Caledonia sees record F24 profits despite US$9m FX loss damper

HARARE—Caledonia Mining Corporation Plc has announced impressive financial results for the year ended December 31, 2024, reflecting a strong operational turnaround despite facing significant foreign exchange losses—showcasing the high cost of doing business in Zimbabwe, which has a punitive export surrender rule.

Gross revenue surged 25% to US$183 million, compared to US$146.3 million in 2023. This was due to a 23% rise in the average realized gold price, which reached US$2,347 per ounce, up from US$1,910 per ounce in the prior year. The company also achieved a record gross profit of US$77 million, up 86% from F23, a boost facilitated by both higher gold prices and improved operating efficiencies at the Bilboes oxide mine.

The company reported a net attributable profit of US$17.9 million, a remarkable recovery from the net loss of US$7.9 million recorded in the previous year.

Operating cash flow saw a significant increase as well, totaling US$42 million compared to US$14.8 million in 2023. This notable improvement in cash generation has strengthened Caledonia’s financial position, with net cash and cash equivalents moving closer to breakeven, improving to negative US$8.7 million from negative US$11.0 million over the year.

Despite this positive outlook, the company did face challenges from foreign exchange fluctuations, reporting a net foreign exchange loss of US$9.7 million in 2024, which was an increase from a US$6.8 million loss in the previous year. These losses have underscored the operational risks inherent in the Zimbabwean macroeconomic environment. The foreign exchange losses highlighted the potential volatility that could impact future profitability, even as operational metrics improve significantly.

The company’s adjusted earnings per share (EPS) reached 125.2 US cents, a recovery from a loss per share of 10.3 US cents reported the previous year. Basic IFRS EPS also showed a remarkable turnaround, now at 91.2 US cents versus a loss of 43.6 US cents in 2023, further reflecting the effectiveness of operational strategies implemented over the year.

Caledonia produced a total of 76,656 ounces of gold from the Blanket mine. Additionally, the Bilboes oxide mine produced 1,645 ounces of gold, although its production was reduced due to being placed on care and maintenance from September 30, 2023

Looking forward, Caledonia has set a production guidance for 2025, estimating gold output between 73,500 and 77,500 ounces. The company’s on-mine cost per ounce is projected to range from US$1,050 to US$1,150 due to expected increases in labour and operating expenses.

The significant increase in gold prices has more than compensated for the rising costs, which bodes well for Caledonia as it aims to stabilise operations at Blanket while continuing its capital expenditure programmes. Gold prices have continued to climb, and operational teams are implementing measures that are expected to bring costs under control and generate savings.

To support its growth objectives, capital investments for the year are budgeted at US$41 million, predominantly directed towards the Blanket Mine project.

Caledonia reiterated that the Bilboes project is a highly attractive opportunity. The company is currently refining the feasibility study for Bilboes, aiming to optimise the project to enhance its economics and reduce upfront capital requirements. Key areas under review include the potential sale of concentrate, which could significantly lower initial capital costs, and the possibility of relocating the Tailings Storage Facility to a more efficient site.

The likely impact of these initiatives includes improved financial viability for the Bilboes project, making it more appealing to investors. By exploring strategic optimisations and integrating near-term opportunities, Caledonia hopes to maximise net present value per share and ensure the project’s successful development. This approach aims to generate additional revenue streams and maintain flexibility regarding funding, which is crucial as costs are evolving.

The company has maintained its quarterly dividend at 14 US cents per share.-finx