Caledonia Mining : Fourth Quarter 2020 Financial Statements

Caledonia Mining Corporation Plc

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION

To the Shareholders of Caledonia Mining Corporation Plc:

Management has prepared the information and representations in these consolidated financial statements. The consolidated financial statements of Caledonia Mining Corporation Plc and its subsidiaries (the "Group") have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and, where appropriate, these statements include some amounts that are based on best estimates and judgment. Management has determined such amounts on a reasonable basis in order to ensure that the consolidated financial statements are presented fairly, in all material respects.

Our independent auditor has the responsibility of auditing the consolidated financial statements and expressing an opinion on these financial statements.

The Management Discussion and Analysis ("MD&A") also includes information regarding the impact of current transactions, sources of liquidity, capital resources, operating trends, risks and uncertainties. Actual results in the future may differ materially from our present assessment of this information because future events and circumstances may not occur as expected.

The Group maintains adequate systems of internal accounting and administrative controls, within reasonable cost. Such systems are designed to provide reasonable assurance that relevant and reliable financial information are produced.

Management is responsible for establishing and maintaining adequate internal controls over financial reporting ("ICOFR"). Any system of ICOFR, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

At December 31, 2020 management evaluated the effectiveness of the Group's ICOFR and concluded that such ICOFR was effective based on the criteria set forth in the Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organisations of the Treadway Commission.

The Board of Directors, through its Audit Committee, is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control. The Audit Committee is composed of three independent directors. This Committee meets periodically with management and the external auditor to review accounting, auditing, internal control and financial reporting matters.

The consolidated financial statements as at and for the year ended December 31, 2020, 2019 and 2018 have been audited by the Group's independent auditor, BDO South Africa Incorporated. The independent auditor's report outlines the scope of their examination and their opinion on the consolidated financial statements.

The consolidated financial statements for the year ended December 31, 2020 were approved by the Board of Directors and signed on its behalf on March 22, 2021.

(Signed) S. R. Curtis (Signed) J.M. Learmonth

Chief Executive Officer Chief Financial Officer

Independent Auditor's Report

To the shareholders of Caledonia Mining Corporation Plc

Opinion

We have audited the consolidated financial statements of Caledonia Mining Corporation Plc and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2020, 2019 and January 1, 2019, and the consolidated statements of profit and loss and other comprehensive income, changes in equity and cash flows for the year ended December 31, 2020, 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated statement of financial position as at December 31, 2020, 2019 and 1 January 2019, and its consolidated financial performance and its consolidated cash flows for the year ended December 31, 2020, 2019 in accordance with International Financial Reporting Standards (IFRSs), as issued by the International Accounting Standards Board ("IASB").

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial

Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

KEY AUDIT MATTER	HOW THE KEY AUDIT MATTER WAS ADDRESSED IN THE AUDIT
Assessment of Life-of-Mine (LOM) Estimate The calculation of the LOM is complex and involves specialised knowledge of the resource. The	In considering the appropriateness of management's judgements and estimates used in the LOM, we performed the following audit procedures:  We obtained an understanding of the of key controls around the assessment of the LOM;  We obtained from management available evidence
LOM is based on estimated available	that supported their key assumptions and assessed
resources, as determined by	the reasonability/appropriateness of these
geologists and surveyors.	assumptions.  We reviewed the LOM relating to geological and technical data of the size, depth, shape and grade of the ore body and recovery rates used in the model.  We performed sensitivity analysis on the key assumptions;  We tested the mathematical accuracy of the value in use calculation;

Independent Auditor's Report (continued)
Any changes to the reserves and resources will impact the LOM which would impact the financial information that relies on the LOM estimate such as the calculation of depreciation of property, plant and	We reviewed the work of management's experts and compared to methods and assumptions used by the expert to those used in the preceding period in order to ensure consistency.
equipment as disclosed in note	As part of our audit, we also focused on the
3(a)(i) and (ii) as well as the	appropriateness and completeness of the group's
discounting of the site restoration	disclosures, that is required in terms of International
provision disclosed in note 28.	Financial Reporting Standards.
Completeness of the site restoration provision. The Group's site restoration obligations with a carrying value of	In considering the appropriateness of management's judgements and estimates used in the site restoration model, we performed the following audit procedures:  We obtained an understanding of the of key controls around the assessment of the site restoration cost model;
$ 3.5 million (2019: $3.3 million) as	 We obtained from management available evidence
disclosed in note 28, are material. Significant judgement is required in determining the rehabilitation timing, underlying cost estimates for rehabilitation, inflation and discount	that supported their key assumptions and assessed the reasonability/appropriateness of these assumptions;  We performed sensitivity analysis on the key assumptions;  We tested the mathematical accuracy of the model; and  We reviewed and challenged the basis for any
rates and the scope of works required	significant revisions since the prior year and
to rehabilitate the mine and surrounding areas in line with current legislation.	assessing the competence of the internal experts  We reviewed key assumptions in the site restoration models, challenging the appropriateness of estimates with reference to contingencies applied, inflation
The site restoration provision calculation includes several inputs	rates, weighted average cost of capital calculation and the consistency of long term discount rates.
that management uses to assess the	We reviewed the work of management's experts and
appropriateness of their estimates, including inflation rates, discount	compared to methods and assumptions used by the expert to those used in the preceding period in order to ensure
rates, timing and value of cash flows that support their calculation.	consistency. We engaged our own expert to independently review the
Based on the significance of the balance as well as the management judgements and estimates involved and the sensitivity of the balance for	rehabilitation provision estimate and the method, fairness and accuracy of management's calculation.
changes in the inputs, it was	As part of our audit, we also focused on the
concluded to be a key audit matter.	appropriateness and completeness of the group's disclosures, that is required in terms of International Financial Reporting Standards

Independent Auditor's Report (continued)

Other Information

Management is responsible for the other information. The other information comprises:

•  The information included:

  • o The Management's Discussion and Analysis report of the consolidated operating results and financial position of the Group for the quarter ended December 31, 2020.

  • o The Annual Report - referred to as Form 20-F

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained the Management's Discussion and Analysis report and the Annual Report - referred to as Form 20-F prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•  Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

•  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.