Caledonia Mining : FY 2019 Results Presentation

2019 Results Presentation

March 2020

Disclaimer

This presentation does not constitute, or form part of, any offer to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in Caledonia Mining Corporation Plc ("Caledonia"), nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, or act as an inducement to enter into any contract or agreement thereto.

Certain forward-looking statements may be contained in the presentation which include, without limitation, expectations regarding metal prices, estimates of production, operating expenditure, capital expenditure and projections regarding the completion of capital projects as well as the financial position of the Company. Although Caledonia believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be accurate. Accordingly, results could differ from those projected as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risks.

Accordingly, neither Caledonia, nor any of its directors, officers, employees, advisers, associated persons or subsidiary undertakings shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying upon this presentation or any future communications in connection with this presentation and any such liabilities are expressly disclaimed.

The projected gold production figures in this document for 2021 and 2022 are explained in the management discussion and analysis ("MD&A") dated March 20, 2019 and the MD&A dated August 13, 2019. Refer to technical report dated February 13, 2018 entitled "National Instrument 43-101 Technical Report on the Blanket Mine, Gwanda Area, Zimbabwe (Updated February 2018), a copy of which was filed by the Company on SEDAR on March 2, 2018 for the key assumptions, parameters, and methods used to estimate the mineral resources and mineral reserves from which such planned gold production is to be derived and risks that could materially affect the potential development of the mineral resources or mineral reserves. Refer to Resource Upgrade at the Blanket Mine, Zimbabwe as announced by the Company on September 20, 2018 for the resources as stated in this document. Mr Paul Matthews, the Company's qualified person and Group Mineral Resource Manager, supervised the preparation of the technical information in the technical report, and also supervised the preparation of the technical information supporting the production figures and the resources.

2

Introduction

1. Strategy update
2. Challenges in 2019 and planned mitigating actions for 2019 and beyond
3. Review of operations
4. Review of financial results for 2019
5. Outlook

3

Strategy

Increased free cash flow to grow dividends and invest for further production

Short-Medium Term (2020 - 2022): Complete the Central Shaft Project

1. Increase production to 80,000 ounces per annum from 2022
2. Increased cash flows due to higher production, lower unit costs and reduced capex from 2021
3. Continued deep level exploration to extend the life of mine beyond 2034
4. Review dividend policy to deliver sustainable dividend growth consistent with increasing free cash flow: 9% dividend increase in January 2020

Longer term (2022 and Beyond): Deploy surplus cash flow to increase dividends and fund growth

1. Evaluate new investment opportunities in Zimbabwe where "surplus" free cash can be deployed
2. • Typically, new opportunities have modest initial funding requirements - mainly to improve resource definition as a precursor to technical/feasibility studies
3. Very little gold mining exploration in Zimbabwe in the last 20 years: one of the last gold mining frontiers in Africa
4. Project evaluation criteria:
5. • Scale: minimum target resource 1 million oz; minimum target production of 50,000 ounces per annum
   • NPV per share enhancing and, eventually, dividend per share enhancing

4

Strategy

Blanket offers significant exploration potential at depth

Section View

Central Shaft will replace the current production shaft by 2021. Current planned development for Central Shaft is to open three new operating levels through conventional horizontal development and a fourth operating level accessible via declines

3D View

Planned long-term stoping and development levels

shown. Development at depth will enable

significant deep level exploration at Blanket to prove up extensions to ore bodies at depth

5

Challenges

6

Operating Challenges

Operating challenges in the first half of 2019 have been addressed

	Challenge	Effect		Remedial Action
		Unacceptable safety performance:	•	Increased management focus
Safety	•	Nyanzvi Initiative - internal mobilisation of workforce
4 fatal accidents in 2017/2018
		• Introduction of long-hole stoping
Lower Grade due to	Adverse effect on production and	•	Increased training of drillers
mining dilution	cost per ounce	•	Review of geological model shows no concerns over geology
Electricity:	Spikes/troughs in voltage damage	•	Surge-protectors installed to protect our equipment
•	unstable electricity	equipment, causes lost production	•	Increased use of stand-by generators
and slows progress at Central Shaft.	•	New power supply agreement for ringfenced imported power
	supply from the grid
	Load shedding causes lost
•	"load-shedding"	•	No long-term solution until the grid is stabilised and/or Blanket
production and delays Central Shaft		goes off-grid (e.g. solar)
		• FX needed for consumables,	• After the introduction of the interbank market, Blanket
			increased wages in local currency terms, which alleviated
		capital equipment and dividends.
			pressure on employees
Zimbabwe economy:	• Rising consumer prices adversely
• At the higher production levels achieved in late 2019 and into
Shortage of foreign	effects employee morale
	2020 and at the higher gold price, we have adequate access
exchange; inflation and	• Local inflation erodes local credit
	to foreign exchange under the existing arrangements
currency devaluation
but reduces the US Dollar cost of	• We continue to look for additional local funding but there is
		locally denominated goods and
			very limited capacity in the local banking market. Reduced
		services
			supplier credit has resulted in increased working capital.

7

Challenges: Safety

Ensuring accident-free production is non-negotiable

Blanket Safety Incident Data (2015 - 2018)		Nyanzvi Safety Transformation Program

NO. INCIDENTS

25																																																												5
																																																									4.5
20																																																												4
																																																									3.5
15																																																												3	TIFR
																																																									2.5
10																																																												2
																																																											1.5
5																																																												1
																																																											0.5
0																																																												0
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
				2015								2016								2017								2018								2019

fatal		lost time		restricted work
first aid		medical aid		occ. Illness
Total Injury Frequency Rate

• More reportable accidents from 2017: a high proportion of accidents were incurred by younger and less experienced workers
• Management initiatives included a wholesale review of safety procedures and training and rigorous enforcement of safety procedures
• Management has initiated the "Nyanzvi Initiative"
• • Entire production crews are withdrawn from operations for 5 days of intensive safety training
  • The programme has dedicated facilities and is run by facilitators from Blanket's workforce: results in a high degree of acceptance and employee "ownership" of the programme
  • All workers have now been trained but the programme will continue to refresh and re-inforce the message

8

Challenges: Low grade

Below target grade results in lower production and higher unit production costs

Head Grade (2011 - Q1 2020)

Head Grade (g/t)

5

Inferred Grade

- 4.52g/t

4.5

4	M&I Grade -
3.72g/t

3.5

3

2.5

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

YTD

Avg

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Grade

6 per. Mov. Avg. (Grade)

• • Grade declined from 2018 into early 2019
  • Average resource grade of 3.72g/t M&I and 4.52g/t Inferred* gives significant scope for improvement
  • Low grade was mainly due to mining dilution as a result of implementing long-hole stoping in certain areas
  • Grade recovered from Q3 2019 due to
  • • extensive retraining of drill crews and improved monitoring
    • re-introductionof underhand stoping in selected areas, but with increased safety measures
• Refer to Management's Discussion and Analysis dated March 20, 2019 and the technical report dated 13 February 2018 entitled "National Instrument 43-101 Technical Report on the Blanket Mine, Gwanda Area, Zimbabwe (Updated February 2018), a copy of which was filed by the Company on SEDAR on March 2, 2018, for all other key assumptions, parameters, and methods used to estimate the mineral resources and mineral reserves and risks that could materially affect the potential development of the mineral resources or mineral reserves

9

Challenges: Unstable Electricity

Two issues: voltage spikes and load-shedding

Challenge	Effect	Remedial Action
Frequent voltage spikes due to	• If un-regulated, spikes will damage	• Auto-tap changer installed (and re-installed in
lack of investment in the grid	Blanket's electrical equipment	May 2020 after it also incurred damage) to
	• Frequent trip-outs on electrical	protect equipment
	equipment cause interruptions to	• Additional back-up generators have been
	production as equipment has to be re-	installed so that when surges become too
	set before re-starting and	frequent, all operations can continue using
	compressors need to be re-charged	diesel power until the grid stabilises
Introduction of load shedding	• Prolonged outages of up to 8 hours a	• August 2019: a new power supply agreement
from July 2019 as local	day result in lost production and/or	was concluded which allows for ring-fenced
generating capacity and imports	slower progress on Central Shaft	imported power paid for in US$ but that imports
are insufficient to meet electricity	• Increased use of diesel - Approx	are subject to interruption due to difficulties in
demand	South Africa
	900,000 litres in H2 of 2019	• Additional diesel generators were installed so
	compared to 180,000 litres in H1
	that all production and capital projects can
	• Cost, environmental and	continue during outages - but this is expensive
	and logistically difficult to source and store
	logistical issues
	large volumes of diesel often at short notice
		• Caledonia is evaluating a solar project to
		improve the reliability of supply

10

Challenges: Unstable Electricity

Proposed Solar Project

• The generating deficit in Zimbabwe and South Africa will not be resolved quickly and diesel generators are not a long-term cost- effective solution.
• Caledonia is evaluating a solar generating project which will be dedicated to supply Blanket
• • It is anticipated that solar will be cheaper and more reliable than existing supply arrangements and will reduce Blanket's environmental footprint
• A Three-phase project:
• • Phase 1 - approx. 7Mw to supply all of Blanket's base load during daylight hours. Indicative cost approx. $7m
  • Phase 2 - approx. 7Mw to supply Blanket's peak requirements during daylight hours. Indicative cost approx. $7m
  • Phase 3 - further solar generating capacity to meet any incremental power requirements resulting from any further production growth above the immediate target of 80,00 ounces
• The immediate focus is on Phase 1: Phases 2 and 3 will require a "banking agreement" with the Zimbabwe authorities to deal with surplus power generated . We do not want these negotiations to impede the delivery of Phase 1
• At this stage it is not proposed to use batteries due to the very high capital cost: this may change if battery technology develops further
• • Blanket will still rely on grid electricity and diesel stand-by power at night
• Caledonia ran a pre-qualification exercise in late 2019; shortlisted candidates have submitted bids in early 2020 which are being evaluated
• • Bids have been received on an EPC and a PPA basis.
• Caledonia is running a parallel process to identify prospective debt funders for an EPC solution
• Caledonia has received a generating licence and the necessary approvals from the Zimbabwe Investment Authority - work is expected to start on site clearance shortly

11

Challenges: Zimbabwe

A rapidly changing regulatory environment

Before October 2018	After October 2018	From February 2019
• All currency held in Real time Gross	• The banking system is bifurcated	• RBZ permits inter-bank trading
Settlement ("RTGS") accounts	between RTGS accounts and foreign	between RTGS and FCA, however
• RTGS accounts are used only for	currency accounts ("FCAs")	very little volume
• FCA's have foreign currency backing,
domestic transactions. To make a	• Provided the exchange rate is fair, this
can be used for foreign payments and
foreign transaction, account holders	policy would allow local inflation to be
are seen as US-dollar accounts
must apply to the RBZ for foreign	absorbed by RTGS devaluation.
exchange "allocations" on a	• Individuals and businesses prefer to	• The interbank rate moved from
discretionary basis at 1RTGS=1USD	hold and transact in FCA rather than
	RTGS	RTGS$2.5:US$1 in February to
• Blanket has always been able to	• Gold producers initially receive 30% of	RTGS$16.7:US$1 by December 31,
secure sufficient FX allocations to	2019
sale proceeds in FCA - quickly
cover the costs of imported goods and
increased to 55%	• RBZ appears to be "managing" the
services, external group costs and
Caledonia's dividend	• Government insists on a rate of 1:1;	interbank rate which is consistently at
	informal trading suggests	a significant discount to the "street
	approximately RTGS4:US$1	rate"

• Frequent policy changes, inflation and devaluation caused difficulties early in 2019: low staff morale due to erosion in their purchasing power; shortage of foreign exchange hindered the purchase of high value consumables e.g. LHD spares
• Notwithstanding the high rate of inflation and lack of transparency in the interbank currency market, the prevailing monetary environment is manageable and the situation has improved
• • Workers are better protected from inflation with a resulting improvement in morale and productivity
  • Blanket has better and more predictable access to FCA to pay for imported goods and services and to pay dividends

12

Operating Review

13

Review of Operations

Head Grade (g/t)

5

4.5

4

3.5

3

2.5

Tonnes Milled & Grade (2011 - Q1 2020)

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020*

Grade

Tonnes

6 per. Mov. Avg. (Grade)

Ounces Produced & Recovery (2011 - Q1 2020)

Tonnes Milled (t)

• Despite grade difficulties, tonnes milled continues its long-term upward trend
• Increasing tonnes milled and an expected increase in grade as deeper level ore is accessed is expected to deliver the increase in production to 80,000 ounces from 2022
• Increased hoisting capacity with the commissioning of Central Shaft in 2020 will also contribute to an increase in tonnes milled

Ounces Produced (oz)

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

-

94.5	• Recoveries are expected to improve to an
94		average of 93.5% following the installation
93.5	(%)	of a new oxygen plant in October 2019.
92.5	Recovery
93
92	Plant
91.5
91

Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1

*

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

		Ounces		Recovery	14
* Q1 2020 is based on an extrapolation of the achieved tonnage and grade for the months of January and February

Financial Results

15

Review of Results

Profit and loss

	(US$'000's)	2017	2018	2019	% Chg
	Revenue	69,762	68,399	75,826	11%	Higher gold price
	Royalty	(3,498)	(3,426)	(3,854)	12%	5% of revenues
	Production Costs	(36,180)	(39,315)	(36,400)	-7%	Lower electricity and "other" cost due to RTGS$ devaluation
	G&A	(5,911)	(6,465)	(5,637)	-10%	Lower G&A due to continued efforts to reduce costs
	EBITDA	24,173	19,193	29,935	54%
	Depreciation	(3,763)	(4,071)	(4,434)	9%
	Net other income	2,940	6,674	1,608	-68%	Mainly export incentive and gold support price
	Forex (loss)/gain	(380)	223	29,661	13,201%	Mainly unrealised on deferred tax and bank loans
	Share Based Payments	(1,811)	(329)	(689)	109%	LTIP scheme
	Other	(541)	(269)	4,808	-1,275%	2019 mainly relates to profit on sale of Eersteling
	Operating Profit	20,618	21,421	60,889	179%
	Net Finance Cost	(31)	(220)	(198)	-14%
	PBT	20,587	21,201	60,691	182%
	Taxation	(8,691)	(7, 445)	(10,290)	36%	Includes deferred tax and withholding tax
	Profit After Tax	11,896	13,756	50,401	260%
	Non-Controlling Interest	2,512	(2,990)	(8,383)	179%	Minority interest at Blanket
	Attributable Profit	9,384	10,766	42,018	296%
	EPS (cents)	86	99	382	286%
	Gross Margin (%)1	38%	32%	41%
	EBITDA Margin (%)	35%	28%	39%
	ROCE (%)2	15%	15%	39%		ROCE excluding FX gain is approximately 21% in 20193
1.	Gross margin calculated as gross profit divided by revenue. Gross profit is revenue less royalty, production costs and depreciation
2.	ROCE calculated as profit attributable to shareholders divided by equity attributable to shareholders
3.	ROCE excluding foreign exchange is calculated using attributable profit and attributable net assets after adjusting for the post tax, post NCI effect of net foreign exchange gains as set out in
	note 10.3 to the MD&A					16

Review of Results

Revenue reconciliation

Reconciliation of 2018 and 2019 Gold Revenues
							Realised		Change in
				Production		Sales	gold price	Gold	Gold
	Tonnes	Grade	Recovery	ounces	WIP	ounces	(98.75%)	Revenues	Revenues
	(t)	(g/t)	(%)	(oz)	(oz)	(oz)	($/oz)	(US$'m)	(US$'m)
2018 Gold Revenues	560 913	3.26	92.9%	54 511	388	54 899	1 245	68.3	68.3
- Change in Tonnes	556 331	3.26	92.9%	54 066	388	54 454	1 245	67.8	-0.6
- Change in Grade	556 331	3.31	92.9%	54 896	388	55 284	1 245	68.8	1.0
- Change in Recovery	556 331	3.31	93.4%	55 212	388	55 600	1 245	69.2	0.4
- Change in WIP	556 331	3.31	93.4%	55 212	-411	54 801	1 245	68.2	-1.0
- Change in Gold Price	556 331	3.31	93.4%	55 212	-411	54 801	1 382	75.8	7.6
2019 Gold Revenues									75.8

• Improved grade and recovery contribute $1.4m of increased revenue, offset by $0.6m arising from lower tonnes
• • Grade improvement due to management interventions to reduce mining dilution
• Improved recovery due to increased grade (tail grade remains broadly constant) and the new Oxygen Plant which was commissioned in October.
• • Q4 2019 recovery was 93.8%
  • The full benefit of the oxygen plant will be realised in 2020 following completion of the oxygen sparging system
• Work-in-progressis a timing issue - all WIP ounces at year end are delivered and sold immediately after year end
• Higher gold price is the biggest contributor to increased revenue:
• • Average realised gold price in 2019 of $1,382/ounce (2018, $1,245/ounce)
  • Blanket receives 98.75% of the London spot price i.e. after an early settlement discount
  • Hedging activity has no effect on the realised price

17

Review of Results

Production costs

Production Costs
	2017	2018	2019
	($'000's)	($'000's)	($'000's)
Labour	13 440	13 160	13 905
Cash- settled share-based payments	311	43	107
Consumables	9 916	12 143	13 020
Electricity	8 701	9 313	6 383
Administration	3 004	3 569	2 159
Safety	322	592	525
Other	486	495	301
Total on-mine costs	36 180	39 315	36 400
On-mine cost /tonne ($/t)	66	70	65
On-mine cost per ounce ($/oz)	633	690	651

• On-minelabour headcount increases from 1,465 in 2018 to 1,569; variations in the labour expense arise from production bonuses and currency devaluation (Rand and RTGS$).
• After the introduction of the interbank rate in Feb 2019, Blanket increases monthly salaries which are denominated and paid in RTGS$ to compensate for RTGS$ devaluation
• A new bonus system was introduced in July 2019 to increase the rewards for "performers"
• Cash-settledSBP charge relates to LTIP's held by on- mine employees
• Higher consumables cost due to the costs of the enlarged fleet of underground trackless equipment which are used in the declines

• Lower electricity cost for the Year was due to RTGS$ denominated costs in the early part of 2019 which devalued in US$ terms from 12.8 cents/kwh to approximately 2 cents/kwh. A new power agreement was agreed in August 2019 and provided for ringfenced imported power at a lower effective blended US$ tariff
• Electricity costs include diesel costs for stand-by generators: 550,000 litres used in Q3 2019; 330,000 litres in Q4 2019 compared to 120,000 litres in Q1 2019
• Administration costs include telecoms, security, insurance: mostly denominated in local currency hence devalued in US$ terms
• Higher safety costs in 2018 and 2019 reflect increased focus on this area

18

Review of Results

Net Other Income

Net other Income
	2017	2018	2019
	($'000's)	($'000's)	($'000's)
Export incentive	2 446	6 482	866
Gold support price	-	-	1 064
Other	494	192	-322
	2 940	6 674	1 608

• Prior to February 2019, larger Zimbabwe gold producers received an Export Credit Incentive ("ECI") at 10% of the prevailing gold price. This was intended to encourage increased production and hence increase foreign exchange revenues for Zimbabwe
• • Revenues from the ECI were treated as "Other income - government grant" in the financial accounts and were deducted from costs for the purposes of calculating all-in sustaining costs
• The ECI scheme was terminated in February 2019. From March 2019 Blanket received sale proceeds at a fixed price of $44,000/kg (i.e. $1368/oz) which exceeded the prevailing LBMA price. In May 2019 the Zimbabwe government confirmed the existence of the gold support price, which was also intended to encourage production and exports. As the LBMA price moved above the gold support price from June 2019, the support price was not adjusted and Blanket thereafter received the LBMA price less the contracted "early settlement discount" at 1.25%.

19

Review of Results

Foreign Exchange Gains

• Rapid devaluation of the Zimbabwe currency after the introduction of the interbank mechanism in February 2019
• Blanket's functional currency is the US dollar: all RTGS$ denominated transactions and balances are translated into US$ for reporting purposes
• • Balance sheet items are translated at the closing rate for each Quarter
  • P&L items are translated at the average rate for the period
• The devaluation means assets and liabilities denominated in RTGS$ became smaller in US$ terms. Blanket has more liabilities than assets denominated in RTGS$, thus the devaluation resulted in an $29.7 million FX gain
• The main RTGS$-denominated liabilities that were devalued were deferred tax and a term loan
• The deferred tax liability mainly reflects the differential between the accounting and the tax treatments of capital investment. For accounting purposes capex is not depreciated until the asset (i.e. Central Shaft) comes into production; for tax purposes 100% of capital expenditure is allowable as a deduction against taxable income. Thus the Zimbabwe tax authority provides a benefit in terms of a lower income tax charge that is not recognized in the financial accounts: deferred tax attempts to recognize this benefit. Because Blanket's tax computations are performed using RTGS$-denominated accounts the effective loan from the Zimbabwe tax authorities which has been received in the form of reduced income tax charges will be fully repaid in RTGS$ and has therefore devalued. This benefit is currently un-realised but will start to be realised when Central Shaft is commissioned in late 2020.

Interbank Exchange Rate RTGS$/US$
February 20 2019	2.500
March 31 2019	3.003
June 30 2019	6.543
September 30 2019	15.090
December 31 2019	16.773
Source: MD&A
Net FX gains
		US$'000's
Deferred tax	23 143
Term loans	5 818
Other	700
		29 661

20

Review of Results

Taxation

Taxation
		2019					2018
	Zimbabwe	S Africa	UK			Total	Total
	(US$'000) (US$'000)	(US$'000)			(US$'000)	(US$'000)
Income tax	6 170	660	-	6 830	3 598
Withholding tax			-	-
- management fee	-	128	-	128	75
- deemed dividend	224	-	-	224
- GMS UK dividend	-	-	128	128	110
Deferred tax	2 942	37		2 979	3 662
	9 336	825	128		10 289	7 445
Total effective tax rate				17%	35%
Income and WHT as %ge of PBT				16%	34%

• Group tax arrangements are complex due to multiple jurisdictions and the rapidly changing environment in Zimbabwe
• Cross border cash flows (management fees and intercompany procurement margins) give rise to taxable profit in S Africa
• Zimbabwean income tax is calculated using RTGS$-denominated accounts, and the resulting tax charge is translated back to US$ for reporting. This results in an approx. $8.5m reduction in the overall taxation charge
• Deferred tax largely reflects the difference between the accounting and taxation treatment of capital investment (i.e. 100% capital allowances in the year of investment)
• Most of the foreign exchange gains are unrealised and have limited effect on the taxation charge
• 2016 re-domicile from Canada to Jersey reduces tax leakage arising on the payment of Caledonia dividends and Canadian capital gains tax on the effective realisation of a portion of the facilitation loans as a result of the repurchase of Fremiro's shareholding in Blanket

21

Review of Results

Cash Flow

Cash Flow Statement				YoY Change
2017	2018	2019	(%)
Profit before Tax	20,587	21,555	60,889	182%
Non-Cash Adjustments for:
Foreign Currency Gains/losses	120	(243)	(31,307)	12,784%
Depreciation	3,763	4,071	4,434	9%
Share Based Payment Costs	1,209	285	(588)	-306%
Other Adjustments	1,129	244	(5,304)	-2,274%
Cash flows before working capital movement	26,808	25,912	28,124	9%
Net Working Capital Movement	2,077	(4,667)	(4,239)	-9%
Net interest	(161)	(119)	(308)	159%
Tax paid	(4,212)	(3,459)	(5,517)	59%
Net cash from operating activities	24,512	17,667	18,060	2%
Cash flows from investing activities
Acquisition of property, plant and equipment	(21,639)	(20,192)	(20,024)	-1%
Proceeds from property, plant and equipment	-	-	1,000
Net cash used in investing activities	(21,639)	(20,192)	(19,024)	-6%
Cash flows from financing activities
Dividends paid	(3,310)	(3,497)	(3,395)	-3%
Net term debt drawdown/repayment	(1,500)	4,500	2,216	-51%
Term debt - transaction cost	-	(60)	(46)	-23%
Share issue	162	-	-
Share repurchase	-	-	-
Net cash from/(used in) financing activities	(4,710)	943	(1,225)	-230%

• Significant non-cash adjustments to PBT are related to Forex gains and losses ($31.3m) and the profit on the sale of Eersteling ($5.3m)
• Negative Working capital movements in the year had an adverse impact on operating cash flows, major working capital items were an increase in the level of prepayments due to restricted supplier credit and higher stock levels
• Capital investment remains at a consistent level of approximately $20m per annum until completion of the Central Shaft in 2020
• Term debt facilities denominated in RTGS$ were drawn down in the year, total term debt at year end stands at $2.5m. Due to the devaluation of the local currency, Blankets debt levels continue to fall below an optimal level

Net increase/(decrease) in cash	(1,837)	(1,582)	(2,189)	38%
Effect of exchange rate fluctuations	258	13	(105)	-908%
Net cash at beginning of the period	14,335	12,756	11,187	-12%
Net at end of the period	12,756	11,187	8,893	-21%

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Review of Results

Cash Flow

• Operating cash flows before working capital and capex increased in Q4 2019 due to higher production, a higher gold price and lower costs

• Working capital absorption in Quarters 2,3 and 4 of 2019 reflects the reduced supplier credit in Zimbabwe and increased stock levels.

• Many suppliers now require prepayments. (Q1 2019 working capital release reflects the devaluation of the electricity payable)

• Increased stocks of diesel and high-value spare parts for underground trackless equipment

• Capex remains high but is expected to diminish from Q3 2020 when work on Central Shaft will be finished

23

Review of Results

Balance Sheet

Balance Sheet	2017	2018	2019
Fixed Assets	82,143	97,525	113,714
Current Assets
Inventories	9,175	9,427	11,092
Prepayments	709	866	2,350
Trade and other receivables	4,962	6,392	6,912
Cash and cash equivalents	13,067	11,187	9,383
Assets held for sale	-	296	-
Total assets	110,056	125,693	143,553
Total non-current liabilities	25,243	34,687	8,957
Current Liabilities
Short-term portion of term loan facility	1,486	-	529
Trade and other payables	12,660	10,051	8,697
Income tax payable	1,145	1,538	163
Bank overdraft	311	-	490
Liabilities associated with assets held for sale	-	609	-
Total liabilities	40,845	46,885	18,836
Equity Attributable to Shareholders	63,267	70,463	108,415
Non-controlling Interests	5,944	8,345	16,302
Total equity	69,211	78,808	124,717
Total equity and liabilities	110,056	125,693	143,553

• Non-currentassets increased due to the continued investment in terms of the Central Shaft project and sustaining capital
• Trade and other receivables reflect in increased level of VAT refunds receivable as a result of increased delays in the processing of VAT refunds by the Government of Zimbabwe
• In December 2019 Blanket drew down a $2.3m two- year facility which is repayable in a single repayment in December 2021; this loan is included in non-current liabilities. Total term debt repayable in 2021 stands at $2.5m

24

Review of Results

Other matters

Hedging underpins cashflows until the high capital investment is completed in mid 2020. Full upside price participation maintained

• High capital expenditure until mid-2020 requires a prudent approach to cash management
• January 2019 Caledonia purchased put options over 22,500 ounces of gold at a strike price of $1,250/oz expiring from February to June 2019
• November 2019 Caledonia purchased put options over 4,600 ounces of gold per month from January 2020 until June 30, 2020 at a price of $1,400/ounce

	• Total dividend distributions (including distributions to minorities) of $3.4 m
	• Dividends paid to Caledonia shareholders of 27.5 US cents per share - compared to
	operating cash flows of over 200 US cents per share
	• Cash available for distribution is expected to grow due to increased production, lower unit
	costs and lower capital expenditure when the investment in Central Shaft tails off from
Dividends	July 2020 onwards
	• Caledonia increased the quarterly dividend in January 2020 by 9% from 6.875 cents to
	7.5 cents
	• The Board will consider future increases in the dividend as appropriate in line with its
	prudent approach to financial management and further investment opportunities

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Outlook

26

Medium to Long-term Goals

Build a mid tier gold producer with minimal dilution

now - 24

Months

2 - 4

Years

4 - 6

Years

6 - 8

Years

• Commission Central Shaft
• Increase production to 80,000 ounces per annum
• Reduce AISC to $700 - $800 per ounce
• Review dividend policy
• Declining CAPEX post Central Shaft delivers increased FCF
• Invest in exploration of expansion opportunities in Zimbabwe
• Invest in growth opportunities identified through exploration
• Multi asset producer
• Substantial production and exploration portfolio in one of the worlds most prospective gold regions
• Strong growth pipeline with cash flow to fund expansion

70,000 - 80,000oz/yr

80,000 - 100,000oz/yr

100,000 - 150,000oz/yr

>200,000oz/yr

Contacts

Website:www.caledoniamining.com

Share Codes: NYSE American AIM - CMCL

TSX - CAL

Caledonia Contacts:

Mark Learmonth, CFO

Tel: [phone]

Email:[e-mail]

Maurice Mason, VP Corporate Development & Investor Relations

Tel: [phone]

Email:[e-mail]

North America IR (3ppb LLC) : Patrick Chidley, Paul Durham

Tel : [phone]

European IR: Swiss Resource Capital Jochen Staiger

Tel: [phone]

Investment Research		AIM Broker/Nomad: WH Ireland
WH Ireland	www.whirelandplc.com
Adrian Hadden
Cantor Fitzgerald	www.cantor.com
Tel: [phone]
		Email:[e-mail]

28