Caledonia Mining Corporation Plc 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Caledonia Mining reported Q2 production up 18% compared to Q1, driven by improved access to higher grade mining areas and operational improvements.
- Revenue increased 16% to $76 million and EBITDA rose 16% to nearly $46 million, supported by stronger production and a robust gold price.
- Profit after tax increased 27% year over year to $30 million, and EPS rose 29% to $1.36 for the quarter.
- Operating cash flow was $28.4 million and cash and cash equivalents ended the quarter at $167.8 million.
- Safety performance was excellent with over 400 consecutive days without lost time injury and nearly 5.5 million man hours worked without LTI.
- The average grade improved from 2.5g/t in Q1 to 2.88g/t in Q2, targeting about 3.1g/t for the remainder of the year.
- The company moved to a seven-day working week in June, increasing blasting days by 18%, with plans to process incremental production through the Lima plant starting September.
- An upgrade to the Aleutian plant will allow processing of high-grade material accumulated over 18 months, adding approximately 1,200 ounces from September to December.
- EBITDA for the six months increased 28.5%, profit for the six months was up almost 35% to nearly $40 million.
- Costs were largely in line with budget but impacted by one-off items including a $3.2 million charge related to employee trust distributions and a 25% increase in electricity costs due to higher wheeling charges.
- All-in sustaining costs per ounce sold increased to a guidance range of $2,100 to $2,700, with online cash costs per ounce sold updated to $1,600 to $1,800.
- Capital expenditure guidance was revised down from $162 million to $103 million for 2026, reflecting timing changes, with Bilbo's project spend reduced from $132 million to $48 million for the year.
- Bilbo's project remains on schedule with $3.5 million spent to date on owner's team and front-end engineering design; first contractors expected on site in October.
- Funding strategy for Bilbo's includes gold price hedging, convertible note offering, interim funding facility of $150 million expected to close late August or early September, and ongoing project finance discussions aiming for closure by year-end or early next year.
- Exploration highlights include over 2,000m of surface trenching and 7,000m of reverse circulation drilling at the Carpets area, with oxide grades between 1.5 and 2.5 g/t and sulphide grades around 6 g/t over 7 to 16 meters near surface.
- A mineral resource update for Blanket mine including Carpets drilling results is expected to be published in the next few weeks.
- Management confirmed plans to upgrade the main plant crushers and CIL tanks to increase throughput to approximately 990,000 tonnes per year, with a $3.5 million budget for these upgrades.
- The new 132 kV power line project is expected to be completed by June next year, which will alleviate current power supply constraints and likely reduce power costs.
- Management confirmed no delays or funding issues for Bilbo's project despite timing changes in capital spend.
- Q2 dividend of $0.14 per share was declared.
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Transcript
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Welcome to the Caledonia Mining Q2 trading update. We are joined by Mark Learmonth and the management team. Mark, over to you. Thank you, Scott.
Could we get into the presentation, please? Okay. Well, morning, good afternoon to you. Should we just quickly go to the disclaimer page? Okay. Then on to the presenting team. So I am Mark Learmonth, Caledonia's Chief Executive, and we are joined today by Ross Jerrard, the CFO, Victor Gapare, another Executive Director who is running the Bilboes project, by Craig Harvey, VP Technical Services. He runs Exploration and MRM. Also in attendance we have Maurice Mason, who is Vice President Corporate Development and Investor Relations. Should we move on? Okay, just in terms of an overview, production was up 18% in the second quarter compared to the first quarter, which reflects improved access to higher grade mining areas and benefits from various operating improvements. Revenue up 16% to $76 million, and EBITDA up 16% to nearly $46 million, supported by stronger production and a robust gold price environment.
Profit after tax up 27% compared to comparable period in 2025, up to $30 million. EPS was up 29% to $1.36 for the quarter. Operating cash flow was strong, $28.4 million. Cash and cash equivalents at the end of the quarter was $167.8 million. The growth pipeline is going well. We are making good progress at Bilboes, as Victor will explain. We have some very exciting exploration results coming out of Motapa, where we expect to produce a maiden resource in the next four weeks or so. Also some quite exciting exploration results coming out of the K-Pits at Blanket. Just for the record, we have declared our usual quarterly dividend of $0.14 a share for the quarter. Should we move on to the next slide? Okay, I am going to canter through these operating results quite quickly. Really, there is one thing that comes out, and it is grade.
So if we just move on. But before we get to that, let us talk about safety, an excellent safety performance for the quarter. We have had, well, now it must be over 400 consecutive days without any lost time injury. That is nearly 5.5 million man hours worked without an LTI. So that is a very good performance. Clearly, that is sort of a lagging indicator, and the strong safety performance really reflects a couple of things. The first is the extent to which we are focusing on proactive and preemptive risk prevention. So things like we have undertaken risk propensity assessments on workers in high-risk areas. We are putting a strong focus on near-miss reporting, and things like that. So trying to preempt and predict where problems might be so that we can address them. What underpins all of this is a renewed focus on training culture and readiness.
A very pleasing safety performance, and congratulations to the mining team for achieving that. Should we move on? Production has recovered in the quarter, and that really comes down to improved access to higher grade areas. As we said previously, we have been hampered over the last few quarters by some fall of ground incidents in the course of 2025, which locked us out of high grade areas. We have been effectively running the mine at a very low grade. In the first quarter, it was 2.5 grams a ton. In the second quarter, it was about 2.88, and we are now targeting about 3.1 for the remainder of the year, and we are operating at that level. So higher access to higher grade areas. We also, in June, moved the mine onto a 7-day working week.
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