Caledonia Mining Share Discussion Threads

[drdre] 19/5/2014 12:18

It's tax on the dividend, because it's paid in CAD $.

[badtime] 19/5/2014 12:13

Not much stock about?

[steffyloveshares] 15/5/2014 10:07

Video interview

Caledonia Mining considering acquisitions outside of Zimbabwe

Mark Learmonth, vice president of corporate development and investor relations at Caledonia Mining (LON:CMCL, TSE:CAL), says the gold company is looking at opportunities in and outside of Zimbabwe.
English-speaking parts of Sub-Saharan Africa are on the hit list, with Zambia and Namibia named by Learmonth as possible destinations.
With US$26mln in the bank, the company is hardly short of cash after another quarter of strong profits.

[338] 14/5/2014 17:43

Sorry, is that investor's income tax or company's income tax?

[drdre] 14/5/2014 16:41

It's prudent to mention the with-holding tax on the dividend. Its 25% but you can claim 15% back.

[badtime] 14/5/2014 09:41

i nibbled at 45 a couple of weeks ago..i do like the divi

[chipperfrd] 14/5/2014 09:31

So, an Ev of $12.4m and yet they generated $6.2m of cash from 3 months operations at a realised price of $1,288/oz!

Earnings will drop to their attributable 49% once the $30m loan to the indigenous holders is paid back through cash flow - similar to CEY and AAZ although CEY have a tax-free status unlike CMCL and AAZ.

In the meantime a quarterly dividend provides a decent yield.

Apart from being Zimbabwe based - what's not to like :-)
Chip

[338] 14/5/2014 07:28

so asset per share is about CAN $1.39 or 76p.... Looking at the growth, etc... I recommend strong buy with share price to move quickly to 60p+... in few weeks... Dyor

[338] 14/5/2014 07:19

Total asset increased by CAN $4.2m $73.8m... Another good news...

[338] 14/5/2014 07:15

Total cash increases by CAN $3.3 millions despite distributing quarterly dividend since Jan 2014.... Very good

[338] 09/5/2014 11:00

Earning results next week... can't wait for the progress of the projects for future production growth...

[338] 06/5/2014 08:16

More shares being held by a New Major Shareholder... share price should start kicking up soon...

[drdre] 25/4/2014 20:16

Hi GWR7,

A very fair and balanced post. I concur with you - there are question marks and risks associated here. However, the yield and relatively medium term safety of that, along with the exposure and leverage to any gold price increase, is appealing. I would, obviously, prefer not to be operating in Zim and not paying 51% but such an arrangement in the resources sector is not unusual - see AAZ and their PSC arrangement, and on a wider basis, the PSCs and TSCs signed by oil and gas companies in a lot of other countries.

Also - and I do not know this answer - if CMCL take out another loan, they can offset the govmt share? AAZ do that with their PSC at present. I know a lot of analysts do not like debt but if the cashflow covers it and it effectively means a greater % of profit and revenue, its a necessary evil IMHO. Does anyone know if any new loans impact the arrangement here?

I think that such arrangements are going to become the norm and it does offer a safeguard against nationalisation to a degree, IMHO, as the host governments are seeing a good proportion of the revenues.

[joan of arc] 24/4/2014 15:43

Good observation GWR7

[gwr7] 24/4/2014 12:48

Afternoon DrDre, quiet thread. Bit of a puzzle this one. On one hand you can't complain about their on the ground operational management of the Blanket mine where they generate a steady return. On the other hand you can question their strategic management. They're a bit pipe and slippers imo. I think last year was an ideal time to diversify but it was only in March of this year that they mentioned they are considering other opportunities in Zimbabwe and elsewhere in Africa. What have the directors been doing for their money? Maybe, given the $14m write off of the Nama Copper mine in Zambia they're frightened in case they waste more money and put the dividend at risk.
Production at Blanket is targeted to double but once the indigenous shareholders have paid off their loan they will be receiving 51% of the profit so on that score the company will be running to stand still. Analysts at the cheap end of the market don't seem to have cottoned on to that fact. It seems to me they tried to play the star pupil in Zimbabwe by being one of the first to give up half their assets but I wonder if the government just treats them as patsies now, as evidenced by the less favourable gold sales arrangement announced recently.
So, a curate's egg for me. I am a holder for the dividend and the strength of the balance sheet but I don't feel like it's a stock I can ever afford to park and forget about.

[drdre] 02/4/2014 12:29

The $14m impairment charge for the Nama copper and cobalt exploration project in Zambia obviously dented earnings, along with lower realised prices but the impairment itself is a one-off. Q1 also impacted:

"Production in the first quarter of 2014 was also adversely affected by the unscheduled requirement to replace the winding ropes on the main production shaft. Both of these factors had an adverse effect on gold production in the first quarter of 2014. New production areas have and are being developed and I am confident that the 2014 production target of 48,000 ounces will be achieved"

I would also like to know the extent relating to - "In the early part of 2014, the achieved grade in certain production areas became uneconomic and production in those areas was terminated." - Will these areas come back online at higher gold prices? It makes sense to mothball marginal areas until gold is at higher levels (here's hoping!).

Can't be helped - these things happen, they have been dealt with and onward we will go. The management seem dynamic in their handling of operations and the crux is - The company is still hugely cash generative and all in sustaining costs remain below $1000. There seems to be definite upside from exploration although it would be interesting to see more detail re: the metallurgical tests on GG.

Also - "Blanket's on-mine cash cost increased in Q4 compared to the previous quarter, however this was largely due to the higher work-in-progress at December 31, 2013. As a measure of Blanket's continued cost efficiency, the cost per tonne processed in 2013 fell from US$75.90 to US$70.40." - that's a drop of almost 10% in cost per tonne and those efficiencies will be of huge benefit if gold remains at current levels.

Dividend of 1.5c per quarter, or around 3.8p per year, maintained and covered eight times in cash held.

The company is in a decent position and yields just shy of 9% with exposure and leverage to any gold price rises.

I personally cannot see gold falling much from $1200 - a lot of companies simply will go bust at any less. I also like the usage of all in sustaining cost as a bottom line metric. Too many companies use cash cost and this in itself is not the whole picture, obviously - and if you aren't versed in accountancy (like I am not) you have to wade through the accounts to get total costs.

I continue to hold in my SIPP and look forward to more positive progress Q2 on - 48k ounces still on track. GL all.

GWR7 - would welcome your views?

[gwr7] 31/3/2014 09:20

A few curve balls in those results imo.

[338] 13/3/2014 07:19

Heading to 80+ pence.... imo... especially when the final results can provide guidence for growth

[338] 06/3/2014 13:40

Any view on L2 at the moment?

[338] 27/2/2014 16:01

Buyers keep coming

[drdre] 12/2/2014 10:28

Bought an initial batch of these based on the dividend and a hope that the bottom is in for gold. GL all.

[338] 12/2/2014 07:23

Gold price is about to hit US$ 1320/Oz... That's good news for CMCL...

[gfrae] 07/2/2014 16:44

Presumably the dividend is being paid out of some of the profits from the mine,so the cash pile should continue to grow,even while the company is paying a dividend of 10%.
It appears that a mine that is generating substantial profits is being valued at about 1x its annual earnings.

[drdre] 07/2/2014 10:21

The dividend itself is almost 10% now and based on the cashpile of £15m and a 3.3p exchange rate for 6c, could be paid for just over 8 years. That does not take into account the cash generative nature of the business and the increasing gold production forecast.

Also, I understand the reticence regarding Zimbabwe but look at some other juristictions in South America (Argentina nationalising oil assets, Ecuador likewise with resources) and The former USSR, then in context, it is about as risky. I doubt Zimbabwe would nationalise Blanket given the revenues it generates for the indigineous (sp) populace and the message it would send out given the country's risk profile.

Perhaps they have their eye on other assets in Zim?

I think what is required is clarity on what is happening to the cash being generated (perhaps a future one-off, in specie dividend,, or even a dividend in gold as per Goldcorp?), future plans outside of Blanket (if any), and ongoing dialogue with the Zimbabwe authorities to assure investors. Does Zimbabwe fall under the International Court of Arbitration juristiction, does anyone know?

[gwr7] 07/2/2014 10:10

A strange investment philosophy imo and not one that is going to increase your wealth.