Earnings Call Transcript - CMCL Q3 2023

Mark Learmonth, CEO

That's Maurice. I'm Mark Learmonth, CEO of Caledonia, joined by Victor Gapare, Executive Director in Harare, Chester Goodburn, CFO in Johannesburg, Maurice Mason, Vice President of Corporate Development, and Camilla in London. Dana sends his apologies as he's traveling in Zimbabwe today. As you know, we'll go through the slides, and there will be plenty of time for questions at the end. So let's get started. In summary, production was reported at 22,900 ounces for the quarter, with Bilboes contributing about 1,000 ounces. Production for Blanket was just under 21,800 ounces, marking a production record. This was bolstered by a strong gold price, which positively impacted revenue. We saw a significant improvement in gross profit compared to the previous quarter. Throughout this presentation, we will highlight the need to focus on our electricity and labor costs, which require our attention. It's important to note a strong net cash inflow from operating activities of approximately $14.4 million for the quarter, nearing a quarterly record for capital expenditure. We have continued to invest heavily in the new tailings facility, which I'll address shortly. That's a summary of the results; shall we move on? I previously mentioned a record production quarter for Blanket. While consolidated on-mine costs showed improvement, there's still potential for further enhancement. During this quarter, we shared some very encouraging drilling results from Blanket. Notably, about two-thirds of the drilled holes yielded better width and grade. This data will eventually contribute to a revised resource statement and subsequently to an updated life of mine plan. We anticipate that the positive trends will translate into incremental resources and an extended life of mine. We can discuss specific reasons for this later; I believe it is more likely that Blanket will extend its production rather than increasing it. We can revisit that topic as well. As previously indicated, Bilboes has returned to care and maintenance effective October 1st as the mining contractor's testing period has ended. We expect this move to significantly lower the costs at Bilboes from approximately $1 million a month to about $200,000 a month. For the next quarter, we are optimistic that Bilboes will be cash neutral while continuing to recover gold from the heap leach. The EIA for Motapa has been approved, allowing us to mobilize on site early next year as the drilling season commences. Additionally, we have received an offer to purchase the solar plant, which we can discuss later. While the terms have not been disclosed yet, we are confident that we can sell it for more than what we paid. However, we do not need to own the solar plant, we just seek the benefits from lower electricity production costs. As for the new tailings facility, we have already spent about $25 million this year and will continue next year. We began pouring concrete on it a few weeks ago, relieving pressure from the existing tailings facility, which was nearing the end of its useful life, as we increased tailings throughput from 1,900 tonnes a day to 2,400 tonnes a day. Once completed by the end of next year, the new tailings facility will have a lifespan of around 14 years, making it a valuable long-term asset. In operational terms, it’s important to note the right side of the top graph, where you see the grey line representing tonnes. There was a significant dip from quarter 4 to quarter 1, but we have since recovered in Q3 to expected levels. The grade increase aligns with our mine plan and meets our expectations. As I mentioned, the return to tonnes milled and target grade has returned to our anticipated production levels, which is encouraging. Now let's move on to the financial section. I'll turn it over to Chester, our CFO, to guide us through the upcoming financial pages. Chester, over to you.

Chester Goodburn, CFO

Thank you, Mark. Our revenue has increased by 15% from Q3 2022 to Q3 2023, thanks to the higher production from Blanket mine. This quarter, Blanket mine is boosting production, marking a strong performance for us compared to previous periods. Overall, we sold 2.5% more ounces this quarter, and gold prices have risen by 12%. Unfortunately, our production costs have also risen. As Mark mentioned, the production cost at Bilboes oxides was around $300,000 each month, totaling $600,000 for the quarter. We're pleased to see the $3.3 million spent on Bilboes in Q3 decrease to about $600,000 now. Blanket's costs increased by $1.1 million primarily due to high interest usage and labor overtime, which we will discuss further shortly. Regarding our tax expenses for the quarter, we are experiencing a high effective tax rate largely attributed to Bilboes oxides, which are being enhanced and cannot be deducted from our tax expenses. As we review our operating costs, we anticipate our tax expense will normalize to the effective tax rates we've seen in previous quarters. Adjusted EPS is lower across the board, primarily due to the buyer costs, and we'll address the production costs in the next slide. Looking at salaries and wages, there was a significant increase at Blanket due to headcount and overtime. We believe we can optimize our labor force over time in a manner similar to our productivity in 2022. We will share updates on our strategies to manage overtime and headcount. Our kilowatt usage has been rising over the year, mainly due to the commissioning of new shafts, including the new Central Shaft, and we are currently operating three shafts. We are also examining ways to reduce our kilowatt hour usage, which we think will begin to yield cost savings in the near future. Regarding Bilboes oxides, we anticipate those costs will decrease to about $600,000 for the quarter starting next year, significantly lowering our costs compared to our life of mine estimates. From an administrative expenses perspective, we have seen major increases, including notable spikes in advisory service fees amounting to $3.1 million per ounce, particularly related to Bilboes sulphides. This includes advisory fees tied to the completion of that deal. Listing fees have also risen this year due to successful dividend distributions in Q1 and Q2. Wages and sales costs increased with the addition of new staff following the Bilboes acquisition, who are now aiding in the feasibility study. We’re pleased to report progress on this front. Additionally, we have enhanced our governance structure, strengthened our internal audit department, and bolstered our IT resources. Overall, if we exclude one-off payments like advisory fees connected to Bilboes, we will likely reduce our administrative expenses to levels comparable to previous quarters. This slide illustrates our on-mine costs, showing that we expect the contributions from Bilboes oxides, represented by the green block, to decrease to around $600,000 a quarter. We have a plan in place for this. By decreasing our online costs, we aim to find solutions that will bring our kilowatt hours back to previous levels. Likewise, labor costs should also decrease. If these three cost areas are addressed, we can reduce our on-mine costs down to the life of mine estimates of $815 to $850 per ounce. Outstanding costs were primarily influenced by on-mine costs, and resolving these will bring our estimates in line with those for the life of mine. Looking at tax, the higher effective rate is primarily due to the operation losses from Bilboes oxides being ring-fenced and non-deductible against our tax liabilities. Our taxes are calculated based on RTGS and U.S. dollar denominations, which can fluctuate due to RTGS devaluations. However, removing the costs associated with Bilboes from our profit before tax should align our effective tax rates more closely with those seen in other quarters. Throughout this period, the enacted tax rate in Zimbabwe remains at 24.72%. Now, turning to the balance sheet, we've seen an increase in our long-term assets from the Bilboes acquisition. Our current assets will rise due to the solar sale, as we plan to sell the solar plant, transitioning it from $14.2 million to our current asset strategy. We hope to make a significant profit on this sale and direct those proceeds into our future gold operations, which we expect to generate high returns. Our noncurrent liabilities have remained stable, while noncurrent liabilities have increased due to the issuance of solar bonds earlier this year. Finally, our cash position is strong and expected to improve. We are currently converting all our RTGS balances, and we have established mechanisms to exchange them. We are not holding any cash balances in Zimbabwe that we cannot move elsewhere.

Mark Learmonth, CEO

Can I interject here? I want to reiterate something we've been saying for a while. We'll continue to make capital allocation decisions. As we evaluate the Bilboes opportunity, it's important to clarify our process for capital allocation. Our main goal is to develop a commercialization strategy for Bilboes, and all our investments, that maximizes the net present value of Caledonia shares, which includes considering any dilution needed to support the new project. We're not focused on simply doubling or tripling production or the number of shares, as that would mean we've made no progress. I'll discuss our progress on the Bilboes feasibility study later. As Chester mentioned, we're advanced in talks regarding the solar project, which will release capital from a non-core asset at a premium for reinvestment in our core business of developing and operating coal mines. Regarding the Bilboes transaction, we are exploring a phased approach. Updating the initial feasibility study is straightforward, but creating a new feasibility study for a smaller phased approach involves new pit designs and other tasks, which will take more time. While we are open to some leverage in our capital structure, I suspect we'll be fairly cautious about that. I wanted to clearly outline our capital allocation policy. Maurice, could you move on to the next page? As mentioned, the updates regarding Bilboes gold indicate that the recently concluded third quarter will be the final one significantly impacted by the negative contributions from Bilboes. We anticipate a reduction in monthly costs from $1 million to $200,000. For the upcoming fourth quarter, we expect it to be roughly cash neutral as we continue extracting some gold from the heap leach. It is disappointing that production from the oxides has no impact on the quality of the underlying sulfide resource. We entered into the Bilboes transaction to acquire and develop the sulfide resource, which consists of about 2.5 million ounces at 2.3 grams per tonne. The oxides were incidental to this. One of our objectives was to avoid having to lay off a significant number of our employees. Unfortunately, we were unable to achieve that, and we have had to let many people go, which was especially unfortunate in light of the recent elections. However, we could no longer sustain the cash drain. We are continuing work on the revised feasibility study as outlined. Updating and refreshing the existing large-scale project is relatively straightforward. The new work on a phased approach will likely be completed in the first quarter of next year, and we will need both sets of information to make proper capital allocation decisions. We expect to provide further guidance early next quarter. Regarding our outlook, we aim to maintain production at Blanket within the targeted range of 75,000 to 80,000 ounces moving forward. The positive drilling results at Blanket will likely enhance the resource base, potentially leading to an extended life of mine rather than increased production. Raising production at Blanket would probably require a significant investment in facilities such as mills and tanks, making it costly to increase output by even an additional 5,000 or 10,000 ounces. We could better utilize those funds elsewhere. I mentioned the feasibility study at Bilboes, and with the EIA approved at Motapa, we plan to connect resources to the site at the right time once the rainy season in Zimbabwe passes. I think that concludes the formal presentation, and we are now open to any questions.

Camilla Horsfall, Moderator

I have some questions. Hold on a second. We've got to wait. Just give me a sec. Just give me a minute.

Unknown Analyst, Analyst

This is Ernie Molesh. I've got a question concerning the electricity supply. How much is the electricity actually costing you? You said $2.6 million per quarter. And then could you break down how much of that is really fuel cost in South African rand maybe? And then how much is coming off the solar plant?

Mark Learmonth, CEO

Twenty-five percent of our power usage is sourced from the solar plant. The solar plant is owned entirely by Caledonia, which owns 64% of Blanket. Caledonia financed the solar plant, so the financial benefits are realized at the Caledonia level rather than the Blanket level. The solar plant supplies power to Blanket at around $0.13 per kilowatt hour, while the production cost is only about $0.01 or $0.02. Therefore, the profit generated from the solar operations is accounted for in Caledonia, impacting the all-in sustaining cost per share rather than the on-mine cost. There’s a bit of complexity to this, but I believe it’s clear why we have structured it this way. Chester, could you confirm whether the cost of grid power is about $10.08?

Chester Goodburn, CFO

Yes, $10.86.

Mark Learmonth, CEO

We import grid power through a facility known as the Intensive Energy User Group, which is an industry organization that operates under the President's authority. This facility imports power directly from Mozambique and Zambia, allowing us to access a lower rate compared to purchasing grid power in Zimbabwe. Currently, the grid power rate is approximately $0.16. Chester or Vic, is that correct? The grid power costs are included in our financial figures, right?

Chester Goodburn, CFO

13-point-something cents.

Mark Learmonth, CEO

Okay. I thought I read something yesterday that said the rate was going to increase even more. We benefit from grid power, but at a lower cost. However, the grid power supply in Zimbabwe is very unreliable, particularly for Blanket, which leads to frequent power interruptions and fluctuations in voltage. As a result, we have to rely on diesel generators that cost approximately $0.45 per kilowatt hour. Chester, do you have the breakdown of power usage between solar, grid, and diesel available? I know where to find it; I just can't recall the specifics right now. If you don’t have it, we can provide it later, but do you have it on hand?

Chester Goodburn, CFO

Hold on one sec.

Mark Learmonth, CEO

Alright. While we’re discussing this, there are some technical aspects we can work on regarding the solar farm to enhance the quality of power we receive from the grid, known as power factor correction. We're looking into this with the planned acquisition of the grid. This may result in us receiving less direct power from the solar project, but it would allow us to utilize a greater portion of the grid power we bring into the IEG, thus reducing our reliance on diesel. So, while we may sacrifice some solar power, prioritizing grid power to displace diesel use would offer significant advantages for us. We are currently exploring this possibility with the buyer of the solar project. I apologize for the lengthy and complex response to a straightforward question. Did I cover everything, or do you have any other questions?

Unknown Analyst, Analyst

Yes, that answers most of it. Just out of curiosity, is the solar farm already paid for? Or how much profit do you expect to get after the sale of that?

Mark Learmonth, CEO

It is always compensated in equity. We haven't shared the price yet as it is still under negotiation. It's a valid question, but not easily determined. However, we anticipate that we will sell it for a higher amount than what we initially paid.

Unknown Analyst, Analyst

Okay. Let me turn it around. Is there a prospect of doing another solar farm if you get another 25%?

Mark Learmonth, CEO

Yes, there is. The buyer for this project is looking to expand their presence in Zimbabwe. There is definitely an option for further development, so we might have a smaller additional project planned for Blanket, though it may not be significant. However, with Bilboes, if we can secure power through the intensive energy user group, which seems likely given Bilboes' advantageous geographical position relative to the Zimbabwe grid, it could operate quite effectively with imported power and face minimal disruptions. Therefore, the total power benefit for Bilboes might be less than what we would see at Blanket, making it uncertain whether we would need to implement a solar project there. This will become clearer through our evaluation. The buyer seems to be interested in growth; are they viewing the acquisition of the Blanket solar project as a starting point in Zimbabwe?

Unknown Analyst, Analyst

That answers my question on that. I have another question regarding the Bilboes sulphide project. Are you considering using processing methods other than Bi Ox? I know there are several projects launching in Africa that are utilizing different sulphide processing techniques, and many of these do not rely on Bi Ox. Instead, they are implementing some form of oxidation method that is more cost-effective and efficient than Bi Ox.

Victor Gapare, Executive Director

Thank you very much. Here during the feasibility study, which we did, we did look at the various options and the option which seems to give us the least capital costs and also in terms of treating the material itself seems to be Bi Ox. There are some other options, which are our consultants have suggested that when we do the feasibility study going forward, maybe we may look at and review. But pretty much a lot of wait was done during the feasibility study, and Bi Ox seemed to be the most logical one from a CapEx point of view, plus also from a probability of other operations, which are using Bi Ox in South Africa.

Mark Learmonth, CEO

It's also fair to say only that there's been very, very limited prospect to export concentrate from Zimbabwe. The red line or policy red line on in-country beneficiation. So our ability to export concentrate, so I don't know how much we get it to the face. So we've got to have something in country, which you're going to get into 99.5%. Does that answer your question, Jay?

Unknown Analyst, Analyst

Yes, it does. Thank you.

Mark Learmonth, CEO

Okay. Any further questions come on?

Unknown Executive, Executive

Yes. There are a few. I'm going to deal with the indiscernible.

Unknown Analyst, Analyst

Can you walk us through any changes in legislation and regulations that may have impacted Blanket and Bilboes in the past six months? Additionally, considering that Zimbabwe has recently gone through an election, has that had any implications?

Mark Learmonth, CEO

Not that I am aware of. The elections all seemed to go very calmly compared to what we were expecting. Victor, do you have anything you're aware of?

Victor Gapare, Executive Director

No, the usage of any policies has really changed. In terms of policy continuity, we expect them to remain the same. One point to note is that the legislation regarding the U.S. dollar regime or the multicurrency regime is set to end in 2025; however, it has been extended through another policy instrument until 2030. Most officials are considering the possibility that the multicurrency system could disappear if certain economic conditions are met. Key factors include inflation and foreign exchange input coverage, which are critical for the current regime to conclude, along with public confidence in the currency.

Mark Learmonth, CEO

Clearly, you have more to say because I doubt you would keep asking if you didn't have something in mind.

Unknown Analyst, Analyst

Well, what you should have been saying, Mark, is that you may be the first company to get gold through the indiscernible.

Mark Learmonth, CEO

Yes, that was the reason. To reinforce the point, we've been exporting gold directly from Zimbabwe since around April, so that's not new. In fact, we have experienced a welcome period of policy stability in Zimbabwe in recent months. I hesitate to say this because the biggest challenge for us has been the frequent policy changes, which in the past have caused significant disruptions and headaches. However, things seem relatively stable now.

Unknown Analyst, Analyst

Okay. Excellent. Just over time, your go-to solution for shortfalls in production.

Mark Learmonth, CEO

No, it didn't. Over time, since really go to physicians, people are looking at production benefits. So now we've got to have a much, much closer attention to the scheduling of labor so that we get people down the shops into that place of work more effectively and more efficiently to minimize the time they spend waiting to own shaft or that's that scheduling. And again, it's not difficult, okay? So no, we shouldn't be using overtime.

Unknown Executive, Executive

Harry, I'm not sure if you have an additional question that you want to ask.

Unknown Analyst, Analyst

Can you hear me? I'm looking at your diluted earnings per share and your regular earnings per share. If I take $5.6 million of profit and divide it by 19 million, that's $0.24 a share. Do you have more than 19 million shares?

Mark Learmonth, CEO

No, that 19, 19.1 million shares.

Unknown Executive, Executive

So how did the diluted earnings become $0.15? What's the dilution? It looks like a miscalculation?

Mark Learmonth, CEO

Chester?

Chester Goodburn, CFO

Yes. The movement in quarters and how it appears is much smaller when you look at the indiscernible effect for the nine months.

Mark Learmonth, CEO

So it's a sort of quarter-on-quarter presentation. I think. I'm sure Chester will be delighted to take you through a little more detail on. But I think it's a reason asking that question in this forum.

Unknown Analyst, Analyst

Even quarter-on-quarter, you still only have 19 million shares, no matter what quarter you're taking?

Mark Learmonth, CEO

I believe Chester can provide you with a detailed calculation, but he may not be able to do it offhand like this.

Unknown Analyst, Analyst

But just send me a note. Second, do I understand correctly that by putting Bilboes on care and maintenance, you're going to save $800,000 a month or $9.6 million a year pretax? Is that correct?

Mark Learmonth, CEO

That's correct, yes.

Unknown Analyst, Analyst

Well, that's $0.45 a share after tax. That's a lot.

Mark Learmonth, CEO

Yes, that's what we're doing it. Well, put it the other way about it was also cash and is unsustainable and we have this call.

Unknown Analyst, Analyst

As for the proposed sale of the solar plant, will you pay more in rate to the buyer than your cost is now?

Mark Learmonth, CEO

No. The reason is just truly their cost of funding is lower than ours, hence, the payment is purely that's all in this.

Unknown Analyst, Analyst

That explains it. And finally, because of that, the ore you thought was there is not present. Is there a way for you to recover some of the sales transaction in the price of the transactions?

Mark Learmonth, CEO

No, because actually, Victor the vendor is indiscernible. You can ask him. And I think that will be this can we claw some money back from you for the oxide.

Victor Gapare, Executive Director

Yes. Most of the ore is actually transitional. What we believed was the outer layer is indeed transitional. This has always been part of our plan to mine the ore. The challenge arises when we conduct the credit trade for the project that we will bring to mine. Effectively, it comes at minimal cost because the mining expenses are already covered by the sulfide project. That's how it contributes. Everything is still intact with the mine; in some areas, we didn't fully access the ore, but most of what we thought was outside is actually transitional. So, it is there.

Unknown Analyst, Analyst

And the other ores, is it oxide or sulphide indiscernible?

Victor Gapare, Executive Director

The sulphides, obviously, between the oxide and the sulphide, you normally get a transitional zone. So is that transitional ore from the transitional zone that you can't really protect it is oxide, your coverage will be poor. But when we actually do the sulfide project, we're able to process that by blending it together with the sulphide in certain proportion so that you give maximum recovery out of it.

Unknown Analyst, Analyst

Okay. And the main ore body, does that have what you think is 4 million or 5 million ounces?

Mark Learmonth, CEO

It's 2.5 M&I, another 0.5 million that's inferred; but it's fair to say there is exploration potential, but we're not pursuing that at this stage.

Unknown Executive, Executive

We've got a few written questions. So the first one is, how do you expect Bilboes in the indiscernible to add to total revenue and profits for the next 5 years?

Mark Learmonth, CEO

It really depends on the situation. It's difficult to say for certain, but I believe we're at the initial stage and plan to begin production in the next five years. The development of Bilboes will rely entirely on whether we choose a big buy strategy or a phased approach, and without clearer answers, it's hard to provide a definitive response. When we acquired Bilboes, we intended to implement a big bang approach, and that remains an option. However, we're looking to refine our initial assumptions to improve outcomes. The project is viable as it stands under a big project approach, but we are exploring potential enhancements. I can't translate that into revenue figures at this moment. I want to reiterate that our capital allocation strategy aims to find a more efficient way to commercialize this asset, balancing growth while minimizing dilution for our shareholders rather than merely pursuing revenue.

Unknown Executive, Executive

Next question is, can you talk through the rough expenditure on Bilboes various feasibility studies? And could you go through any planned exploration programs at various sites?

Mark Learmonth, CEO

So just read that again. I couldn't just read it again.

Unknown Executive, Executive

Can you talk through the rough expenditure on Bilboes various feasibility studies?

Victor Gapare, Executive Director

We are currently working on the feasibility study and planning to spend around USD 5 million as part of our budget.

Mark Learmonth, CEO

Okay. That is quite broad and encompasses many areas, making it a complex project. Would you like to discuss it further?

Victor Gapare, Executive Director

Yes, it does cover many areas in the sense that the way we're looking at it is in terms of a fair approach. It can be purely a new project at the end of the day, you have to do new designs and things like that. So unlike where we look at the bigger project, we still look at the bigger project to see whether we can find a better optimized cost structure. So then we update on the cost. And also, in the last few months, as we've been looking at it, there are a lot of areas which we have already identified as areas for optimization. So that's the kind of point which we're doing optimization in terms of various streams and also in terms of maybe managing the capital expenditure.

Mark Learmonth, CEO

So do you want to go into a bit more detail on those various extents?

Victor Gapare, Executive Director

Okay. I'll just pick a few. For instance, the big one way we're expecting to make quite a big saving on our capital will be about the tailings facility, for instance, in terms of how we construct it and also taking a phased approach, which then reduces our peak capital funding when we start the project. So that's a big one. We expect it to be quite a big one. Plus also if we go with a smaller project, we can go with a smaller tailing facility. Also in a way so that will reduce the CapEx. And then from a mining point of view, the way the pit has been designed is obviously, by managing the way you do your waste stripping when you start. We do expect to reduce maybe the capital expenditure at the beginning. These are the major workstreams which are on. We've also at the issue of the electricity. If we are drilling the big project for et, we will have to build a new power line, which is about 75 kilometers. But we have to look at that. If we do the smaller projects, we can drill some way to see whether the existing line can naturally be upgraded or can naturally take the amount of power, which we need. We're working very closely with the power utility that we point net. But I think obviously, the other issues that may be the contractor will be doing the mining. We're looking at optimizing that in the sense that if that contract is also mobilized to do the tailings facility, for instance, we only pay one mobilization here and things like that is we shops to let to look at these wishes. So there are many areas which we're working on at the moment. We're quite optimistic in terms of maybe coming up with a better capital estimate for this project and also better operating costs for the project.

Mark Learmonth, CEO

So let's indiscernible anything else?

Unknown Executive, Executive

Yes, there is what are your thoughts on near-term future CapEx in 2019, 2020? We obviously thought that was going to go down and CapEx is roughly doing the amount of operating cash flow. Do we expect that to decline free cash flow to increase and a larger dividend?

Mark Learmonth, CEO

No, we do expect CapEx to go down, but I think to increase the dividend in the context of a very substantial investment program would be, I can't see how we could possibly justify that. Although we do expect CapEx to come down and therefore, free cash flow to go up. But I can't at this stage give you the dividend given the fact we've got a large, quantified CapEx program coming towards us.

Unknown Executive, Executive

And then there's one more, which says, when will the current recovery at Bilboes oxide be completed?

Mark Learmonth, CEO

Victor, we seconded in this quarter. I mean outright the end of this quarter, it doesn't trickle on into I want to say, first of all, let's be clear, we're not talking indiscernible, okay. So let's put it in contracts. My understanding was that we thought that the continuing heat leach would go for quarter 4 and then not into next year. Is that correct?

Victor Gapare, Executive Director

It should really end at the end of the year unless the recoveries continue to show that we can extract more gold, but I think that depends on the cost of doing so.

Mark Learmonth, CEO

Yes. But I really would encourage you not to start focusing on the heap leaching from the oxide that really is going to be done in the indiscernible. Any further questions?

Unknown Executive, Executive

Yes. There is one more that just came in. How is the South African rand affecting your supply cost, especially with fuel and materials?

Mark Learmonth, CEO

It's not affecting us. Chester can explain this better, but South African suppliers usually charge us in rand, linked to a dollar price. In terms of cost analysis, as Chester mentioned, we haven't observed any increase in our consumable input costs, which is very encouraging. So, to put it simply, this is not having any effect at all.

Unknown Executive, Executive

There's one more. Do you plan to increase the spend on exploration at Blanket?

Mark Learmonth, CEO

The exploration program at the Blanket is not particularly significant in cost and is mostly constrained by logistical issues related to drilling operations. We're confident that the results we've seen so far, along with those expected from ongoing efforts, will provide a substantial increase in our resource base and mine life. We do plan to explore areas to the north, south, and east, though we have many competing needs for capital and a limited cash budget. Currently, the amount being spent on exploration is not large, and I'm comfortable that our exploration activities are effective. Additionally, a significant investment at Blanket is in upgrading our IT systems and software, which has proven to be beneficial by improving our mine planning system and allowing us to adapt to changing conditions. This enhancement is likely to lead to a modest reduction in some of our planned capital programs for 2024, as we've realized we may not need to execute certain projects thanks to better planning tools. So, while my answer was lengthy, I believe it addresses the question thoroughly. Let's take a moment to see if anyone else has further questions. Victor or Chester, do you have any final thoughts based on the inquiries we've received and my responses?

Victor Gapare, Executive Director

Not for me, Mark. Thank you.

Chester Goodburn, CFO

None for me. Thanks. No.

Mark Learmonth, CEO

Okay. No more questions?

Unknown Executive, Executive

Nothing. None.

Mark Learmonth, CEO

Okay. Well, thank you all for attending, and we'll do this again or we can publish our next quarter results, which will be towards the end of March to be Q4 numbers talking the auditors got involved. Okay. Thank you all for attending. Thank you very much.