Caledonia Mining (CMCL) Q4 2015 earnings summary

Executive summary

• 2015 gold production rose 2% to 42,804 oz as tonnes milled increased 13%; lower realized gold prices and grades weighed on revenue and cash generation.

• Investment-plan milestones advanced: the Tramming Loop was completed, No. 6 Winze began contributing modest production, and Central Shaft sinking was progressing toward a mid-2018 start-up.

Financial highlights

• Revenue fell 8% to $49.0m from $53.5m; EBITDA declined to $8.9m from $14.7m, and operating profit to $8.5m from $12.1m.

• Net profit was $5.6m versus $5.9m; EPS increased to 8.9 cents from 8.4 cents, while adjusted EPS declined to 8.2 cents from 10.4 cents.

• Cash flow from operating activities declined to $8.8m from $15.6m, reflecting a $4.5m impact from lower gold prices and $2.1m from higher operating costs.

• Gold revenues fell 8% to $49.0m as realized price declined 8% to $1,140/oz; gold sold was nearly unchanged at 42,943 oz.

Outlook and guidance

• 2016 production target is 50,000 oz, with a Q4 2016 production rate target of 58,000 oz per annum; 2017 target is 65,000 oz.

• Higher tonnes milled and a gradual recovery in grade and recovery are expected to support production growth and reduce cost per tonne and cost per ounce.

• Increasing production is expected to spread fixed costs, which are approximately 65% of on-mine costs, and support rising profits and cash flows from mid-2016.

• Continued high Blanket investment is expected to shield Zimbabwe profits from income tax in 2016; increased production is expected to improve cash generation.