Operator
Welcome to the Caledonia Mining quarterly and full-year results 2025 presentation for analysts and investors. I would now like to hand you over to Mark Learmouth, who is the CEO. Mark, over to you.
Good afternoon and welcome to this management conference call. If we could move to the first slide of the presentation, please. Just go to the disclaimer. so that's the standard disclaimer if we could move on to the next slide please presenting team so there's me Mark Learmonth Caledonia's chief executive we're also joined by Ross Gerard who will run us through the financial performance for the year Victor Kapari will talk to us about what's happening at Bilbo's and Craig Harvey will give us an update on the various exploration initiatives if we could move on to the next slide please so just in terms of the summary of the results it was very strong performance underpinned by a higher gold price and some consistent operating delivery revenue up by 46% to $267 million, gross profit up by 78% to $137 million, EBITDA up by 100% from just less than $60 million to just over $125 million, and the profit after tax up by 200% from $23 million to $67 million. So there's some quite big numbers there. Ross will unpack those numbers in more detail in a moment. should we move on to the next slide please before we go much further can we just just briefly discuss some Caledonia's value creation proposition so from one angle what we see here is looking at this from the perspective of our distributions in country to government by way of taxes and royalties and also to our local shareholders over the course the last nine years we've distributed just over a quarter of a billion dollars so we're making a very very substantial contribution and you can see quite how that increased in 2025 as a result of higher taxes due to higher profitability higher altars due to the higher gold price but also an increase in local dividend payments to our local minority shareholders as a result of the strong financial performance and the unwinding of certain local ownership initiatives that's very pleasing to see but moving on to the next slide as well as paying quarter of billion dollars out to local local stakeholders we've also delivered a very significant return to our shareholders so that the top line shows Caledonia share price over 10 years with dividend with dividends and we've given a return of just over a thousand percent over the same period GDXJ is increased by 464 percent and gold up by 300 percent so as well as making significant contributions locally we're also delivering a very very healthy return for our shareholders shall we move on to the next slide right let's just quickly focus on the operating results clearly we had a very unfortunate fatality in september as a result of a secondary blasting incident as a result of that we we initiated a comprehensive review of our safety practices and our safety procedures our operating controls and our training programs across the across the entire business with the objective of improving our risk management and making sure that we operate as safely as it's possible to do in a very hostile underground environment that includes instilling operational discipline a proactive forward-looking approach to identifying hazards and avoiding such hazards and embedding a zero-harm culture across the organization should we move on to the next slide but what we see here is the usual usual graph the top graph shows our tons building grade the bottom graph the bars show the answers the the line the line shows the recovery what's notable really and the top graph is that the the tons milled has been stable we're pretty much operating the the plans the metallurgical planners the crushing and crushing and milling and the CIL plants pretty much operating that at maximum capacity of about 820 odd thousand tons a year and that's been very stable, largely because we've been able to make use of the stockpile, to draw down from the stockpile on those rare occasions when the mine hasn't been delivering the tons, but also what's clear from the lower line is the extent to which the grade is lower in quarter four and quarter three than it has been historically. part of that is due to the fact that temporarily we're mining lower grade areas as we're developing into hybrid areas that will we expect reverse into the second quarter of 2026 and the first January February or still mining relatively low grade areas that has improved in March and also to some extent as we've been drawing down for the stockpile the stockpile itself is relatively low grade the bottom the bottom chart clearly shows the ounces but it shows the drop in recovery and that is largely due to the lower feed grade the tail grade that we did put it on the onto the tailing facility pretty much it's 0.2 grams a ton we're not going to get much better than that so inevitably that means that the difference being that the recovery goes down can we move on to the next slide the Craig will talk in a lot more detail about exploration towards the end of the presentation our exploration activities of blanket are really targeted with replacing what we're depleting so we're effectively standing still nevertheless we've actually done rather rather better than that so over the over the course of the year of the course of the quarter it was called a four you can see that we we added quite substantially more tons than we depleted and as James and as Craig will explain later on that will give in due course results in a revised reserve and resource statement for blanket should we move on right i'll now ask ross if he could run us through the financial results ross could you do that thank you mark and good afternoon everyone before we dive into the financial results i just wanted to draw your attention to the format of
the reporting and as previously advised Caledonia is now classified as a foreign private issuer under Canadian rules so the standard filing requirements in Canada that you've historically seen has changed we will be filing our full financial statements under the SEC rules so included in our 20th which is scheduled to be filed in April you'll see the full financial statements and controls attestation and that's all going to be done in April so I'm delighted to talk you through the financial results today and you can see on the summary slide in front of you we've had a fantastic year the performance was really driven by the benefit of the higher gold price environment but also delivering the answers a blanket mine produced 76 000 ounces of gold in 2025 and sold 77,000 ounces. The Bilbo's oxide operation produced and sold 1,683 ounces of gold. So together, they totaled at 79,000 ounces on the top right end of the chart. Importantly, to highlight our online costs were up some 19%. and the unit costs were marginally above those cost guidance ranges that we had guided the market. This was really a reflection of the restriction of access to some of the higher grade areas, but also some inflationary pressures and our continued investment in development to ensure long-term operational reliability and safety, but also that grade profile. So with grade coming through slightly lower than we had originally anticipated, that did have a flow-on impact on our unit costs, just slightly above what we had guided. The overall result, though, is a very pleasing financial result with EBITDA up 109% at $125.3 million, which was a significant improvement. And after our capital expenditure, which was largely on track to guidance when you take into account some commitments that will roll over year end. We delivered on our CapEx profile and all resulting in the healthy free cash flow of $62 million, which was up some 483% on the prior year. And after our distributions resulted in an earnings per share, which was at $2.83, cents which again was up over 200% for the year. So very pleasing set of financial results. Just sliding into a little bit more on production costs so if we can turn to the next slide please. You can see on the bottom right-hand pie chart the makeup of our production cost categories which is largely driven by labor consumables and power indicated with the blue orange and green slices and then a little bit 10% across admin. You'll see in the figures our overall production costs went up 25% across the group. 19% was an increase in blanket. And really those were driven by those three buckets of labour, consumables and power. Our labour costs were up this year, again due to higher overtime payments that were made during the year and production bonuses, together with some wage inflation. But really the delivery of the ounces was a result of more volume being moved and hoisted to compensate for that lower grade. And as a result, we had to pay that over time and the various bonuses that came through the system. Our consumer bills were up some 14% for the year. This was driven by some of the inflationary impacts on consumables, reagents and the like. But there is a ZIG premium in terms of local procurement. So there's been a big push this year in terms of deploying our local ZIG component back into the market. With that, there is a slight difference with the ZIG versus US dollar differential in terms of the local market. And I would highlight that it's been a very pleasing year in terms of foreign currency. The differential between the ZIG and the U.S. is very close now. We're not seeing the high differentials that we've seen in the past. But it has meant that as we've taken a strategic decision to deploy into the local procurement market using ZIG, we have incurred an additional premium in terms of that ZIG to U.S. dollar differential. And we'll talk a little bit more about the overall Forex loss when we talk through the cash flows, but that has been a driver in terms of our consumables. Our power costs, there have been grid and genset power overruns, which has been really driven by supporting that additional output. We obviously, mining in deeper areas within the mine, driving higher power usage and requirements, and obviously incurring more power. And we do have initiatives in place that we will address these three buckets as part of our ongoing costs initiatives to ensure that we can at least will reduce or at least maintain our cost profiles and in those significant buckets moving on to the next slide please you'll see the results as we as we work our way through the profit and loss so top-line revenue up at 267 million dollars driven by those ounces and higher gold price that I'd spoken to. Our royalty this year was up at $13.5 million. That is driven by the higher revenue number and I would draw your attention to the change in the royalty rates as we deliver ounces at over $5,000 an ounce and they do attract an additional 5% royalty charge. Our production costs is already indicated were up some 25 percent and depreciation charges were largely unchanged. So we were very pleased that our gross profit that was generated up some 78 percent for the year driven by those improved margins and and thanks to the gold price. You'll see the the net foreign exchange losses was down from 9.7 million down to 3.3 million dollars this year and again that was a very pleasing result in terms of the exchange differential that we had historically seen and we're very pleased with the ability to access the willing buyer willing seller market. Eight and a half million dollars is the profit on our solar plant so I won't talk to that we've gone through that in previous results presentations but it was pleasing in terms of being able to sell that asset generate proceeds that we could then deploy across the group. I would draw your attention to the administration costs that 20.48 million that is higher than historical run rate and general trending that we see going forward this year we have incurred some quite significant one-off fees predominantly around our advisory fees related to the convertible some additional employee costs that have gone through the system and some other transaction costs that we don't see ongoing and we think that run rate will come off by some some 10 percent 12 percent more closer to a 17 million type number on a per annum basis we've incurred a fair value loss on our derivative financial instruments so those are the hedging instruments that we put in place to protect our side our mine and the gold price at a three and a half thousand dollar gold price so those hedging instruments are really put through the pnl we don't do any hedge accounting or anything that is nuanced to that extent so everything goes through the profit and loss and we were delighted with the ultimate profit before tax of $106 million up 162 percent. The tax expense was higher off this great result but also included the capital gains tax on the solar plant sale which pushed up those that tax expense a bit more than a normal run rate but delighted with our that our P&L result with the overall profit for the period of 67.5 million. If we can move on to the next slide please. Let's quickly touch on some of those aspects from a cash flow perspective. So our cash flow from operations was up at 105 million dollars, up 90 percent. I've spoken to interest in tax payments which included that solar sale. Our capex was on on track in terms of what we had guided the market in terms of expenditures and the proceeds from the sale and the gross proceeds from the solar sale were able to be deployed into our treasury options where we deployed those into various fixed term deposits during the year and we're able to allocate central treasury and start our treasury function as we look to Bilbo's and beyond. Ultimately, our net cash used in investing activities was able to then be deployed across some dividends paid. So the $19.9 million was a result of dividends paid, both to our CMC shareholders of $10.8 million, but also to GSCOT and NEAF, so our various partners at the blanket mine level in terms of deployment. and so they got $5.5 and $3.6 million respectively. Ultimately, a very pleasing close to the period with an increase in cash and cash equivalents of $32 million for the year, which was a great result. And if we move to the next slide, you'll see our overall liquidity and what it means is that we exited the year with cash on hand of $35.7 million. And if you add in our bullion on hand at year end plus some gold sales receivables and our fixed-term deposits, before utilization of facilities, we had almost $60 million available to us and a total liquidity of just under $55 million. So a very pleasing result and a very solid position in terms of our performance for the year. On top of that, in early 2026, we were able to successfully complete a $150 million convertible note offering. where after inputting a capital structure, we received a net $130 million. So post year end, we're in a very healthy cash position as we look to further development of blanket, but importantly, as we start our deployment and our spend on our billbos project, which I'll talk to in a couple of minutes. So moving on, I've mentioned that CapEx was largely on track and you'll see our various expenditures that were aligned with guidance. so nothing that stood out in terms of where we where we spent the money but ongoing sustaining capital expenditure was really about underground mine development where we spent 22 percent of the capex budget and that was really development and looking at new mining areas and underground developments targeting additional reserves and resources 31 of the of the spend was sitting in engineering department and that covered the whole bouquet of electrical mechanical and central shaft upgrading and engineering and then there was 27 percent that went across the other mining departments in terms mines milling and the mrm department our only non-sustaining capex project was the tailing storage facility and that accounted for 20 20 of the capex spend so turning to the next slide you'll see the slice of where those various spends occurred in terms of sustaining and non-sustaining split but we were pleased that we were able to deliver those capex projects and continue to invest in the mine for the future with some solid cash flow generation if we move to the next slide please closing off on capex you will see in the announcement that there's been some additional capex approvals by the board so a total group capital expenditure for this financial year 2026 is projected to be 178.9 million dollars and the two key projects that were approved last week by the board was 14.2 million construction of a 34 million dollar power line connecting to the 132 kV backbone and a 2.2 million dollar allocation against the central winder for the central shaft converting it from AC to DC. Both projects are great projects with quick payback periods and really underwriting some solid reliability in terms of power usage at the mine and also some imperative upgrades in terms of the underground mine. We're looking to the future, investing in the future and making sure that some of these critical projects are delivered. Over and above that sustaining capex we have $136 million allocated primarily against Bilbo's where $132 million is anticipated to be spent against both the feed phase but also some early deployment of expenditures against the Bilbo's project and then just shy of $4 million which is further exploration at Patawapa project. If we can move to the next slide, please. We're delighted that the results of 2025 have delivered a solid performance and we're continually looking at that balance of our capital allocation in terms of both growth projects and shareholder returns. And as you can see in the CAPEX that we've both delivered and planned to deliver, we're looking at growth for the future and investing in that future for the long term, but equally conscious of our shareholder returns. So we're delighted to have another dividend, a quarterly dividend of $0.14 for share. Dividends have been paid since 2012, so we continue with that continued payment of dividends and balancing both growth and shareholder returns. And I'll just draw your attention to the key dates in terms of that dividend payment. So if we can switch to the next slide, please. I'll now take the opportunity to hand it across to Victor to talk a little bit more about Bilbo's.
Thank you, Ross. Can we move to the next slide? With regards to Bilbo's, we've previously announced that the Board approved this project implementation in November last year. Basically all the parameters which are in there, we've announced them before. An IRR of 32.5% at a gold price of $2,548. Obviously, the returns are materially higher at prevailing spot gold prices. Can we move on to the next slide? Basically, what we have shown here are really the economics at three different prices. The consensus forecast of $2,548 per ounce, the three-year trailing average price of US$2,350 and the price which was on 10 March 2026 which was US$5,177 per Obviously there's been some volatility in the price of gold, so those figures at the end there, you can put any price you want and you can come up with different margins. But clearly you can see, you will see that the economic changes quite significantly if we apply the current economics, that's all we're showing. So effectively what we have done is we've started implementing the project following approval. As Ross has said we've raised some money and we've appointed an EPCM contractor and that work has started and we are hoping for, the plan is to have the first gold pour towards the end of uh 2028 and our first year of full production will be 2029 which would be it uh just about 200 000 ounces per year that's peak production can we move to the next slide uh ross will cover the funding aspects uh what we have done and what we're planning to do ross over to you.
Thank you Victor. So our funding strategy for Bilbo has covered four funding pillars and we're delighted with our progress in terms of how we're tracking against that strategy. The first phase was underwriting our blanket production and securing a series of put options at a price of $3,500 per ounce that covered a three-year period from January 26 to December 28 effectively the construction period the key elements of that hedging strategy was really to provide provide a floor to the to the cash flows that were generated it wasn't giving up any upside in terms of gold price above three thousand five hundred dollars but it did enable us to basically earmark the best part of 200 million dollars from our own operations that we could deploy against the Bilbo's project. At prices closer to $5,000 an ounce, that $200 million escalates to closer to $300 million. So it's a core cornerstone strategy in terms of using our current asset on the portfolio to underwrite the strategy. It also helped us in terms of our pricing discussions with the various banks and financial institutions in terms of how we'd and sort of take on our various debt facilities. The second step, as you've seen and previously mentioned, is the raising of some funds from a convertible note offering. It was $150 million raise. It was upsized from $100 million due to some amazing demand out of the US. And we're delighted with the result that we were able to receive those funds in short order. and we were able to also allocate some of those funds against a cap call structure which effectively increased the conversion price to $56 a share up from the $40 a share. So those two steps, steps one and two, have been completed and has enabled us to be able to move forward in short order in terms of the remaining funding facilities. The first one is an interim funding facility. So we're currently in negotiations with a consortium of both Zimbabwean and South African banks to raise a $150 million facility. You would have seen the announcement in terms of appointing Standard Stanbeck and CBZ as co-leader arrangers for that facility. and we're targeting the middle of this year to get that facility in place. And the cornerstone of that is, again, the blanket mine cash flows. And in parallel with that, the fourth arm is really the project finance facility, a longer burn rate in terms of getting that facility in place. But that formal process has commenced, and we're expecting that to be delivered in the next 12 months with the various due diligence procedures. So we're very pleased around where we're positioned with it, what we've done to date in terms of underwriting that financing strategy, and we're on track in terms of the discussions with the various banks and financial institutions. If we turn to the next slide, where this illustrates, I guess, our thought process and the overview in terms of our sources of uses and actually how we believe that this funding requirement will be bet. I'll refer you to the right-hand side of the slide in the first instance in terms of the use of funds. So you'll see our capital cost is basically $485 million. But when you add in our capitalized interest and some working capital, the ask is closer to $600 million in terms of a package. On the left-hand side, you'll see the column at $3,500 an ounce. And you can see together with our cash and our net proceeds from the convertible bond and our forecast future cash flows, the ask from a senior debt and other facilities is just over $300 million in terms of delivery of those funds. If we move that pricing deck up to $5,000 an ounce, you'll see that senior debt and other facilities reduces down to closer to $170 million. and we're well on track in terms of getting that funding in place between both the interim and the wider project finance facilities. So we're really pleased in terms of the status of the financing work stream. Importantly, we've got some big spend that is coming up, so we need to deploy the best part of $130 million in the third and fourth quarters of this year as we start the more significant spend on the VILBOS project and we're excited about that while on track with that and I think it's all coming together very nicely. So with that I'll hand it across to Craig Harvey.
Thank you Ross. I'll just give you an overview of the exploration activities that have been taking place at the top and blanket in the past year. so if you could go on to the next slide please so 2024 and 2025 Caledonia has put quite a lot of money into Muntapa I mean we have drawled surface drawles totalling just under 30,000 meters it's a very strategic asset as we can see on the map on the screen it's located directly to the south of the Bulbas project which we've just heard about that kind of scale from the top and north to Bulbas is between 200 to 400 meters away so I think we can all draw you know draw our own conclusions as to synergies between Bulbas and the top bearing in mind it's it's basically hosted into the same shear zone mineralogy met metallurgy is expected to be quite similar so going forward for 2026 we have had a further allocation of 3.8 million dollars exploration. We will continue looking at Mapudzi and we're going to focus on Matarpa South for the year. Clearly there is potential for a sulphide resource below the historic open pits but at the same time there's a strong potential for oxides to the east. We have put in two drills to have a look. results were encouraging.
Operator
So things to look out for at Metapa.
During Q2 2026 the company will be publishing a maiden resource estimate or probably be publishing a maiden resource estimate. We are just waiting for some of the final QAQC checks of the data and geological interpretations to be complete but in all likelihood during Q2 of 2026 we'll see what the drilling activities that have actually given us if you can move on to the next slide please so during 2025 there's been a continued deep hole or long hole exploration program at blanket so just to give you an overview of the areas that we are drilling so on the so on the northern side of the property which is to the left of the image there where you can see lima it's the lima and Eroica ore bodies and to the south on the right of the image it's the mainstay of the mine it's the blanket and the blanket quartz reef ore bodies so I'll zoom into a bit more detail on each of these areas if you could move on to the next slide please so on the blanket side where we've got essentially a whole bunch of ore bodies that come together AR south the blanket quartz reef and the blanket ore bodies and the blanket ore bodies are blanket one through to blanket six so of course we've also got blanket seven now but what is important to note here so I've got a great legend on the side of the map there and really what you want to be looking for is the little purple stripes that you see coming off from those drill hole traces so anything that is purple there is five is 5g a ton plus. Now in the next month or two again we're just finalising some QAQC checking from the lab but we will be putting out a press release regarding the drilling results that we've done at Blanket and that will give us or it will give people insight into the wits that we encounter in these grades. very very exciting so 34 level is the base of the blanket mine currently we are putting a decline as you can see there from 34 to 36 level that's on 36 level at the moment we are starting with the 36 level in in infrastructure development and what is key to note so 34 level you know 1110 meters below surface. The deepest hole there that we have represented with those little purple stripes is 277 meters below 34 level. Now 277 meters below 34 level equates to a depth of approximately 1,350 meters, which equates to a 42 level. so there are kind of main levels are set up 34 to 38 120 meter lifts apart so we are quite clearly looking at all things being equal there's another two main lifts at blanket that we are going to have a look at very very encouraging we carry on doing the work just to give a bit of reference if you had to move to the south to the to the right of the image we will be putting in another hang-in-wall drill draw cubby to create another fan of drills in due course adjacent to these holes this is kind of at the limit of our inferred resources so clearly with this drilling coming in we will be looking at upgrading inferred to indicate it, as Mark the CEO has indicated, with a view to upgrading mineral resources and mineral reserves in due course. If we can move on to the next slide, which then focuses on the northern portion of Blanket Mine. On the very left, the very northern portion, the little bit of colorful goods that you see there, Stokes, is the Lima ore body and in the middle is the Eeroica ore body. Now Eeroica has been a mainstay and why you only see a couple of drill holes there is the majority of this area was drilled during 2023 and 2024. You can already see some of the development that's accessing these areas. The majority of this area is now indicated reed source, but you can also see that there's a long hole that's also maybe 60 meters below 34 level, so currently on a 36 level type horizon. Clearly, as we advance, 34 level will have a hanging wall cubby put in place and we will continue drilling on the heroic ore body from 34 level down to 42 level on the left-hand side with Lima again you can see some of those little purple stripes which represents five five gram a ton plus one hole on purpose we push down to around the to around the 34 level bar to test the depth to see that we're not wasting our money. We did pick up the Lima ore body but Lima itself is not one single ore body it's made up of six ore bodies so there's a lot of scope to continue doing this. The lowest level of mining on Lima is at 750 meters below surface. You can just work out for yourself if we take it down another 250 to 300 meters, we're talking 22 level to 34 level of mineral resources that may be exploited. Again, below 22 level, it's inferred resources on Lima. With the drilling coming in, we will be looking at including that and seeing if we can upgrade some of the inferred resources into an indicated resource or better. So in a nutshell, blanket keeps on going, the grades still looking good, the grades, the wits, we obviously model what we are expecting to find with our drilling and it continues to return similar if not better results at depth. So thank you for that.
With that I'll hand back to Mark to give some closing comments good thank you Craig we're kind of running out of time so I just want to draw your attention to a an event that we we hosted at the on the fringes of the Cape Town mining in Daba in February as along with five or six other foreign owned Zimbabwe mining companies posted a briefing event where we invited representatives from the Zimbabwe government so Minister of Mines Minister of Finance and the Reserve Bank to and the objective was to try and dispel some of the pervasive continued misunderstandings about what it's like to operate in Zimbabwe it was very well attended and the way the representatives of the Zimbabwean authorities engaged the very transparent constructive way with the with the audience hopefully is the first step a first step for many to trying to overturn some of these misunderstandings about Zimbabwe so that was very good can move on to the next slide so just just to finish and move on to questions so clearly our strategic focus after the fatality last year is to continue commitment to the safety of our people objective to maintain reliable and operations at blanket which let's face it is going to be an important generator of the capital for the construction of Bilbo's but as you've heard from Greg from Craig has very significant significant long-term extension plans in its own right leverage the strong gold price to invest in blankets projects to create operating resilience and to mitigate further import cost pressures moving along with Bilbo's as quickly as we can in terms with the financing and development plan and to continue to explore at the tarpa which in due course we think will be very exciting project so all of those together really mean that we're continuing to execute our strategy to become a multi-asset zimbabwe focused gold producer so i think that's the end of the presentation can we open it up to questions please thanks very much Mark, if I could just remind people if they'd like to ask a question, if they could please use the raise hand button, that's at the bottom of your screen.
Operator
We'll just pause for a few seconds, just wait for people to raise their hands in order to ask a question. Our first question is going to be from Harry Flinker. Harry, I've unmuted you, please unmute yourself and then please ask the question to the team.
Harry Flinker, Can you hear me now?
What is the maturity of the convertible bond?
I have another question till it is I think it's seven is it seven years Ross it's outside the is that it's a slightly longer dated maturity than most convertibles and that was specifically so that it matures outside the the timing of the of the schedule repayment of the project project finance plus is it seven or was it slightly longer seven years seven years 33 yeah the next question Harry yeah Aaron I thought the solar plant was in the Jersey Island so that would be that would be a big mistake because it's often not very sunny here no I thought the ownership was there and it was tax-free what's the
capital gains rate on that it ended up being two million dollars so and there was a combination and some of it was on a on a total capital gain and there was a profit element but it was two million oh and what is the tax rate on the the loss on the derivative is that a regular tax rate or something different now so that there yeah that all the derivatives are held outside they will held here in corporate and so it's here a percent for the derivatives because they sitting in Jersey I think for practical purposes it would be very difficult stroke impossible to structure derivative holding through through Zimbabwe I think
having to go through the various RBZ approval process would just fly in the face of being able to you know when you when you decide to do these things you do them very quickly and to have to pause for RBZ approval would just just make it impossible so the effective tax rate on the derivative pre-tax and post tax uh is the same right zero taxes zero yeah that's right yeah uh finally i'm going to say this is pretty thorough financial accounting nice job thank you thanks thank you thank you you're welcome sorry um we've got our next question from joseph parish um joseph if would you like to go
ahead uh yes uh great presentation um and anticipated um some of my questions so this we'll simplify things a bit uh the only only thing i really had left to ask was uh has to do with uh power costs you know the solar plant of course was intended to to keep those contained you know with the recent conflict in middle east right there's some temporary increases in fuel and energy prices um depending on how long this goes on and maybe just you know with the higher operating cash flow you're enjoying on the mine um would further investment in solar plant facilities at Blanket become a higher priority as you're looking at these or are these something that's being
considered no it wouldn't um so let's just let's just deal with our exposure to fuel we've got Blanket uses about 2 million liters of fuel a year approximately half of that is diesel generators the other half is used on diesel equipment to the business uh last year's last year's diesel price that recommends about 3% of our opex so we're not particularly exposed to diesel in our operating costs and in terms of supply we've got just over six months of supply either on the property or consignment stock so we're not particularly exposed there the problem the problem with them with solar is that when the Sun doesn't shine you don't get you don't get solar and the the particular issue we face right now is that the the 130 to the the the way electricity gets through the grid to blanket means that the last sort of 30 odd kilometres goes through a pretty poorly maintained 33 kV line which typically has bigger reliability problems when it's rainy and so you got you got the combined effect of rain which means that you've got a higher chance of power interruptions from the grid and also it means that the solar plant's not working very well. So the two issues kind of compound each other. So what we're doing is we're putting in a 132 kV line, which we expect will reduce the average incidence of power outages from, say, 30 hours a month to an average of, say, three hours a month, and that will reduce our reliance on diesel. And once you're connected to the 132 kV line that gives you much more much more flexibility to access power both in ZIM and in the region where there is no shortage of power so frankly solar kind of compounds the problem doesn't doesn't solve the problem so the simple answer your question was no okay well I appreciate the detail I'm sure investors will appreciate well thank you thank you we're going to take our next question from Mike Kozak.
Operator
Mike, unmuting you, please.
Yeah, good afternoon, guys. You hear me okay? So two questions from me. First one, sustaining capital for this year, it looks like it's increased $27 million to $43 million, and you did a good job of explaining where that money's going. But I didn't flag any change to the 2026 all-in-sustaining cost guidance that you guys set a couple months ago. So I think between $2,100 and $2,300 announced. Are you going to stick with that range?
That's clearly fallen between the gap in that we got the board approval a couple of days ago for the extra capex. And clearly, I guess that should flow through into all the sustaining costs. Is that correct, Ross?
That's right. And we're just looking at timing, Mike, in terms of when some of that will actually drop. So while the projects have been approved, I think it's going to see when they schedule to be paid.
Okay, got it. And then my second one, if I back out from your earlier quarterly results from last year, I should say, it looks like Q4, you recorded a derivative loss of around $4.8 million, I think. Is all of that related to the put auctions you guys bought in December, or is there something else going on there?
Yeah, it's all to do with the puts.
Let's be clear, the point of the puts at gold, even with this current volatility, the gold price is much higher than the put price. The point of the puts, as I think Ross outlined, just to reinforce the point, is it creates a floor price for the purposes of the ZIM banks in terms of putting together the interim funding facility. So it is still strategically important to us.
Oh, for sure. I just want for my own numbers, I want to know what to adjust out for and what to expect in future quarters. I just wanted some clarity on that. I appreciate it, guys.
Operator
Thank you, Mike. Thank you. we've got our next question from Nick Hinman. Nick, please go ahead.
Hi everybody. Usually I'd like to spread around the questions. The first is for Craig. I think Craig, it does look encouraging what you're doing, but coming back to blanket mine, is the recons between what you're actually getting out of the mine at the moment, adhering to what you would have expected from your reserve models?
Hi, hi, hi, Nick. Yes, yes, there are. So Q4 was affected by a couple of forced moves that we had to make. We could not access the areas as quickly as we would have liked. So we were forced into maintaining production out of kind of some lower grade, some medium grade areas. As we all know, in mining, you know, trouble always hits your higher grade areas and people see it. So, yes, it's maintaining what we are expecting.
Okay, excellent. I think the next question is for Ross. We'll set your questions. Ross, it's a usual one. Have you repaid your facilitation loans to your non-controlling interests. And the second question with that, I'll have a few more, but the second question is, with that is how many dividends did you distribute from Blanket? Eventually you get some numbers here, it wasn't quite clear.
Next, so I'll do it the other way around. So there were $60 million of dividends that were declared in 2025 from Blanket. Not all of that equated to actually cash move. There was an opening balance and the timing of the payments post period, but it was $60 million and there was a $5 million rollover with $44 million paid during this year. So high level $60 million, but there were some timing differences in terms of the cash flows. Beth's rebated facilitation loans in Q4 2025.
That's the employee trust.
That's employee trust. Sorry. And NEAF has got about half a million dollars left on it to be reclaimed.
NEAF is the government's beneficial shareholder, yeah.
Okay, so it's all over from now on they'll be securing their share of the dividends from now on. Correct. One of the questions about the loss on the derivatives that you're reporting, and obviously this is a moving piece because you're marking it to a price at the end of the period. Do you have a sense of what that number would be if you were to take today's price? What sort of loss would you be recording?
I haven't looked at it today. And I mean, that range in the actual valuations range quite considerably as we do the pricing because it's a delivery of a put option each month for the next three years. So it's, you know, it's not a prima facie. Well, we're under the three and a half. They're all written off on day one. There is a value that goes up. But no, I don't have the price for you today, especially after today's gold.
I thought you might have an idea of sensitivity. And the last question is you've started to accumulate some cash and near-cash equivalents, and you've got some deposits being made here. What do you think you need in terms of keeping blanket solvent and keeping the rest of business lubricated with cash?
What do you think is the minimum residual cash that you should have on hand at any one time or cash equivalents on any one time? well selfishly from a CFO perspective I'd rather have a little bit more in the back pocket than normal but anywhere between 30 to 50 million dollars I think would be a healthy position particularly on the projects that are coming through the system so we've got a large amount now that will be deployed but I think having that sort of quantum on balance sheet this gives us some protection in terms of where we're going so do you mean cash or do you mean liquidity.
Liquidity in terms of facilities, yeah.
Okay, and then just on the operational side, there was a discussion previously about a build-up of poor stocks. Now you've run them down again because to meet the requirements at the end of this last period. Is your strategy still to rebuild those stockpiles? Yes.
One of the things that we'll be introducing in the middle of the year is a new shift system. that blanket to introduce to you'll do two things first of all it will introduce seven day working at the mine as a standard and that is that's pretty common there across the mining industry in Zimbabwe that and the mine that drilling and blasting only currently takes place six days a week so that should result in an extra extra day of drilling a blasting if we can get the stuff trimmed and hoisted in the order of course events that should give rise with extra 100,000 tons a year in the short term we'll be using that to accumulate a stockpile to see us through the the hiatus relating to the AC DC conversion so currently the central shaft works AC the central shaft winder works AC will be converting that to DC for safety reasons and also for cost reasons but that will result in the central shaft not being able to hoist for a period of two to three weeks and so we do need to make sure that we've got a healthy stockpile at the end of the year to see us through that so very much there is the intention over the course of this year to build stockpiles and then once we're confident that the shift system is working and we've got adequate stockpiles then clearly we'll be looking at what we need to do to address and use the extra production increase our milling capacity that's a work in progress so at this stage at this stage I can't tell you what the costs of increasing that milling capacity would be and what the what the effects on OPEX would be let's just let's just focus on getting the shift system in getting the delivering the ounces getting and delivering the extra tons building the stock power to see us through the AC DC conversion and then for next year there will be the hopefully the story about how we're going to convert that into increased ounces it was premature to say that at this stage okay excellent thank you and then the final question for Victor here at the end of this year this time next year sorry at the end of in in Thomas
time you will have spent circa hundred and thirty million dollars on on Bulbas what will you have in place by the end of the period what is what is your project gonna look like on the ground okay so thank you Nick what we are really doing is placing orders, long lead items, is what we're basically doing most of this year, towards the end of this year. That's really what we will be doing. We will probably have some contractors moving in at the end of the year, but really most of the money we are spending this year is on orders on the long lead items.
So that means nothing, very little physically to see?
Yeah, very little to see. The only thing you'll see, there are contractors moving in and starting to do some work. So this will be in the form of pre-payments then, really, will it?
Pre-payments and deposits, yeah. Excellent. Thank you very much.
Operator
Thank you. Our next question is from Tatra Zewanora. Please go ahead.
Hi, can you hear me? All right. So I just have three questions. The first one, can you explain more about the consortium facility, as in which banks in South Africa you are courting, and what is their level of interest in supporting the company given the 15% non-resident tax which resumed this year? Could you explain that as my first question?
15% non-resident tax? I mean, Ross, are you able to answer that?
No, well, not specifically for the banks, but we've got two South African banks and then the Zimbabwean banks that are participating, so half a dozen banks that we're talking to for the interim facility. And yes, we've been pleased with, I guess, the appetite to participate in such a facility with those banks. So no, we haven't had any negative connotations or discussions from that perspective. And then our PF facility is the African banks in terms of AFC and the Brexit that we're talking to and a similar positive feedback.
Okay and my second question is PGM companies have reported substantial amounts of their ZIG portion of the export proceeds are being trapped at the RBZ. I think there was complaints from Zimplats and Valterra And I wanted to find out if Caledonia is facing such a problem with their ZIC portion of the export proceeds being trapped at the RBIZ.
All right. Then my final question is, has your outlook changed in terms of the gold prices which you're expecting for the year, given the geopolitical tensions happening in the Middle East right So is that, do you mean, are we going to adjust our, you're asking if we're going to adjust our production level?
Yeah, considering that, you know, the commodity market has become volatile going to those geopolitics.
No, the mine plan is pretty much set, I mean, we can't just arbitrarily increase and reduce production. The objective is to mine to optimize operating efficiency and keep the mills full. What you could do, what you could do is you may, you could adjust your cutoff grade. So if you thought the gold price was going to be much higher, you might cut the cut and reduce the cutoff grade So you can perhaps mine more material that's less would be less attractive in a local price environment, but know the Within the current gyrations on giving us any thoughts about changing our overall approach to the mine plan and our mining schedule All right, thank you Thank you for your question.
Operator
And the next question is from Tinashe Dumas. Please go ahead.
Can you hear me? Yes. Okay. Nice presentation and nice performance as well. Great performance. My question is how much of this year's performance is genuinely operational? I'm talking about the year and the period and the review. How much of its performance is genuinely operational and how much is simply gold price? leverage. I point here that its production at Blanket was broadly flat and while gold prices changed by a stake of 4%. And from that, I could argue that your earnings were likely price-led rather than execution-led. So what concrete evidence can you give that The business can protect margins in certain cash generation if the gold price normalizes.
Okay, so one of the things that we didn't make clear enough is you're quite right. In 2025, a lot of the good performance was driven by the higher gold price. One of the things that we are doing, and we have seen quite significant increases in costs of blankets. So if you look back over a five-year period, in 2020, Blanket's online cost was $784 an Last year it was $1,280. People need to understand that Blanket now is a very different mine from what it was in 2020. We're hoisting significantly more material from much, much, much deeper. In 2020, we were hoisting most of all of our material from 750 metres below surface. Now we're hoisting most of our material from 1,200 metres below surface. so inevitably that means that you're going to be using more electricity even before you start taking account of the incremental need to use electricity for run improved ventilation and in terms of in terms of employees if you look at the pointy end of the business so that's the people involved in the in the mining the underground tramming the hoisting the people involved in the milling we're actually handling more material more tons per person now than we were five years ago but our costs have gone up and that's you know if you look at our run if you look at our consumable cost we're pretty much using less in the way of inputs like grinding media cyanide drill steels we're using fewer kilos of that per tonne mill but every year year on year we've seen our costs such as the costs of steel balls which we use in the in the steel in the ball mills they've gone up on average 10% per annum over each of the last five years so the cost the cost profile has gone up what we're doing now is we're focused on trying to reduce dollar costs in particular first three initiatives are targeted at electricity so the 132 kV line the AC DC conversion they will they are expected to give rise to significant cost reductions over the course the coming three years in addition to that we're trying to use electricity more intelligently so we're trying to reduce our overall power consumption by just being clever more clever about how we use electricity the shift system that I referred to earlier on this has got two aims the first is to reduce worker fatigue by reducing the the overtime a reduced overtime will clearly then reduce the sort of our labour costs because overtime is clearly the premium rate but the other thing a lot of those cost reductions I expect may well be given given away in terms of further increases in costs that we know we're going to experience over the next three years or so particularly in terms of providing better better quality housing for the for the workers and so the only way I can see that we can get sustainably reduced costs that blanket is to increase production so as I've mentioned we are we would expect as a result of a shift system but introducing seven day week working weeks instead of 60 instead of 60 working weeks is to harvest more tons which should give give rise to more answers which should mean that our costs are spread over you know if more answers and therefore get the cost down so that's not going to happen quickly but over the next three years I would be hopeful that But as a result of the combination of those packages, we can begin to get the cost down. But don't for a minute think the blanket is going to go back to being a low-cost producer at $784 an ounce. It's not. The only way for a deep-level, relatively low-grade mine-like blanket to be sustainable – and we – blanket's 120 years old this year, and we want to keep it – as you've heard from Craig, there's plenty of potential to extend blanket's mine life by going deeper. And the only way we can do that is continuing to invest, to improve resilience and lock in economies. So that's a long answer to a fairly short question, which I hope addresses, which I hope answers your question.
Yes, yes, thank you, thank you, that has been answered. I'm too nice to hear from equity access, by the way, thank you, that was enough from Okay.
Let's be clear, the phrase I use is escaping forwards. For pretty much any mine in Zimbabwe which is facing rising cost pressures, the only way to counter that is to escape forwards through growth, and that's what we're looking for over the course of the next three years.
Operator
Thanks very much. That concludes the questions that we have at the moment. So Mark, I'd like to give the floor back to yourself for any closing remarks.
Well, clearly it was a good year financially, as we've identified, largely driven by the gold price. We're focused very much on Bilbo's turning that to account that will be a game-changer not just for Caledonia But also for Zimbabwe, but we're not neglecting blanket And as I think the comments at the end of that Q&A session made very clear we are focused on using this high gold price to invest in blanket both to To try and tickle up the gold production, but also to lock in resilience and efficiencies. So that's going to be three-year exercise it's not really a quick turnaround but hopefully we'll clearly we'll keep keep stakeholders in informed as you move along so thank you very much for your attendance and we'll be putting out our q1 results in about six weeks time in the middle of May okay so thank you all very much
