've been doing at Blanket Mine past couple of months. So this opening slide is from our press release that we published on the 7th of April. So for those of you that haven't seen, basically represents from 34 level down a depth of approximately 250 meters below 34 level. So that kind of gives you an indication of the scale that we looking at there. And this is only really in what we call the Blanket Quartz Reef and the blank dips or the blank dip ore bodies area. But some of the key takeaways, as I said, is we are intersecting the continuation of the ore bodies about 250 meters below our workings currently. And what those coloured blocks Represent it's, if you can make it out, it's the various different ore bodies. It's quite difficult to read because they stack behind one another. But that is the limit of the inferred mineral resources as we currently have, which was dated 31st December. So anybody looking at it can see at the bottom there we've got some nice warm colors, which is greater than 2, 3, 5 grams per tonne. That is sitting below our inferred resource base that we have in the public domain at the moment. So encouraging takeaways, redrilling and the ore bodies continue at depth. If we can move on to the next slide, this then gives a, a tabulation of some of those results that you have seen and one of the key takeaways there. So you'll see that the top four there is annotated as blanket seven under the all body name. So it was March. No, Sorry, it was June 2025. When we published our previous drilling update for blanket, we indicated that we had intersected a new ore body. This ore body has now been turned blanket seven. And as we draw more define more this area is going to grow. And the key takeaways there is, I mean, you know, blanket seven we're looking at in the drill holes 40 meters wide, you know, so I mean any mining company that can find a 40 meter wide ore body running at between 3 and 4 grams per tonne is going to be extremely happy about it. Inside that 40 meters we have the option of being selective in what we do so we can narrow it down. And just by looking at the drilling assays, we can mine those at anywhere between 5 and 6 meters wide, at anywhere between kind of 12 to 50 grams per ton. Now it's not going to be all over, but that's the kind of results that we actually get out of blanket. So it's, you know, so it's very, very key. The drilling program is going along very well. We drilled just over 10,300 meters between the June 2025 and the April 7 press releases that we've done. And so clearly we have a need to update our mineral resource estimate. So that will be done during 2026 and reported and declared before the end of 2026. But I think the upshot is that at depth there's no change. If anything is getting slightly better, I mean 40 meters wide, 4 grams a tonne, I think it's happy days if we can move on to the next slide and we'll talk a little bit about Matapa, the surface exploration project that's located directly adjacent to Bulbos that we've just been speaking about. So I'm pleased to say that finally, the labs in Zimbabwe have been very, very busy. So finally, we have gotten all of our repeat assays back and all of the assays from the lab that we need. So we have now closed out our 2025 drilling program exploration program. By doing that, we are targeting early Q3, 2026, a maiden mineral resource estimate for the Matapa-Kan North Sulfide mineralization. That's going to represent the kind of $5 million of work that we've done during 2023 and 2024. That's what we've expended to date going forward into 2026. We will kind of be doing rinse and repeat on the Matapa-Kan itself. It's also got historic open pit oxides that have been mined. And clearly below those pits is the sulfides. We have done some reconnaissance drilling there. So we will now.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.