Earnings call transcript: Caledonia Mining beats Q3 2025 expectations

Caledonia Mining Corporation (CMCL) reported its Q3 2025 earnings, surpassing market expectations with an EPS of $0.77 against a forecast of $0.75, marking a 2.67% surprise. Revenue reached $71.44 million, exceeding the anticipated $64 million by 11.63%. The company's stock responded positively, rising 5.05% to $27.9 in pre-market trading. This performance is attributed to strong gold sales and effective cost management, despite rising operational expenses.

Key Takeaways

• Caledonia Mining's Q3 2025 EPS and revenue surpassed forecasts.
• The stock price increased by 5.05% in pre-market trading.
• Increased gold sales and exploration activities drove performance.
• Operational costs rose, but strategic measures are in place to manage them.
• Future guidance indicates continued production growth.

Company Performance

Caledonia Mining's performance in Q3 2025 was robust, with a significant 52% increase in revenue quarter-on-quarter. The company sold 20,000 ounces of gold, benefiting from a 40% rise in gold prices to $3,434 per ounce. Despite challenges such as increased on-mine and all-in sustaining costs, the company maintained its competitive edge through technological innovations and improved operational efficiencies.

Financial Highlights

• Revenue: $71.44 million, up 52% quarter-on-quarter.
• Earnings per share: $0.77, exceeding the forecast by 2.67%.
• EBITDA: $33 million, a 162% increase quarter-on-quarter.
• Gold sold: 20,000 ounces, up 9%.

Earnings vs. Forecast

Caledonia Mining reported an EPS of $0.77, slightly above the forecast of $0.75, reflecting a positive earnings surprise of 2.67%. Revenue also surpassed expectations by 11.63%, reaching $71.44 million compared to the anticipated $64 million. This marks a strong quarter for the company, with both metrics beating estimates.

Market Reaction

Following the earnings announcement, Caledonia Mining's stock climbed 5.05% to $27.9 in pre-market trading, reflecting investor confidence in the company's financial health and strategic direction. This uptick places the stock closer to its 52-week high of $38.75, signaling strong market sentiment.

Outlook & Guidance

Looking ahead, Caledonia Mining has increased its production guidance for 2025, projecting an output 3,000 ounces above initial expectations. The company anticipates on-mine costs to rise to $1,150-$1,250 per ounce and all-in sustaining costs to $1,850-$1,950 per ounce. These adjustments reflect the challenges of deeper mining operations and rising expenses.

Executive Commentary

CEO Mark Learmonth emphasized the strategic importance of the Bilboes project, stating, "We're doing Bilboes not for fun. We're doing Bilboes to increase cash generation and thereby increase our ability to pay dividends." CFO Ross Gerrard noted, "We are seeing costs generally going up," highlighting the financial pressures faced by the company. COO James Mufara reported improvements in health and safety, saying, "We have seen quite a serious improvement in terms of health and safety parameters."

Risks and Challenges

• Rising operational costs due to deeper mining operations.
• Volatility in gold prices affecting revenue stability.
• Economic and political challenges in Zimbabwe impacting operations.
• Increased competition from other African mining companies.
• Potential delays in exploration and production projects.

Q&A

During the Q&A session, analysts inquired about the integration of the Matapa project with Bilboes and the implications for future production. Executives also addressed concerns about rising costs and reaffirmed the company's commitment to maintaining its dividend strategy. The exploration of new surface opportunities was also discussed, signaling potential future growth avenues.

Full transcript - Caledonia Mining Corporation (CMCL) Q3 2025:

Moderator/Webinar Host, Caledonia Mining: Good afternoon and welcome to the Q3 2025 results presentation for Caledonia Mining. Today we're joined by Mark Learmonth, who's the CEO, and he's going to introduce the webinar and start his presentation. Mark, over to you.

Mark Learmonth, Chief Executive Officer, Caledonia Mining: Thank you. Thank you very much, Tilly. Should we open the slide deck? I can't seem to move on to the forward-looking statement and disclaimer page. Next page. There you go. And then the presenting team. Yeah, I'm Mark Learmonth, Caledonia's Chief Executive, joined by Ross Gerrard, the CFO, who will run us through the financial numbers. James Mufara, the Chief Operating Officer, will talk to us about operations. Victor will say a few words about Bilboes, and Craig Harvey will talk to us about some of our exploration initiatives. Can we just move to the next page? Okay, the first thing I'd point out is that, as you probably noticed, we no longer publish the standard sort of management discussion and analysis and the detailed financial statements.

In Quarters One and Quarter Three, we'll produce what we've done this morning, which is like a truncated version, but I think that's more than adequate for conveying the substance of what we're doing. As we get into the presentation, first, we must recognize that we had a fatality during the quarter, and we extend our condolences to the family and the colleagues of the man who tragically lost his life. James will talk to us more about what we've done in the aftermath of that to comprehensively review our safety procedures and safety practices and what we're doing to strengthen our risk management and workforce protection. James will go into that in some more detail. It was a solid performance operationally. Production at Blanket was just over 19,000 ounces, and we sold just over 20,000 ounces.

That was clearly, we have clearly been helped by the rising gold price. The gold price is up 40% quarter on quarter, comparable quarter to this quarter, to just over $3,400 an ounce, which drove a strong improvement in revenue and also profitability. Revenue is up 52% to $71 million, and EBITDA is up 162% to $33 million. Ross will clearly provide more information on the financials. With respect to Bilboes, as we say in the RNS, we expect to give an update as to where we are and where we are going with that imminently. Victor is on hand to say something, but frankly, until we have imminently said something, there is not a great deal we can say at this stage. Craig will run us through the exploration programs at Blanket and Matapa, which we are advancing and which are showing very encouraging results.

Finally, I just remind you all that in addition to these results, we have this morning declared another quarterly dividend of $0.14 a share. With that, can I hand over to James to run us through the operating results? James, over to you.

James Mufara, Chief Operating Officer, Caledonia Mining: Thank you very much, Mark. Good day to you all. It is very sad that, I mean, in this quarter, we actually have to report a loss of life incident that occurred at our Blanket Mine. In this very quarter, one of the things that why it's tragic is we had seen quite a serious improvement in terms of our health and safety parameters, and that's in terms of lost time injuries, in terms of environmental conditions underground, ventilation conditions underground. We had seen an all-round improvement in accident-free days. We'd seen quite a serious improvement. However, we still suffered this loss of life in which a gang leader who was in the process of conducting secondary blasting actually had a premature detonation, and he lost his life.

Secondary blasting operation is an operation where we break some of the bigger rocks that could have been generated during the time of primary blasting so that you can send them through into our ore passes and be in a position to take them out to surface. Immediately after this accident, we embarked on a thorough investigation and extensive investigation to determine the root causes of this accident. We reported also this to the government, who also actually conducted a thorough investigation on their own to determine these root causes and possible areas where we can see improvements. The investigation is complete now, and action plans that we found out are currently being implemented to avoid any possible recurrence of these significant unwanted events.

One of the key issues that we still need to deal with is the issue of our employees and the higher risk appetite that we see within the operations. If you can just go to the next slide, please. And the next one. In terms of the slides that are now showing, I mean, you will see that this depicts a consistent delivery that we are now witnessing at Blanket Mine from the third quarter of 2024 to now. You can see that the delivery has almost reached steady state, I mean, almost delivering at the same level. This is the recipe to good production and actually consistency. That is what the planned ones consistently deliver, and this is what we are beginning to see. This has been brought about mainly by three issues, but there is obviously a lot more other issues behind this.

The first one is the introduction of the short interval control system that we see on the mining and the metallurgical side where production is managed on a short interval control basis. The second reason that we have seen is that there's been a consistent tonnage throughput because now the plant can feed from the stockpile, and we are in a position to see consistent throughputs due to feeding from the stockpile. The third reason for this consistent performance that we see with the tonnage and steady state performance is because with the improvement in development that we embarked on starting the end of last year and even carrying on with this year, we are seeing an improvement with regards to flexibility as we are opening up more and more areas for production underground.

However, on the same top graph, you'll see that there is an unfavorable drop in the orange line, which is the grid line. The reason for the drop in the grid line is linked to the loss of life accident that we had on the 22nd of September, where we stopped our high-grade areas for up to 20 days while investigations were actually going on. You will see that this had also a negative impact in terms of our recovery, which is on the graph below, on the graph below where the graph shows that the recovery also took a negative dip because of the grade that actually went down. The good news, however, is that the recovery for the year to date is still on plan, and we still expect to finish the year high with regards to our recovery.

If you may just turn to the next graph. The table shows how our mining metrics were above plan for the quarter, which is actually showing a healthy production throughput throughout the whole quarter in terms of our tonnes hoisted, our tonnes milled, and most importantly, in terms of our development to generate new areas where we'll mine from. You will see that we were green in these areas, and it's very important to be healthy in all these areas. This is consistent production all around. Achieving development will also help us to make sure that our flexibility going forward is going to be better, and this will actually positively impact in terms of employee productivity.

The only color which is not green is the grid color, which we have already explained that some of the higher grid areas we had to stop them after the loss of life accident that we unfortunately suffered on the 22nd. Because of that, we actually see that the grid was at 3.04 grams per ton. However, if you can just carry on to the next table, we see that as Blanket, we are on course to meet the increased guidance. On this presentation, you'll see that the tons milled are still about 7% ahead of our desired run rate for the year to date. Of importance, however, also is the issue with regards to the tail grade, which remains at 0.2 grams per ton, which is our plan, consistently very, very low, which is showing that our recovery within the plant has remained consistently very, very high.

The ounces for the year to date is still, even at the end of the quarter, still 3,000 ounces ahead, clearly showing that Blanket is on course to meeting the increased production guidance as given out to the market. If we can just go to the next graph, which shows that we are still securing the future. This production has not just been to meet today's need, but it's also securing the needs of tomorrow. You can see that in terms of our reserve generation, which was positive for the quarter, we have met today's production, but without destroying our ability to meet production targets within the future. Although our set out goal at the beginning was simply not to deplete reserves, we, because of better production, better development, actually added reserve ounces as well in the quarter due to better production.

This is a healthy state to be in. If you can just go to the last one, which talks about our focus on productivity, you will see that Blanket, being a mine that has been in operation from 1904, some of the areas are further and further from the shaft barrel and deeper as well. There is need for us to improve productivity and introduce technology within our mining space. We have seen that ourselves as mining, I mean, we are price takers in the only area in which we can actually improve our competitiveness is if we can improve productivity. We have thus embarked on implementing technology in the mine so that we can better position ourselves to be more productive going forward.

In this example, I've just given three of the areas that we have chosen to embark on, which is engineering areas, and one of them being introducing main carriages for main riding. This has got the improved impact in terms of face time so that people are on the face in good time and also so that people have good energy when they arrive on the face. We have started to implement this within our working areas as a way of increasing productivity and dealing with the increased cost that invariably comes with an aging operation. Most importantly, is the technology that we are improving. We are doing a lot of the work in-house. As a result, it's costing us less to actually implement this technology.

We intend to continue to increase and implement this technology to both increase productivity and also increase the health and safety of our employees. I'll hand over to Ross for the financial section. Thank you.

Mark Learmonth, Chief Executive Officer, Caledonia Mining: Thank you, James. Ross, do you want to run us through the finance, please?

Ross Gerrard, Chief Financial Officer, Caledonia Mining: Thank you, Mark, and thank you, James. It's my pleasure. Good afternoon, everybody. It's my pleasure to run through the financial results. As what James described, it's been a challenging quarter, but certainly well delivered. Excuse me. If we can turn to the next slide, a quick overview of our financial results and a summary. You'll see gold sold is up 9% at 20,000 ounces against gold produced of just over 19,000 ounces. Solid quarter there. I will highlight that those gold produced ounces are the Blanket ounces. There were some 437 ounces that were generated from Bilboes that we don't account on this table just in order to calculate our on-mine costs, etc. A very solid set of numbers in terms of ounces produced and sold. Just dropping down below that first line, you'll see the on-mine costs, which were up 27% quarter on quarter.

That's driven by our sort of traditional elements of electricity, labor, and consumables. That increase was incurred this quarter, as James has indicated. There were additional volumes that were having to be processed and moved to compensate for some of those lower grades. Importantly, the teams had to be shifted around because of the unfortunate incidents. When we're comparing against those areas that were planned to be or scheduled to be worked, there were a number of moving parts that obviously resulted in additional costs, but also additional volumes having to be moved, offset by that lower grade, which obviously came at a cost, and that has driven our on-mine costs. Dropping down to our all-in sustaining costs for the quarter, you'll see that they've equally moved up some 40%.

That is predominantly due to those on-mine costs that I have just mentioned, but also the higher gold prices impacted our royalties, and that has dropped down into the impact of our all-in sustaining. Overall, a really good result driven by that gold price that Mark had mentioned at $3,434 an ounce, which was a really pleasing result and has really benefited the operations and the results that we will talk to. Moving to the next slide, we will talk a little bit about the profit and loss. Happy to report another sort of quarterly revenue number of $71 million, which is back on those good ounces produced in all-time gold prices. You will see that royalty number has similarly increased in line with those revenues. Those production costs were up, as I mentioned, in terms of additional volumes moved at a lower grade.

Depreciation has largely been in line for the quarter. I am very pleased to report on those net foreign exchange losses where we have continued to benefit from access to the willing buyer, willing seller market, and being able to deploy our ZIG component. If you look in the nine months column, you will see that we are just under $3 million compared to a $10 million type number for the same time last year. We are really pleased with that result in terms of delivery and income statement. Our corporate line items have increased, and that is due to a higher equity share-based payment valuation that was driven by the share price, but also a number of one-off expenses that you will see in that year-to-date number in terms of some of the corporate team reshuffle.

Lower down below the line, that tax expense is higher, and that's due to the good operational performance and the benefit of the gold price. You must remember the solar sale that's been included in that number, and importantly, from a cash flow perspective, includes the capital gain on that solar plant sale. If we quickly move on to the next slide and talk about cash flows. The net cash inflow from operating activities was a very solid number. It's just a shade under $14 million for the quarter, impacted by some large negative working capital movements of around $8 million. Those are timing in terms of some investments in terms of consumables and then the traditional working capital movements in terms of ounces, gold sales, receivables, and the like. Tax payments, as I'd mentioned, included that $2 million in terms of cash outflows.

Lower down in terms of capital expenditure, we're largely on track for the year. We're not readjusting our forecast spend, and we've continued to invest and deploy money into our fixed-term deposits. You'll see we've got $18.5 million now sitting on fixed deposits, and they all sit offshore here in Jersey. A really pleasing result year to date. You'll then see the $14.7 million worth of dividends that have been made year to date, split in terms of $6.6 million for our NCIs and $8.1 million for Caledonia shareholders, comprising three quarterly dividends that have been paid in the nine months. As Mark mentioned, we've declared our customary quarterly dividend of $0.14 per share earlier today. Importantly, we closed the period with $7.3 million of cash and cash equivalents at the end of the quarter.

If we want to move to the next slide, we'll see where those funds are held and also, importantly, from a liquidity position where we sit. In terms of having cash on hand of $15.6 million, we've got those fixed-term deposits that I mentioned of $18.5 million. We've got some bullion on hand and gold sales receivables at the end of the quarter. Overall, including our bank facilities, we have a total liquidity of just over $44 million, which places us in a very healthy position and have the ability to deploy funds against some meaningful projects, which is very exciting. I know James has spoken about cost initiatives, but I just wanted to turn to the next slide and, I guess, take a minute to look at our cost profile, which has been an ongoing team exercise.

I just wanted to highlight or take a minute to really look at our cost base against others. We've been benchmarking our cost profile against our similar African peers. Admittedly, they are in South Africa versus us in ZIM. Looking at mines that we compare to in terms of operating under conventional mining methods and also those mines operating underground mines and at depth, we're not out of line and actually compare quite favorably against similar mines. You can see those metrics in terms of depths and the tons, mill per annum, and also the human element, I guess, the number of people that operate those mines. Our mines, as James indicated, really it's around where we're operating now. Blanket is a very different mine from five years ago where 60% of it all was really extracted from a depth of approximately 750 or 760 meters.

Now we have got a big component of it all coming up from a depth of over 1 kilometer. In terms of tons and ton meters hoisted and all the metrics that we are looking at, this all comes at a cost. Those key components of both productivity, but also our electricity costs and our tons of meters and the additional loads that we are having to put on that electricity or the power requirement when operating at depth, have a significant impact on our cost base when producing an ounce profile of around that 80,000 ounces per annum. There are a number of initiatives that we have got on the go, as James has indicated, and we will be hopeful that we will be able to bring those to account and that have a meaningful impact on our cost base going forward.

It's unlikely that we will return to historical levels in terms of the cost profile when operating in a very much closer to the surface and lower volumes being moved. On that basis, you would have seen in the announcement this morning that we have updated our cost guidance for 2025. If you move to the next slide, please. Whilst the gold production and the previously guided gold ranges in terms of ounces and capital expenditure were maintained, we have looked at our cost base and looked at the volume movements and what it's meant for how we exit the year in preparing our outlook for next year. We've increased our guidance ranges, both on-mine costs by increasing it just over 10% to a range of $1,150-$1,250 per ounce.

Equally, on our all-in sustaining costs, we've increased it at 9.5% to a range of $1,850-$1,950. We believe that that is a very reasonable and considered outlook in terms of as we exit this year and conclude on the final quarter. We're really excited. It is mining, and there have been some challenges, and I think the team has dealt with that very well. As we sit today and as we look for our outlook for 2025, we're really excited in terms of being able to deliver a really solid 2025. With that, I'll hand it back to Mark, and I think it's going to Craig to talk a bit about exploration. Yeah, thank you, Ross. Craig, could you just talk us through the exploration of Matapa and the Blanket, please? Thanks, Mark. I can do that for you.

If you can go on to the next slide. Just very quickly, what we are doing at Matapa, the budget for the year is just over 27,000 meters of drilling. At the end of Q3, we had done just under 20,000 meters. It is about 71-72% complete. We are expecting to complete the drilling campaign during Q4. I did mention, I think, in the last quarterly that there were some issues with the laboratories in Zimbabwe. That seems to have been sorted. We have caught up quite a number of assays. I am expecting to have a maiden resource declaration for Matapa, specifically Matapa North, during H1 of 2026. If you could go on to the next slide then. This is just when I talk Matapa North. I mean, obviously, it is those nice pretty colored zones that you see on that map there.

That blue line, that represents the Bilboes, which is our current big project that everybody knows about, and the Matapa area. From Matapa to the Bilboes boundary is literally 200 meters, and it's another 250 meters to the Isabella South Pit. Quite clearly, what we're doing at Matapa and Matapa North should, in all aspects, have an impact on the Bilboes projects going further. Currently, with all the drilling that we've done, we've drilled and we've defined some mineral zones over a strike length of approximately 2,500 meters. It remains open to the northeast. I still have some gaps between the historic old pits that we've got to do. Matapa North, its main thrust is sulfide mineral resources below the current pits, down to a depth of about 200 meters.

All of this, once the drilling campaign is complete during this year, we'll take a month or two to get the assays in, and we'll have a maiden resource declaration from Matapa North early next year. If we could go on to the next slide. Some of the other drilling that we're doing, this is about 500 meters south of Matapa North. It's the area that we call Mpudzi. We're finishing up our drilling campaign here. We've drilled about 1,000 meters on strike. It remains open, probably for at least another 1,000 meters to the northeast. It's an area that hasn't been open-pitted in the past. This program is slightly different where we are focusing on the potential for oxides. Clearly, drilling some deeper holes to get an understanding of what the sulfide mineralization looks like.

This program will carry on in 2026, and we'll report drilling results as and when they all come in. If you could go on to the next slide, I'll take us through Blanket quickly. Blanket, we've got the underground, as we all know, and we've also got the surface. With the underground exploration drilling, it's all of the long-haul drilling that we're doing, typically holes 250 meters to 450 meters deep. If you can go on to the next slide, I can then show you where the areas are that we're drilling. To the south or to the right of the slide that you see, we've got ARS, which is AR South. We've got the Blanket Quartz Reef, which is BQR. Then all of the Blanket ore bodies. We've got seven of them. You can see there are 34 levels.

You can see the little blue traces that are running there. We're currently drilling below 34 level. A lot of our intersections are now on kind of the 36-level mark on the Blanket ore body side. Half-yearly drilling results. Probably at the end of this year, we will publish a set of drilling results for Blanket. On the northern side, on the left-hand side, you can see some long-haul traces there. That is Lima, where we are now filling in the drilling below 22 and 34 level. We've drilled the one next to it, Eroica, extensively. We've got 30 and 34 level that can quite easily develop north towards Lima and pick up that ore body and then carry on mining like that as well. If you could go on to the next slide.

In the past quarter and the previous quarter, Blanket started a surface exploration program. For all the geologists out there, if they are and you are on the call, a very simplified geological map showing kind of the host rocks that we're looking at. All the blue vertical lines are the trenches that we have done. That was the start of the exploration activities. The strike length of 600 meters, the trenches are approximately 200 meters long. Out of this, we have identified an area. It's approximately 50,000 sq m surface expression area that has got anomalous gold values. If you look carefully, you can see some colored bars that are next to the trench lines. I can't put values on there as yet. We haven't released anything to the market, but it gives an indication of mineralization in those trenches.

During Q3, we have instituted a reverse circulation drilling program. It is spaced 25 by 25 meters apart, drilling to a depth of about 45 meters. The intention of this is quite clearly if we have sources of ore that are probably amenable to heap leaching, Blanket Mine will have access to hopefully an additional source of low-cost surface ounces that also do not require to take up capacity in our current plant environment and capacity there that we have. My last closing remark on the Blanket exploration on surface is if you look at an aerial map of, for instance, Bilboes, it is covered with historical open pits. If you look at an aerial map of Blanket, there are no open pits. It is just really a function of the age of the mine. When Blanket first started, it went underground very, very quickly.

Quite clearly, along our lease area, this should be the first of a couple that we would see like this. This program is expected to finish up late December, so kind of early Q1 of 2026. We should have a full exploration report on this as well. With that, I'd like to hand back to Mark. All done. Thank you, Craig. At the outset, I had indicated that Victor would talk about Bilboes, but the fact of the matter is that, as I also said, we're about to provide a very detailed update on Bilboes imminently. At this stage, there's nothing really Victor can say other than just repeat the word imminently. Apologies for getting that slightly wrong. In terms of outlook, we remain on track to achieve the increased production guidance for 2025. We're about sort of notwithstanding a few headwinds in Q3.

We're about 3,000 ounces ahead of where we expected to be at the beginning of the year, which is good. Craig has given you a good sense of the very encouraging drilling taking place at Blanket, both at depth and at the surface. Matapa, we're looking to convert the drilling into a maiden resource early next first half of next year, which should validate the acquisition of that asset some time ago. As I've said, Bilboes feasibility study news on that is imminent. We continue to look closely at cost management to see to what extent we can try and get those costs down somewhat. Acknowledging that Blanket is now a fundamentally different mine than it was five years ago, we're not going to go back to the days of enjoying the days of producing gold at $850 an ounce.

With that, we can open it up to questions. Thank you. If you would like to ask a question, please click on the raise hand function. We'll just pause for a few moments to allow you to raise your hands. Our first question comes from Nic Dinham. I'm going to allow you to talk. If you can unmute and go ahead. Hello, Nic. Hi, guys. Awesome. Thank you very much. I have several questions, tidy up some details here. On the mining side, there's a lot more broken ore registering than actually hoisted. Could we have an explanation for that? Also from you, James, I think, what are your immediately available ore reserves at the moment? I think you've got a sort of South African standard when you talk about that. James, do you want to deal with those questions? Yeah, thanks, Nic.

Yeah, so obviously, in this particular quarter, we broke more, but we had, I mean, if you look at the year, for instance, we are within the normal standard of plus or minus 2%, the difference between what we broke and what we hoisted. In this particular quarter, we broke slightly more, and this is simply because of our hoisting constraints, the stoppages that we had with the loss of life in some of the areas, and we were let. You'll see that that will correct out this quarter. In terms of the immediately available sort of first link, we are still very, I mean, we're still very quite low. We're looking at maybe at the moment, two to three months. We need to move that up with a little bit more development that we need to do with the flexibility.

We are happy that we are already over 5% above for the year, and we are seeing we are actually mining, we are actually putting back into our reserves. We should see a big correction within the next year. I think within the next three to four years, we should be in a position to be maybe three to six months or better so that we can have better flexibility. Thank you. Thanks. Here is a question which I always run off you, Ross. What are you expecting from dividends from Blanket this year? Will that bring that horizon for the end of the facilitation loans any closer than quarter one, which you spoke about last time? Obviously, things have materially improved. Hi, Nick. Yes, absolutely.

Those loans basically will be paid off by the end of the year or January at the latest, certainly earlier than originally talked about in terms of end of sort of Q1 next year. Yes, in terms of planning for the remainder of the year, we were originally targeting, if I deal in cash, we were targeting a $50 million sort of cash balance to have been distributed and be sitting in Jersey by the end of the year. I think that's more likely to be between $40 million and $42 million, that type of level in terms of distributions that come through the chain. We've had $45 million that have been distributed up from Blanket, both during the quarter and post in terms of dividends. We continue to look to build our offshore bank account up closer to that $40 million mark. Sorry, Ross.

If you can just explain again, what is the quantum of dividends that Blanket will distribute over this year, given where things are at the moment? What will the total look like? Is that the number you mentioned? Yes. So those are the numbers that we've already done, sort of $45 million. And depending on performance and the like, we're probably going to get between sort of $15-$20 million additional distributions that happen within this remainder of the year. That's obviously impacted by timings in terms of when those dividends actually get declared and the distributions get distributed up the chain. So we've done $45 million. It'll probably be $60-$70 million in terms of actual distributions that come up from Blanket. Thank you. Thanks. That's all I have. Thank you. Thank you, Nick. Thank you. Our next question comes from Joseph Parrish.

If you can unmute and go ahead. Hi. My question is mainly for Mark. You've talked in the past about how your goal is to avoid further common shareholder dilution as you fund the growth of the business. With the favorable gold prices in 2025, Blanket, you're really starting to harvest some of the fruit of Blanket and the previous investments there. My question is, how much do you intend to retain cash to fund the future development projects and potentially other acquisitions in Zimbabwe as opposed to increase the dividend? Effectively, if a common share is needed to be issued again, you raise your cost of capital in doing so, as I think in hindsight has been the case following the dividend increases with Blanket. Okay. I'm not sure I heard all of that correctly. The upshot is that there are several questions embedded in that.

We're not looking at any further acquisitions in Zimbabwe. I think our plate is full. That's the first thing to say. Secondly, we do have a very substantial capital investment program in the Bilboes project, and that will become clearer imminently. In that context, it would not be appropriate to increase the dividend. Having said that, our planning going forwards is to maintain the dividend. Now, clearly, we're not going to promise to maintain the dividend, but we don't see the dividend increasing, and we will do our level best to avoid reducing the dividend. I think that's all. I think those are the answers to the questions you raised. Is there anything I've not answered? It was quite a complex question. Is there anything I've not answered? I think that gets to the meat of it.

Maybe just as a follow-up, if you were to have a general idea of when dividend increases would occur again, would it be after the current projects with Bilboes and Matapa are substantially completed? It would be after Bilboes is completed. Let's be very clear. We're doing Bilboes not for fun. We're doing Bilboes to increase cash generation and thereby increase our ability to pay dividends. That's entirely what we're about. I mean, we've been paying dividends now for, what, 12 years or so. And if you look at the returns that we've generated for shareholders over the course of the last 10 years or so, I think it's a 1,000% return compared to gold going up threefold and the GDXJ going up fourfold. So we've substantially outperformed both gold and the GDXJ.

A major contribution to that has actually been the effect of those continuous dividend payments over the last 10 to 12 years. Paying a dividend is deeply embedded in our DNA. I would hope that our past actions in terms of maintaining and then increasing the dividend should give shareholders a high degree of comfort that we're going into Bilboes and other projects with a view to increasing the dividend. It's very important. All right. Wonderful, Matt. Thanks for your answer. Thank you. Our next question comes from Tate Sullivan. Please unmute and go ahead. Hi. Thank you. Big picture on Matapa. Sorry for background noise. Is any of the work that you have done on Matapa going to factor into the feasibility study for Bilboes? No, it's far too that would it's far too early.

It will take, it'll take a maiden resource at Matapa early next year is just a staging post. To complete that work at Matapa will take, Craig, what, three years, four years? Yeah, I'd say a timeline of three to five. Yeah. If we were to, if we were hoping to fold Matapa into Bilboes at the get-go, that would introduce a delay of many years into the project, which I'm not sure my nerves would stand. Look, if you think about the Bilboes project, the first six years will be mining in the Isabella McKay's area, and then the latter four years would be mining Booby, which is more remote. In the intervening period, that gives us plenty of time to finish the geological work at Matapa and then, in due course, to fold Matapa into Bilboes as the Isabella McKay material runs out.

At this stage, there'll be no benefit to shareholders in deferring the project. Thank you. For Blanket, you mentioned in the press release a plan of scheduled engineering work on winders and shafts. I mean, and then storing and accumulating the ore for uninterrupted milling. Is this all planning for 2026 engineering work? Sorry, I'm finding your line is very poor. Could you kind of repeat the question because I couldn't pick up all of it? Yeah. You mentioned some scheduled engineering work on winders and shafts for Blanket. Is that all planning for 2026? James, correct me if I'm wrong, but I think it's that sort of relatively quiet period over the December, January, 2026, 2027. James, is that correct? Yes, it is correct, Mark. Yeah. So it's 2026, 2027, we're going to have the ACDC convention. Yeah. Yeah. Let's be clear.

The whole point is to have a stockpile so that we can see our way through that hiatus without interrupting production. Thank you. Thank you. There are no other raised hands. I'll go over it. Oh, we've just got one more. From Nic Dinham. Allow you to talk. Please unmute and go ahead. Yeah. Sorry, I missed a question for Craig here. When, Craig, do you think you'll be in a position to do a reserve upgrade at Blanket? And when would that result in a technical report summary? Thanks. Thanks, Nic. So we are currently busy with one. During Q1, late Q1, we'll have a new technical report out. It'll have a revised capital, and it'll have revised resources. And obviously, with the life of mine, we'll have a revised reserve estimate as well. Thank you. Thank you.

We've got another question from Yuen Lo. Please unmute and go ahead. Hello, Yuen. Hi, everyone. Congratulations on the strong financial results. I've got a couple of questions, perhaps first for James. In relation to the development that's been done, could you talk specifically to Eroica and BQR? James? Yuen. Yeah. Yuen, I mean, we obviously now at the moment, in terms of the development, nothing has really changed in terms of Eroica and BQR. We are developing reserves in that area. We still have got crews also that are busy mining in that area. I wouldn't say off the top of my head, could be around, Craig, maybe 15% of our production is coming from there. These are still high-grade areas. We're still seeing good values in Eroica and the BQR area.

That is where we also had the loss of life, also in BQR, for instance. We are confident that with the development that we are doing at the moment, we should be in a position to open good reserves in the next two, three years, like we say. We are accelerating development there. Okay. On a related note, by this time, directed to Craig. The discoveries at our sheet or in the position of sheet are very interesting. I know you are focusing on the oxides for heat beach right now, but have you done any deeper holes? Does there appear to be an extension at depth to sheet? Is it disseminated sulfides or is it quartz? Yeah. Thanks. Thanks, Yuen. That surface exploration that I showed there, as I say, it is 250 meters east to the east of sheet.

When we extrapolated underground, because obviously we've got a whole plan of our underground workings, it appears as though this area hasn't been mined. There is a potential for a previously unknown or unmined ore body to be sitting in the foothold of sheet 250 meters to the east. We are going to tackle the surface. In the meantime, we are in the process of procuring slightly stronger, better electrohydraulic rigs that we can draw from nine level from sheet drives that we have there to actually have a look if this does carry on down. Okay. That's great. Thank you very much. Yeah. All right. Sorry, Yuen, does that finish you? You done? Yes. Thank you very much. Okay. I can see we've got a typed question, which I think falls—I mean, Ross, can you pick it up at the bottom?

It seems to really fall into your bailiwick. Can you see them? Sorry, Mark. I'm just seeing them now. It's reading through. The first question is, what's effectively the downside gold price scenario below which we couldn't sustain the dividend? I think that's the first question. Are you able to answer that? Yes. On that one, it would be sort of $1,850 would be the low price or downside scenario in the short term that we've modeled on that side. Okay. The second one refers to lease liabilities. I don't quite understand what the question is about lease liabilities. Cash used for payments of lease liabilities has been increasing year on year. What's the long-term capital allocation strategy for managing these increased lease and debt? I don't quite know what lease liabilities we're referring to. I'm not sure either in terms of the leases.

We're conspicuously ungeared. I mean, we do have some loan notes which initially were issued by the solar company. And then when we sold the solar company, we, Caledonia, deliberately took those loan notes over because we're interested in helping to further develop the emergence of a debt capital market in Zimbabwe. Also, we're keen as a company to continue to build those relationships with high-quality Zimbabwean institutions. So we have those liabilities. The other liabilities are really of the nature of very short-term overdraft facilities. As you can see, we've pretty much repaid. We've allowed half of those to go during this quarter. I'm not quite sure what the lease liabilities are. I think it's probably related to some of the property leases and the new buildings and some of the signing of those leases. Again, not material in the total scheme. Okay.

Two further questions. Firstly, what's the percentage tonnage being hoisted by number four and central shaft? Currently, the percentage, I think for the whole of this year, the target is for about 62% to come up central shaft and the balance to come up number four shaft. I think the point that Ross was making is if you look at that in terms of ton meters, in 2020, we hoisted 630,000 tons from a depth of 760 meters. That's about 450 million ton meters. If we're going to hoist 62%, this year, we're going to hoist about 830,000 tons. If 62% of that's coming from 1,200 meters, that effectively increases the ton meters to about nearly 900 million. We're using pretty much twice as much power to hoist, which is, I think, the point that Ross was trying to make.

The second question is, was the pressure on production cost broad-based or unique to? No, the pressure on production costs has been across the board. We are continuing to see increased labor costs. That is a combination of overtime and, I have got to say, bonus payments based on production exceeding targets. In terms of trying to manage overtime, one of the things we are doing is we have introduced a clocking time attendance system, which is allowing us now to get a better handle as to how and why overtime is being incurred. One of the things we want to do going forwards is to try to improve the rostering and improve the way we use labor so that the workers get to and from their places of work much more quickly and therefore they are less tired, and they also do less overtime.

I think that's the initiative on labor. On consumables, we've looked over the last five years. Of our consumables, about a third is what we call variable consumables, which is cyanide, drill steels, explosives, that sort of stuff. Over the course of the last five years, we've actually become more efficient across the board in terms of our usage of cyanide, explosives, drill steels, kilos per ton milled. In every case, we're finding that the unit cost is going up, particularly in the case of, say, rods, where the average increase per annum over the last five years has been about 12%, I think. We are seeing costs generally going up. The third one would be, yeah, that's labor, that's electricity, and that's consumables.

Within consumables, the conspicuous offender, I guess, at this stage would be the cost of running the TMMs, both in terms of overtime and consumables. That reflects the fact that some of these TMMs, that's the underground trackless equipment, is getting old. We need to seriously now consider whether it's economic keeping and repairing old unreliable stuff or buying new stuff, which is more reliable and less prone to breaking down. I hope that. Also, on top of the final point to that question, within the quarter, we did incur some additional costs relating to repairing a ball mill, one of the big ball mills found. Whilst we could work around that in terms of maintaining tonnage throughput, it meant that we did incur some extra costs to fix that ball mill.

But primarily, the increase in costs, I guess, is structural, not specific. I hope that answers the question. Any further questions? No further raised hands. So Chief, any closing remarks? Let me just make sure there's no more—no, there aren't. Okay. Look, thank you very much for joining us. I characterize the quarter as being a solid quarter. It creates a good foundation. As we say, the real news flow is going to be the imminent news flow relating to Bilboes. Thank you all for joining us. Thank you very much.

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