Caledonia Mining Share Discussion Threads

[338] 14/2/2020 08:04

$10.16 in USA or 778p due to strengthening £/$ rate... expecting volatile share price today

[338] 11/2/2020 16:38

hxxp://news.goldseek.com/GoldSeek/1581435213.php

Eventually the market will discover the junior exploration stocks and the share prices will be off to the races. This is part of the reason Eric Sprott continues to invest aggressively in the companies he considers to have the highest probability of getting enough “wood on the ball to knock the ball out of the park” (sorry, baseball is right around the corner).

Precious metals mining stocks are exceptionally cheap relative to the price of gold (and silver). Many of the junior exploration stocks have sold down to historically cheap levels in the latest pullback in the sector. As such, this is a good opportunity to add to existing positions in these names or to start a new position.

- Dave Kranzler

[338] 10/2/2020 08:10

$10.98 in USA or 852p

[338] 07/2/2020 14:50

$10.26 in USA or 815p ... :)

[338] 06/2/2020 14:48

$10.44 in USA or 805p ... :)

[338] 06/2/2020 11:11

$10.30 in USA or 795p ... :)

[stemis] 01/2/2020 21:48

Thank you for posting. That's very helpful.

[338] 01/2/2020 15:09

Caledonia Mining Corporation - Briefing Note
Published on January 24, 2020
Author’s photo
Michael C.
Private Investor and Analyst
January 24th 2020

The Proactive presentation at London on 22nd January gave the opportunity to talk with the managers of Zimbabwe-focused Gold producer, Caledonia Mining Corporation (AIM:CMCL, TSX:CAL, NYSE:CMCL). There were two main issues that I wanted to address. The first was the development of the Central Shaft and the second was the reliability of electricity supplies to its mine.

When asked bluntly what would stop the commissioning of the Central Shaft, they were adamant that there were no obvious hurdles that would cause it not to be brought into commission within the time frames given. No further regulatory requirements are needed. In fact, the most technically challenging factors appear to have been overcome. The shaft has been sunk and it’s now being fitted out. All further costs will be met out of cash flow - assuming that the Gold price does not collapse, this appears quite reasonable. And we need to put this into perspective, the company has invested some US$63m in developing the Shaft since 2015. With a six metre diameter and 1,200 metres deep, it appears to fundamentally change the dynamics of the business. Not only will it substantially extend the mine life (To 2034) but it also feeds into operating efficiencies that the market may have not yet taken on board. Basically, the Central Shaft moves the company’s centre of gravity closer to its major ore bodies. Put simply, it's a huge logistical improvement and further opens up the mine’s potential. Once in operation, the company is looking at increasing production to 80,000 oz of Gold per annum by 2022.

The reliability or otherwise of its electricity supplies are key to its development. The company has put in place diesel generators to deal with temporary outages (It has increased its backup capacity to 18.5MW). It also benefits from a mining industry wide scheme that gives it preferential access to electricity. The management were keen to emphasise the development of its Solar power project. The impression given was that this should be operational by the end of 2020. When asked about the possibility of issuing Green Bonds, they seemed to believe that this was probably not an option considering the jurisdiction. But, in my view, this is a project that will substantially change the dynamics of the organisation. To some degree, it derisks it.

At a broader level, I questioned the management about the jurisdictional risk. For many investors, Zimbabwe is simply off limits. The country has been grossly mismanaged and a way out of its economic morass is difficult to envisage. I would suggest that if there is a way out that will include a successful mining sector - it’s the country’s biggest foreign exchange earner. That said, Caledonia is not only a profitable business operation but it also supports a great many people in a very poor country and, through a variety of mechanisms, its ownership is shared with the indigenous communities. When asked about labour relations, a useful but possibly overlooked point was made. This is not South Africa and the company shares good relations with its trade unions. Possibly not surprising given the 95% unemployment rate but easy to go unnoticed. As for the Government, it has had 15 years to nationalise the operation and has chosen not to. When pressed about this threat, the management regarded it as a non-issue. The broad impression given was the Government is very supportive of the sector. In addition, the company has done a great deal to ensure that it can navigate any potential political issues. The one downside that was pointed out was the bureaucracy it faced. But this appears to be little more than an irritant.

Putting the Central Shaft project to one side, and it’s looking at growth through acquisition in Zimbabwe. When pressed, the management were quite forceful about the company’s focus on Zimbabwe. It appears to have virtually no interest in overseas growth - this is a pure Zimbabwe Gold play. The one obstacle to this strategy could be the price it’s willing to pay for acquisitions. It’s determined not to overpay but appears to be encountering sellers who have what it regards as outlandish offer prices. There also appears to be an issue with paperwork. Finalising the ownership of assets is slowing down the buying process. Nevertheless, an acquisition this year appears very likely. But I was informed that this would not be funded through a placing, it would be financed through cash flow. It also views its dividend policy as key to its investment model - there was no indication of a cut or termination of the dividend, in fact the reverse was the case.

When questioned about Nick Clarke's role as Non-Executive Director, I was told that he brings with him a great deal of local knowledge and technical expertise. That's fair enough, but I suspected that there may be some synergies with Clarke's role at Central Asia Metals (LON:CAML). That doesn't seem to be the case. The company is obviously very focused on Gold and Zimbabwe.

The overall message seems to be that the Zimbabwean mining sector is open for business and Caledonia is determined to expand its footprint in the country. As an investor, my prime concern is about events outside the company's control. But I believe this to be a well managed company with much growth upside in Zimbabwe. But it obviously comes with inherent risk.

[338] 01/2/2020 15:07

Caledonia Mining Corporation - Briefing Note
Published on January 24, 2020
Author’s photo
Michael C.
Private Investor and Analyst
January 24th 2020

The Proactive presentation at London on 22nd January gave the opportunity to talk with the managers of Zimbabwe-focused Gold producer, Caledonia Mining Corporation (AIM:CMCL, TSX:CAL, NYSE:CMCL). There were two main issues that I wanted to address. The first was the development of the Central Shaft and the second was the reliability of electricity supplies to its mine.

When asked bluntly what would stop the commissioning of the Central Shaft, they were adamant that there were no obvious hurdles that would cause it not to be brought into commission within the time frames given. No further regulatory requirements are needed. In fact, the most technically challenging factors appear to have been overcome. The shaft has been sunk and it’s now being fitted out. All further costs will be met out of cash flow - assuming that the Gold price does not collapse, this appears quite reasonable. And we need to put this into perspective, the company has invested some US$63m in developing the Shaft since 2015. With a six metre diameter and 1,200 metres deep, it appears to fundamentally change the dynamics of the business. Not only will it substantially extend the mine life (To 2034) but it also feeds into operating efficiencies that the market may have not yet taken on board. Basically, the Central Shaft moves the company’s centre of gravity closer to its major ore bodies. Put simply, it's a huge logistical improvement and further opens up the mine’s potential. Once in operation, the company is looking at increasing production to 80,000 oz of Gold per annum by 2022.

The reliability or otherwise of its electricity supplies are key to its development. The company has put in place diesel generators to deal with temporary outages (It has increased its backup capacity to 18.5MW). It also benefits from a mining industry wide scheme that gives it preferential access to electricity. The management were keen to emphasise the development of its Solar power project. The impression given was that this should be operational by the end of 2020. When asked about the possibility of issuing Green Bonds, they seemed to believe that this was probably not an option considering the jurisdiction. But, in my view, this is a project that will substantially change the dynamics of the organisation. To some degree, it derisks it.

At a broader level, I questioned the management about the jurisdictional risk. For many investors, Zimbabwe is simply off limits. The country has been grossly mismanaged and a way out of its economic morass is difficult to envisage. I would suggest that if there is a way out that will include a successful mining sector - it’s the country’s biggest foreign exchange earner. That said, Caledonia is not only a profitable business operation but it also supports a great many people in a very poor country and, through a variety of mechanisms, its ownership is shared with the indigenous communities. When asked about labour relations, a useful but possibly overlooked point was made. This is not South Africa and the company shares good relations with its trade unions. Possibly not surprising given the 95% unemployment rate but easy to go unnoticed. As for the Government, it has had 15 years to nationalise the operation and has chosen not to. When pressed about this threat, the management regarded it as a non-issue. The broad impression given was the Government is very supportive of the sector. In addition, the company has done a great deal to ensure that it can navigate any potential political issues. The one downside that was pointed out was the bureaucracy it faced. But this appears to be little more than an irritant.

Putting the Central Shaft project to one side, and it’s looking at growth through acquisition in Zimbabwe. When pressed, the management were quite forceful about the company’s focus on Zimbabwe. It appears to have virtually no interest in overseas growth - this is a pure Zimbabwe Gold play. The one obstacle to this strategy could be the price it’s willing to pay for acquisitions. It’s determined not to overpay but appears to be encountering sellers who have what it regards as outlandish offer prices. There also appears to be an issue with paperwork. Finalising the ownership of assets is slowing down the buying process. Nevertheless, an acquisition this year appears very likely. But I was informed that this would not be funded through a placing, it would be financed through cash flow. It also views its dividend policy as key to its investment model - there was no indication of a cut or termination of the dividend, in fact the reverse was the case.

When questioned about Nick Clarke's role as Non-Executive Director, I was told that he brings with him a great deal of local knowledge and technical expertise. That's fair enough, but I suspected that there may be some synergies with Clarke's role at Central Asia Metals (LON:CAML). That doesn't seem to be the case. The company is obviously very focused on Gold and Zimbabwe.

The overall message seems to be that the Zimbabwean mining sector is open for business and Caledonia is determined to expand its footprint in the country. As an investor, my prime concern is about events outside the company's control. But I believe this to be a well managed company with much growth upside in Zimbabwe. But it obviously comes with inherent risk.

[338] 31/1/2020 13:03

£11 next stop :)... then £20 when they announce a new licence in Zims

[338] 31/1/2020 08:35

with eps $1.75 and p/e ratio 8... the share price is now heading to $14 or £10.6

I think the eps can easily exceed $2.25 this year so the share price can double from here or about £13.70 supported by an increase of quarterly dividend as well.

[fredfishcake] 30/1/2020 09:55

Main risk is, and always has been, the fact that its mine is in Zimbabwe! As long as you're aware of that and size your holding accordingly this is a corker of a company.

[eezymunny] 30/1/2020 09:53

Probably unwise to annualise those 4Q earnings for 2020 as Q4 a bumper Q for production and 2020 is not currently guided to be Q4 x 4.

Nevertheless with a big ramp later this year and next, if the gold price holds up etc they have the potential to be making an absolute pile. The current share price may look an unbelievable bargain in 12 months time.

Not without risk of course...!

[stemis] 30/1/2020 08:36

Considering underlying EPS at end of Q3 was 69.4c, that means they made underlying EPS of 85.6 - 105.6c just in Q4; an annual run rate of 342.4 - 424.4c. Presumably there's going to have to be a pretty huge increase to 2020 expectations. Imagine what this beast is going to do when it gets production up to 80-85k oz...

[observer007] 30/1/2020 07:40

Earnings guidance up 65% or around £1.30p a share verses 55p last year. WOW !

Has to be a £10+ share now.

[pi0110] 30/1/2020 07:23

Stonking update from CMCL....

St Helier, January 30, 2020 - Caledonia Mining Corporation Plc ("Caledonia" or the "Company") is pleased to announce that earnings for 2019 will be substantially higher than market expectations due to the combined effects of:

·    the continued strength of the gold price;

·    higher than expected production for 2019; and

·    lower than expected operating costs.

As a result of these factors, adjusted earnings per share (before net realised and unrealised foreign exchange gains) for 2019 are expected to be in the range of US$1.55 to US$1.75 per share compared to company guidance in early 2019 of US$0.86 to US$1.17 per share. 

Earnings per share on an IFRS basis which includes net realised and unrealised foreign exchange profits is expected to be approximately US$3.80 to US$4.00 per share.

Caledonia expects to publish its results for the year to December 31, 2019 on or around March 20, 2020. 

 

Commenting on this announcement, Steve Curtis, Caledonia's Chief Executive officer said:

 

"I am delighted by the excellent performance of the Blanket Mine, particularly in the latter stages of 2019, which, combined with the strength of the gold price, has resulted in us comfortably exceeding expectations for the year ended December 31, 2019. This is down to the hard work and dedication of our exceptional team operating at the Blanket Mine not least in how they have successfully addressed challenges in the year such as the variable power supply and grade fluctuations. With these challenges addressed, an excellent start to 2020 and with the development of the Central Shaft continuing on time and record quarterly production in the fourth quarter, we look forward to an exciting year ahead."

 

[goodgrief] 23/1/2020 08:07

The CFO made a pretty good presentation at Pr*Active Inv&estors last night. Completion of the Central Shaft looks like giving the share price another big leg up.

[stemis] 13/1/2020 16:25

Very positive update. Everything looks to be going well. At 75,000/80,000 oz and with capex finished this should be a veritable cash machine.

[daz] 03/1/2020 13:50

Yes, totally agree with that, it indicates confidence in the completion of the central shaft and also reflects belief that the money will not be needed for cost over-runs

[stemis] 03/1/2020 10:01

A dividend increase; a confident sign from the company as they move closer to a step change in cashflow...

[sharesoc] 26/11/2019 21:39

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