Okay, ladies and gentlemen, welcome. Good afternoon. Welcome to this call to discuss Caledonia's results for the Q3 . In addition to the usual discussion of financial and operating results, we'll also discuss the preliminary results of the exploration program at Motapa, which we published this morning, and I'll also make some brief comments regarding the progress at Bilboes. I'm joined this afternoon by James Mufara. He's our Chief Operating Officer. He joined us in May. By Chester Goodburn, our CFO, and a new person, a new face, I think to most of you will be Craig Harvey, who's our Vice President of Technical Services. And he's responsible for our exploration activities, so he will say a few words about what we're doing at Motapa, and then I'm joined by Victor Gapare, who's a director, and he will field questions relating to Bilboes and/or the general environment in Zimbabwe.
Before we get into the presentation, I just want to make a couple of observations. The first is that Caledonia is changing very rapidly. And that's reflected in the three announcements that we published this morning. First of all, we've got the financial and operating results, which largely reflect the performance at Blanket. It's fair to say that production has stabilized from, well, it was a difficult time in 2023, but we now need to address the issue of costs. And we are facing some stronger headwinds than normal, particularly in respect of higher electricity costs and labor costs and the effects of continued currency instability. We are accustomed to managing these risks. And then, of course, the presentation will set out some of the steps that we're already taking to address these areas.
And we'll also outline some other issues, which at this stage, it's too early to quantify the effect or indeed the timing when it will come into effect. So we've got the financial and operating results relating to effectively Blanket. We've got very encouraging results from Motapa, which reaffirms and reconfirms our strategy of investing in Zimbabwe to create a mid-tier Zimbabwe-focused co-producer. And I think that strategy is now being vindicated by what we're seeing at Motapa. And including the continued dividend. The third press release this morning was the continuation of the dividend. We have attractive and competing calls on our capital across the business, but maintaining returns to shareholders remains a key part of our strategy. So with that, we'll get into the presentation. Regrettably, we do. Sorry, just go back a minute, Camilla. Let me just deal with that.
Yes, we had a fatality at the mine in late September. James will talk a little bit more about that. Just under 19,000 ounces of gold were produced in the quarter. A little bit less than we did in the same quarter of 2023, but let's just note that was a record production quarter. So we're very comfortable with a production run rate of just under 19,000 ounces. And we remain on track to achieve the full-year guidance of anything between 74,000 and 78,000 ounces. As I mentioned, encouraging results at Motapa, which Craig will talk about in a moment. We've also announced the forthcoming sale of the solar plant. That's been operating slightly better than expected. We built it at a cost of about $14 million. We're selling it for just over $22 million. We will continue to get the power that's generated from that solar project.
W e're by no means losing the benefit of getting that reliable power. And in addition, the new owner is now evaluating a second stage of that solar plant. So we can release the capital and use the capital elsewhere in our business. Already mentioned the fact that we've declared another dividend of $0.14. And we'll talk a bit more about Bilboes, but we're continuing with the feasibility study. And we're making some progress now on funding options for that project. So moving on, I think. Can we move on, Camilla? I think I've dealt with most of these things. I mentioned production, gold price benefiting from higher gold price, an average price in the quarter of over $2,400. That's resulted in improved revenue, improved gross profit.
But the net profit attributed to the shareholders, as Chester was outlining, we then suffered the headwinds of continued foreign exchange losses and some other unusual expenses, which Chester was outlining in due course. So I think with that, we're going to move into the. So can I ask Craig, sorry, can I ask James to just run through the review of the operations at Blanket? James, could you do that?
Thank you very much, Mark, and then good afternoon to you all. As Mark already alluded to, we are glad to inform you that we lost one of our treasured employees, a jackhammer assistant, on the 21st of September. The said employee was in the process of installing support when this fall of ground actually occurred, fatality happening. Despite all our efforts with the rescue team to try and bring him out to surface and resuscitate, unfortunately, he succumbed to the injuries that he had suffered in this fall of ground. As an organization, Caledonia, we strongly believe in a culture of care and growth, and this is something that we treasure ourselves with. We also believe in total or real risk reduction all the time, and we believe in learning from the incidents that would have happened. We have given the employee's family support.
We've also supported the government with the investigation that they actually took out with regards to the employee that lost their life. Subsequent to the accident, we actually employed the services of DuPont or dss+ to do a total diagnostic on our operations in order to see the whole of our value chain with regards to certain health. This work, we believe, will assist us in our quest for zero harm on our mines. We should believe and totally and thoroughly believe that it's both a moral imperative and an operational imperative. On the production of the quarter, I'm glad to announce that in terms of development, we actually came in close to 7% above our plan for the quarter. This is good with regards to our future flexibility that we need because the development is opening up our future possibilities of flexibility.
In terms of tonnage, we're neck and neck with regards to what our plan was. However, we were set back because our grade was just around 4% below our plan for the quarter. This was just a result of a fall of ground that we had at the beginning of July in one of our stopes, Eroica, and we couldn't actually quickly and in time have the flexibility to replace this stope. As a result, we actually suffered this drop in our grade, in our average grade. We have ever since moved back into better stopes to stabilize the grade, but it was a little bit too late to recover the quarter at that moment. As a result of the grade drop that we had, we actually ended up with our ounces just on 6.9% below for the quarter.
The improvement that we see in the development and the achievement that we see with our targets at the moment will ensure that in the future, we'll isolate ourselves from incidents of inflexibility that harmed us in the previous quarter. Thank you, Mark.
Okay. W e'll move on to finance. Chester, can I ask you to run through these pages using the finance, please?
Yes. Thank you, Mark. It's good to see our revenue up by 13.6%. That's 28% due to additional prices or higher prices that we've received. Royalties remain flat at 5% of revenue. And production costs have increased by 2.9%. So it's good to see the cost of Bilboes coming down and also the revenues of Bilboes covering the holding costs for Bilboes. Production costs at Blanket have increased. And as Mark has said, we've got some cost initiatives to improve on that. And we'll get to that in a bit. And then depreciation has decreased. And that's due to lower ounces. I was quite pleased to see the gross profits, an increase of $0.37 for the quarter. When we look at the production costs, this is on a per-ounce sold basis. You can see that the wages and salaries have increased.
And that should be due to additional headcounts that we've employed at Blanket, as well as overtime that we spend. And we've got some initiatives to turn that around. Consumables have increased, predominantly due to once-off repairs and maintenance that we've done in our engineering and metallurgical plant. And that shouldn't reoccur. So I'm not too concerned about consumables. Other than that repairs and maintenance charge, we can see that our prices are really good. And there's actually been a reduction, a slight reduction in our variable consumable costs on a per-ounce basis. Electricity has increased at Blanket. And that's due to higher maximum demand charges that we are receiving. If you exceed a certain demand charge or, I should say, electricity load at the mine's grid, the utility would increase the rates that they charge. And that increases the costs that we see here.
In addition, there also could be a penalty if you have a low power factor that comes out of your grid, and that has also increased our electricity charges at Blanket Mine, but we've got some initiatives, and some of them have already been—or it's about a week away from being implemented. Online costs and administration at the mine have increased, predominantly due to the rebasement of costs due to the volatility that we've seen in the ZiG, and all the local suppliers have increased the costs, and you can see that effectively, but it's not a big increase in absolute terms. Bilboes, I've spoken to that before. That's covered by the revenues and on a break-even basis. If we look at the waterfall of our Q3 2023 cost and how that compares to our current online costs, we've decreased the cost significantly at Bilboes oxide.
G ood to see that turning around. Our power, labor, consumables, and other has increased, as I said before. And we can see that our all-in sustaining costs also increased. And that's pretty much due to an increase in our share price that increases the share-based expense. So that's actually a good cost to keep as our investors would be happy with the increased share price. We've revised our cost guidance for 2024. On-mine cost guidance is now set at $950-$1,050 per ounce. And all-in sustaining costs are set at $1,450-$1,550 per ounce. And that's increased predominantly due to the labor and the power costs, which we'll come on to in a bit. So these are our cost control initiatives. Firstly, power. We're about two weeks away from installing power factor correction equipment.
That's expected to save approximately $1.2 million per annum. And that should take effect in 2025, the full 2025, being installed in a couple of weeks. We are planning to convert our Central Shaft winder from AC to DC. And the efficiencies that you gain from a power use perspective will also decrease your cost by $1.2 million. And that should be implemented within 2025. So you'll see the full effect of that coming in in 2026 and part of it coming in 2025. What we've already done is to increase our waste payload, wasting speed, and improve the sequencing of our waste at Central Shaft. And that's helped us to increase efficiency in our operations. And that's already taken effect. So it's good to see that coming in place. And we also plan to replace equipment with more energy-efficient equipment. And that will come through in time.
It's not something that you will see immediately taking effect, but we are looking at more energy-efficient equipment. Then, from a solar plant perspective, we're looking to get an external party to build a phase two. We expect that to be approximately 8 megawatts, and the rate that it saves, we'd say it's approximately $1.6 million. Now, this wouldn't come with a capital cost for us. We'll just be buying the power from a third party and in turn, save on our OpEx. Further, on salaries and wages, we retired under six people of a certain age and plus. Our cost of $2.1 million, that's included in other expenses, so it's not part of our OpEx, but it's expected to save our OpEx going forward by approximately $400,000. And also, in addition to that, it brings about some efficiencies that we could generate by modernizing the mine.
We're planning to do quite a few IT initiatives. And hopefully, that helps with the implementation of that too. We also plan to implement a new biometric clocking system and this would track staff at the Blanket Mine. So we're tracking our staff movements, see where we can gain efficiencies in time studies, and better and more efficiently allocate our staff at Blanket Mine. In addition to this, there's the help of the rostering and pre-authorization of overtime. So it helps us to allocate labor better to various areas and also track that. But also look at the overtime and make sure that this overtime gets pre-approved. So we know why we're spending money on overtime. So we believe that could help quite a bit in helping to manage our staff members.
Just before Chester goes on, so of those initiatives, some of them are very close to being implemented. Some of them will be implemented next year, and we can quantify the benefits arising from those, and we're pretty clear on the timing. Some of the things, yeah, replacing old equipment with more energy-efficient equipment, the effect, the benefit we can get from the introduction of the biometric clocking system. At this stage, it's too early to quantify the benefits that we might reap and also the timing thereof, but we should start to see some progress in terms of cost reduction for early next year, so go on, Chester.
Thanks. So gross profits, as I said, it's gone up by 37%. We're pleased with that. Net foreign exchange losses, that was quite significant. In the quarter, we incurred $3.1 million of foreign exchange losses. $800,000 of that would be intercompany foreign exchange losses that are not eliminated. That's also unrealized. And we don't expect that to realize. So I'm not too concerned about that. That's due to strengthening of the rand. So again, not an issue there. But what we see is $2.3 million worth of losses in Q3 due to the devaluation of the ZIC. We'll get down to the detail on how we manage that and how that has broken down. But for the year, we've suffered a total of $9.3 million worth of loss. And that's significant for our business.
And we can no longer ignore that and say it's not a cost related to our business. We've seen this in every quarter throughout. And we've also not backed that out for our adjusted earnings per share. So we look at this as quite a serious cost. And we try to mitigate the effects of devaluing currencies as far as we can. We'll get onto that in a moment. Under other, that's where we include the once-off $2.1 million of retirement fees. So that you won't see again. It won't be repeated. And the tax expense increased due to higher gross profits during the quarter. And here you can see the foreign exchange breakdown for the nine months. And we've got the ZIC and the RTGS. Now, the ZIC is a new currency. The RTGS was abolished in April 2024.
You can see that it was quite pleased to see that we've got very small cash and cash equivalent loss of about $2,000 when we had the ZIC. That's how we manage that is to spend the ZIC. We're trying to spend it on efficient—we do spend it on efficient costs to ensure that our cash gets converted to inventory that we can use at the mine rather than keeping it in a dollar that could suffer the volatility that we've seen in this currency. In the first quarter, we had a conversion method where it locked up our cash. That incurred $2 million worth of losses under RTGS. Other than those two, I'd say that the most significant line items that contribute to our foreign exchange would be the bullion sales receivable and our bullion sales receivable.
And the conversion and receipt of that cash is very much outside of our control as we receive our cash from Fidelity when they're ready to pay. So normally, that happens in about 10 days, 10 to 14 days. But still, in that 10-14 days, if there's a significant devaluation like we've seen with the ZIC, it still comes down to the fixed bottom line in terms of losses. That is pretty important.
Can I just make a point that people may not understand? There's no properly traded liquid market for the Zimbabwe currency. The exchange rate, the official exchange rate, is just set by a committee. And it typically steps down, devalues in big steps. So case in point would be the devaluation of the ZIC from about 13.7 to, I think, about 23. It's about a nearly 50% devaluation. That happened in the space of a few seconds. So it makes it very difficult. The magnitude and the speed of these devaluations makes it very difficult to manage. But there is no hedging mechanism. And there's no sort of exchange rate which allows you to move ahead of the curve. Sorry, Chester, go on .
T hat covers it. So it's our main mitigation to prevent volatility in the ZIC and losses in the ZIC is not to have any ZIC as far as you can. So we try to spend that on efficient expenditures. What I was also pleased about is the cash generation. That's before the working capital changes. And again, we've got a quarter over $16 million for the quarter. If you can see our $46 million that we've generated for nine months, that's more than double what we generated last year. And it's good to see that every quarter this year, our cash generation has been consistent. And it's been a lot higher than 2023. So it's good to see the shifting around from 2023 to now. Good cash generation.
We are spending some money on safety stock to ensure that we've got spares available and bolster our production and not have any delays in terms of production. We don't want that, especially at the current gold prices, and we've also increased our prepayments for long lead items, and that would have been reflected in the CapEx that comes through Q4 predominantly, and about $1.4 million of that prepayments relate to the ZIC, where we've made some prepayments to buy stock rather than all the cash, so that has significantly affected our cash flow, but not in a bad way. It helped us to ensure our production, get some safety spares, and also ensure that we don't suffer devaluations in the ZIC, so it just changed form. We expect that to turn around over the longer term, and it's good to see that safety equipment on the shelves.
Other than that, CapEx, that's well controlled. We still expect CapEx to come in at $30.8 million at Blanket. So no unexpected CapEx. There might be some withdrawal over into next year. But the absolute number hasn't changed. And that shouldn't affect. So happy to see the cash generated again in this quarter.
Good. Thank you. Thank you, Chester. Can I ask Craig to run us through the results, the Motapa results, which, again, we announced this morning? Craig, can I leave you to do that, please?
Thanks, Mark. Good afternoon or good morning to everybody. So basically, during 2024, Caledonia kicked off a first-pass, pretty widely spaced drilling program at Motapa. As we can see on the map just to the right there, we have Bilboes which share the common boundary. So it's adjacent. I mean, they're right next to one another. Motapa has three main trends. So we have basically the northern, central, and southern trend. These three trends in total are just over 9 Ks in strike length. So it's a fairly expansive piece of ground. So in 20—well, for this year, what our focus was, it was to test the continuation of sulfide zones below the historic open pit oxide that was mined, typically during the '80s and '90s under Anglo American.
And so clearly, we have quite a bit of data from Anglo, some old drilling databases, some underground working plans from previous operators as well. And then we wanted to trench across the Motapa property to have a look for prospective new areas that might not have been found or had been looked or had been looked over. So we had drilled just over, it's about nine and a half thousand meters of drilling, a combination of diamond and reverse circulation drilling. That was from a total of 68 holes. The grade, in general, is very, very similar to Bilboes. So again, I've just got to stress that it's very widely spaced. It's about 150 to maybe 200 meters between drill holes. So it's early days. The widths may be a little bit thinner than Bilboes. There's still a lot of work to actually be done.
Just looking at the grades, I mean, those are six holes of, as I said, 68. In the press release, it'll be available on our website as well. The full details are there. You can have a look through all the holes. Something that sort of stuck out is that, yes, quite clearly, sulfides continue at depth at similar grades. Of great satisfaction is Caledonia has defined an area on the eastern portion of the Motapa central trend. We call it Mpama. It's the fourth hole there, the MPZRC number two. That's just one of the holes that is from there. As you can quite clearly see, pretty decent grade, very, very shallow, sitting at 12 meters below surface. It does appear to be oxides, right? Oxide material.
This is quite significant in the fact that the Bilboes that we have, it currently still has two oxide heap leach processing plants. The closest, well, they're about the same. The one's 3.5 km away. The other one's 3.2 km far. So we have drilled some extra holes. They are in the tables in the press release. There are 15 holes that we actually drilled there. Sorry, nine holes drilled, six of which have grade. And of great interest is, of all of the intersections in the Mukuzi area, eight of the 15 intersections that we actually report with grade are above 15 m. So 15 m and shallower. The average of those eight intersections is 4.21 grams per ton. And so we can drop out the high grade one of 10.95. And the average comes back at 2.6.
It's very, very exciting for us going forward into 2025 and 2026. Our focus is going to be on clearly the Mukuzi area. We are pretty sure and pretty confident that the potential for near-term oxide mineralization is there. Clearly, we'd like to get that into the bank. The second focus is going to be drilling on the Motapa north area, which is directly basically along the Bilboes Motapa shared boundary.
That is about a km and a half from the plant. Our focus is to get that into a mineral resource of some form or fashion, be it inferred, indicated, whatever it is, and then to focus on the Mukuzi area. G oing forward, we're very happy that we have proven up that the sulfides continue at depth. We will execute a standard drilling program to get that onto our books and then the Mukuzi area. Very, very exciting. Thanks, Mark. I don't know if you have any comments.
T hank you, Craig. Shall we move on? Okay. Just a few words about Bilboes. We continue to do work on the feasibility study. So there's no update there. All the information you see on this slide is from stuff we previously published. We still remain on course to publish a feasibility study in the first quarter of next year. And for those of you who are familiar, the main focus of the work is to upgrade it from the existing PEA to a feasibility study is to upgrade the work that's been done on the tailings facility. While that's going on, we're also now progressing our thoughts about funding. Clearly, we had some internal thoughts when we bought Bilboes. We now have those validated by a specialist debt advisor. And we're now in the process of beginning to engage with prospective funders.
We're looking at what seems to be coming into focus would be three potential funding structures using various combinations of various permutations of senior debt and mezzanine debt. So we'll continue to flesh those out. And then, in due course, very much in the hands of the speed at which the funders move. But in due course, we'd then be able to announce the senior lender and the debtor ranges. But I can't really give any indication as to how long that will be. But that's making good progress. Sure. Moving on. So look, in terms of outlook, for Blanket, our immediate area of focus is to maintain production of about 75,000 ounces a year. And as you've heard, we do need to pay closer attention to the cost, area of cost, particularly electricity and labor. Some of the initiatives we're taking, we're able to quantify.
Some of them at this stage, we can't quantify. And we can't pull precise timing. But we'll be able to make progress there. Bilboes, we expect to publish the feasibility study in the first quarter. And as I've said, we are making progress on various funding options. And as Craig's just outlined to you, we've got exciting results at Motapa from three areas that were pre-known and then from one new area which effectively we found. And we'd expect that exploration to continue maybe a couple of years before we get to a major resource. But given its immediate proximity to Bilboes, anything we find at Motapa should give rise to very substantial synergies as a combined Bilboes-Motapa operation. So we've taken about half an hour to go through that. I mean, we can now open this out to questions. Camilla, do you want to chat at?
That's fine. Can I just ask if you raise your hand if you have any questions?
Can I also say, people can type them? But the problem with typed questions is sometimes you may not get the nuanced answer that you're looking for. So you probably get a better quality of answer if you actually raise your hand and do it verbally rather than written. But of course, if you don't want to do that, we can manage.
Any questions so far about having the drawing on slide 14 available on the website? Yes, we can do that. It's also in the press release. There's a question here from Ian Joslin. I'm just going to unmute you now. Ian, you should be able to speak.
Okay. Good. Right. Yes. I think I had a similar question last time around. But it's kind of you've highlighted it, I think, today. It's to do with the accounts where you obviously have the IAS EPSs, and then you have your own adjusted. And you've touched on something I was going to talk about anyway. But when I look at your notes, the difference, I think, correct me if I'm wrong, but the main difference between the IAS EPSs and the adjusted ones are one FX, which clearly you've alerted on as being of concern. And I think the other factor was, I think, minority interests, which obviously takes up quite a large chunk of after-taxes.
Chester can answer that question, but I would, yeah, Chester, I'll leave you to answer that question if you could.
Yeah. The first thing on the NTI, we show what is the EPS on a trailing basis. And secondly, we don't deduct the FX. The FX that is deducted would be the intercompany FX that I spoke about. It's not that big. It's not the significant portion. The significant portion relates to the ZiG losses. And that's still deducted from EPS and adjusted EPS.
So what's the main difference? What accounts for the main difference between the two?
If we look at adjusted earnings per share, we take out non-controlling interest, the deferred tax, and some foreign exchange if we don't see a structural to our business. What we've done in the past was to remove the foreign exchange because we had foreign exchange gains for, well, let's say 2020, 2021, and 2022. So we removed those profits from adjusted earnings per share because we didn't feel that was part of our business. And we didn't want to show a number without that. When we look at 2023 and 2024, we see large foreign exchange losses. And now for this year, because we've seen significant losses of about $9.3 million, we deducted the foreign exchange losses that pertain to the ZIM operation. We still deducted that from EPS. So we didn't count it back in the adjusted earnings per share calc.
You mentioned minority interests.
W e want to show a number that's a trivial profit to our business. W e count that back.
I'm not understanding. But isn't that money paid out, which is a long-term thing?
No, w hen we adjust the foreign exchange movement, we only adjust it for our share of that foreign exchange movement. Clearly, those foreign exchange movements will include a Blanket. And so the minority of the Blanket, they have to stand behind their share of that. I think that's the confusion. The calculation of earnings per share is based on an attributable earnings per share. So that's after the NCI.
Right. M inority interest is them standing behind their share of the losses.
No, they have to. Absolutely. Yeah.
T hat's fine. That's fine. It just had a line minority interest. So I thought possibly you were just adding back their total share of that.
What we do, the adjustment for foreign exchange, then the adjustment is further adjusted for the NTI component and the extent of any tax relief on the foreign exchange loss.
Gotcha. I t's effectively the two words mislead me into thinking.
Yeah. I can see.
Gotcha. Okay. Could I ask another question?
Yeah.
It's to do with I think you gave examples of putting in extra inventory to try to ensure that if you hit low grades, you're able to have flexibility. That's more faces to do the mining. I was just wondering if you could give an example of how the extra inventories will help you.
No, hold on. The inventories are, yeah, I think we're talking about development. And clearly, we're trying to develop in as many areas as possible to give us the flexibility in the event that we have another event, such as that happened at Eroica. The build-up of inventory is to make sure that if we've got enough backup stock in case pumps fail, we're putting some de-pumping systems on the bottom level of the mine, on 34 level. If those pumps fail, that means that we end up with too much water at the bottom of the mine.
Similarly, we're having to. We bought spare parts to service the new tailings facility. I n addition, we also increased our inventory to mean that instead of holding ZiG cash, we spend the ZiG cash. We buy whatever it is we can buy that we use in the business to minimize our foreign exchange exposure.
I understand. O ne last question. Obviously, it's interesting and quite exciting that you discovered oxides in Motapa. And I think you mentioned you're looking at a two-year horizon for any sort of development. So would that include doing some shallow mining for taking out the oxides that you could?
If we can, don't forget, we had a very unhappy experience with oxide mining at Bilboes a couple of years ago. So we certainly don't want to repeat that. But if we can get our hands on relatively shallow oxides, we will do. And we can put it through the existing leach facilities at Bilboes and turn it to cash as quickly as we can. So if that's economically viable, we will do it. But we're not going to fall into the same, literally the same pitfall that we fell into in early 2023. So yes, if it makes sense, clearly. But on a prudent basis.
Could you remind me what happened at Bilboes? Because obviously, you thought that you could do it there, but it didn't turn out to be possible.
It turns out that the stripping ratio was too high. So we will access the remaining oxides at Bilboes in due course as part of the broader sulfide package. But on a standalone basis, it just wasn't cost-effective.
Carrying too much earth around.
Yeah.
Gotcha. Okay. So that's been very helpful. Thank you.
Okay. We do actually have some written questions, which are quite detailed. Camilla, should I try and address these written questions?
Okay. The first question was, please explain the circumstances surrounding the fall of ground in Eroica. Craig or James, do you want to talk about what happened at Eroica, the fall of ground early in the Q3 ?
W hat happened was a very unfortunate instance where there were two structures that were going. It was forming a host structure. Some of the people that understand this would remember, so it was forming a host structure, and in between, you would obviously form a wedge where our teams were supposed to proactively identify that, pin this wedge, and be in a position to carry on with work. Unfortunately, we did not do that time, actually, and as a result, when they were trying to put in support, they did, unfortunately, not put in temporary support. The risk was not perceived to the extent to which it was, and the fall of ground happened, unfortunately, when they were still there, and we lost the man.
Okay. T he further question was the incident at Number 4 Shaft that disrupted hoisting. That was quite simply a piece of equipment was being lowered down the Number 4 Shaft . It broke loose. It fell down the shaft and caused some damage to the shaft infrastructure. And that lost about, what, a week's worth of hoisting up Number 4 Shaft ? Was that correct?
Yes. It was a week's worth of hoisting.
Yes. But that's now been resolved. There's a very detailed question about the—which I think Chester—I'll ask Chester to do with this. The difference between IFRS production costs on page 11 of $3.1 million and Blanket's production costs on page 12 of $19.2 million. Chester, are you able to address that easily? Or does that require an email to the questioner?
It was marked by email. But if I look at page 7, that's where production costs are shown on the slide, not page 11. But I can-
A ctually, I'll ask you one. This is written, so I don't know if page 11 probably refers to the MD&A or something, or maybe the accounts. I don't know what document's been referenced here.
$119.3 million. I'm going to assume a few things, yeah. But if it doesn't answer, let's do it on email. $19.3 is the cost at Blanket. We do incur some costs at a group level that gets added to that. And we also get the Bilboes costs.
I'd like to be able to send you the message as well as we're having it. So I'd like to be able to please if you send me your email address. And then I'll forward your email to Chester. And Chester will deal with this over email. It's a bit too detailed going into it on a call like this. The further question is the reallocated employee costs into the shared services center. It's about $2.4 million for 2024. Those are costs that we will need to carry as we go forward with Bilboes. So yes, those will be recurring costs. So where we are at the moment is we're effectively building up a head office infrastructure to service not just Blanket and Caledonia as it currently stands, but Blanket plus Caledonia plus Bilboes, as we will be in the future.
And so we are in this uncomfortable period now until we get Bilboes up and running of carrying those costs. Now, clearly, when Bilboes is up and running, we do expect our all-in sustaining costs and our on-mine costs to fall very, very substantially as we spread those shared services costs and the higher head office costs across substantially more production. So it will work its way out in a wash over the course of the next couple of years. But we need to have got Bilboes up and running. Okay? So the further question was the funding in Zimbabwe, the overdraft facilities and working capital. Chester, did you want to talk about liquidity in Zimbabwe?
Yeah. A s we go forward, Mark mentioned now, we've got some cost initiatives. That should bring down our operating costs going forward. So that's going to increase the cash generation. We don't see the working capital outflows. We don't see that carrying on going forward. We just got the safe space to ensure that we don't have any delays in our production. So we don't see that cash coming through or cash expense coming through, cash outflow. So yeah, our cash position should improve going forward, and for the short period of time when we've increased our inventory, we will be utilizing the full facility before year-end. But it should normalize going forward.
The point of those facilities is to use them, and I'd note that the Blanket is very undergeared.
If I could add to that, I mean, Mark did mention the solar plant that we're planning to sell for $22 million after CGT. It should generate about $19 million. Blanket's very profitable at these gold prices. So you should see an increase in the cash flows coming through in 2025. So all these factors will improve our cash flows going forward.
T hen the final question was the ZiG, the adoption rate of the ZiG. Do Zimbabweans still primarily transact in dollars? I guess the person who's best placed to answer that is Victor. Are you able to talk about the general acceptance or non-acceptance of the ZiG in country?
Thank you, Mark. At the moment, if you look at the global transactions in ZIM, what you find is that the US dollar is somewhere between 70% to 75%, moving up to probably somewhere between 75% to 80%. So approximately 20% to 30% of transactions in ZIM are mainly ZIG. So there is a level of acceptance where you have to use it anyway. But for us, because we get some of that money in ZIM dollars, in ZIG like Chester says, we use it to pay taxes and buy some local consumables.
T he other trend in Zimbabwe is the extent to which people just don't use banks anymore. Do you want to talk about that? I think to the sort of de-banking.
Yeah. A lot of Zimbabwe, to a large extent, also operates a cash economy. Because you find the general public, because most of the businesses have gone informal, and because of unemployment, a lot of people are informal traders, informal traders. So those transactions in that side of things is mostly cash. So you find most of those transactions are actually U.S. dollars rather than ZiG.
T hat deals with those written questions. Any further questions, Camilla?
Yes, there are. So Howard Penney wants to ask a question. Hold on one second. Howard, you are muted.
Oh, good. I have a few questions. Craig, you cited one hole in Motapa. Did you say 15 meters or 50 meters?
I'm not quite sure what.
You said 15 or 50 meters at some grade, and I didn't know which one you meant.
It's the fourth hole that's listed there. I t is at around 50 meters below surface. It's 4 meters downhole intersection at a grade of 10.95.
Oh, I see. 50 meters downhole. Okay. I misunderstood.
No. It is 15 meters.
One 5 below surface.
The maximum width is four meters.
Got it. Okay. And Chester, could you please explain? No, I'll rephrase that. Is the large increase in administrative expense attributable to expenses at Bilboes in Motapa? Or is that something else?
Yeah. If you look at our admin expenses, it increased quarter on quarter. It increased by approximately $1 million. And so that's predominantly caused by the imperative to do the Feasibility Study. So we've bolstered our resources there to complete that.
Howard, that's the point I was making earlier, which is as we can't just over the course of the next few years, we've got to build up an ownership team to build this project and then run the project. And so we will be having costs at a head office level or a group level to build this project. So we are --
That's what I thought. That's what I thought. I wanted to clarify that in my mind.
Yeah. T he other slight problem arising from those, or the following problem arising from those, is those costs aren't actually tax deductible because they're not in a taxable entity. Okay? So that's one of the reasons why our effective tax rate looks quite high because we've got costs sitting in areas that aren't making profit and therefore are not having tax deductions. Again, that will all wash out eventually once we've got Bilboes up and running.
Yo u preempted my next question about taxes. Is the foreign exchange loss also tax deductible or not really?
The real life which is most of it. So real life portion is.
Okay. Y ou also said you're going to save $1.2 million of electrical expense compared to now. I think you meant compared to now. Does that mean that the financier owning the solar plant will actually save you another $1.2 million?
Yeah. T he solar plant will save me $1.6 million. We're planning to get somebody else to build that. It would be a PPA that we enter. The cost would be cheaper than, and that's an estimate based on a mixture of using gensets or utility. That's what we'll be saving to instead of using utility at a higher cost. We'll be using the solar plant at a cheaper cost. That should save us about $1.6 million.
Is that also $1.6 million cheaper than what it is now or cheaper than what the utility would charge?
Currently, we're selling the plant and we're going to generate cash for that. But it would be cheaper than that phase one result.
It's cheaper than what we've had at the moment. That's the point.
S econd to last question. I don't know, a point. But Chester, on your cash flow statement at the bottom, it looks as if your ending balance is a -$7.6 million. And I think you meant the cash outflow net was $7.6 million because you do have $7.2 million on your balance sheet. So the last label on that statement is a little misleading. You might want to clarify that.
Okay. Let's have a look. I'll get back to you.
Victor, finally, could you please tell me what inflation has been in the most recent month, maybe October, in Zimbabwe, if you know?
If you look at the U.S. dollar inflation, it was less than 1%. And the U.S. dollar inflation, the ZiG inflation, if my memory serves me right, might have been around 37%. I sent that to my colleagues. Does any one of you remember?
I could find out.
Yeah. I can check.
I need to throw it about a bit. I couldn't do it easily on this call.
Yeah. Did you say 6% or 7% in ZiG or 1.6?
No. I said the US dollar inflation was less than 1% month on month, and the ZIG inflation was probably around 37%. I have to double-check that before I confirm.
That's okay. 3.7 you said, right?
Yeah. No, hold me on that figure.
Approximately.
I have to double-check it and send it to you.
Sure. I just wanted to make sure I heard correctly. Okay.
Actually, I have the figure. Official U.S. dollar inflation was unchanged at 0.7% in October, while the ZiG inflation soared to 37.2% month on month after the RBZ devalued the local unit at the end of September.
Okay. Thank you.
This figure is released by ZIMSTAT.
All right. Thanks, guys.
Mark, I'll just check the cash flow. It seems right there.
No, the cash flow is right. The label makes it appear as if your ending balance was a negative $7.6 million. And I think what you meant with the cash outflow was $7.6 million because cash on hand is $7.2.
Yeah, well, I'll send you an email on that, but it should be negative.
Because the balance sheet shows $7.2 million in actual cash, and the label on the cash flow statement makes it look negative.
That's the liabilities too.
Okay.
Howard, have you got any more questions?
No, Camilla, thanks. Mark, thanks.
Okay. I just have one more question from Nick Denham. Just hold on a sec. Nick, you're unmuted.
Okay. Thank you very much. Okay. Craig, your very interesting discovery in Motapa. Do you have a sense of how long the strike is on the undiscovered area?
On that? On that particular one, from what we've outlined from our trenching, it's about 800 meters of strike, and it's made up of two, possibly three zones of various widths.
Okay. So having seen the aerial photos, the satellite photos of the area, it looks fairly apparent that the area has been worked for extensive periods of time. So tell me more. Is it possible that there are many more undiscovered similar types of appearances in that area?
Okay. I'm going to be cautious with what I say because obviously, I don't look at any forward-looking statements as such. Bilboes has quite a comprehensive set of EPOs, claims, and other patches of dirt in that immediate area. We are busy putting all of the info together. Structurally, from a sort of structural point of view, there's quite a bit of folding and shearing that takes place at the sort of northern end of the Bubi Greenstone Belt. As we know, gold loves shears and bends and things like that.
If you look at who our neighbors are or our closest people, and if you had a look on Google Earth, you would also notice further to the north there's a couple of other historic pits, which if memory serves me correctly or if my eyeball is working, it's part of the Bilboes property or very close to it. We have Lonely Mine, which is sitting on a structure to the south of Motapa, but it runs into the Bilboes holdings. Lonely Mine, I'm not going to quote a number because I'll probably get it wrong. I'll such numbers around. It was a 1 million-ounce producer from what I understand. I think the camp that we're in, and this might be a good term for it, is that Bilboes Motapa, whatever.
It 's probably the Bilboes mining camp is going to become the future name for this area because I really do think that there's a lot of exciting potential in this specific area.
So if I say, come back to Motapa, how much of Motapa have you done? Have you covered systematically to find these possible outstanding oxide ore deposits? So we do 20%, 30%, 50% of it?
Yep. So we've covered about 60% of the area with trenches or what we want to do. I think it's now standing at just on 13,000 meters out of a budgeted total of 22,000 meters, I think. And so we've put a—and I've said that we have completed activities for 2024. So as we enter the rainy seasons, it just becomes very, very difficult, becomes costly. We have to keep the trenches dry. So we'll pick up the remainder of the trenching activities and other surface activities, yeah, from probably about the end of March and then run from March until the beginning of November of next year.
Okay. Thanks, Craig.
Thank you, Nick.
There's one more question from [Inaudible]
Hi, guys. Congratulations on the very interesting results from Motapa. Sorry, I joined late, so this may have been asked already. But have you done any test work yet on the Motapa South Side? I understand it's very early days, so probably not, but just curious.
Sorry. I haven't done any what work?
Test work.
Test work. Okay. So quick, okay?
Yeah. A t this stage, we haven't done. But what I can say is that we have put sample material through our SGS laboratory at Isabella, which is on the Bilboes property, specifically for bottle roll tests. And then those samples are halved or duplicated to be sent off for fire assays. And then obviously, what that gives you is it gives you an indication of what the oxidation level is. So if you've got a fire assay of 2 grams per ton and a bottle roll of 1 gram per ton, it means that you can realistically, under oxide heap conditions, expect to get somewhere near the 1 gram per ton. So it's very early days. So we have the oxides that we're going to have a look at.
And then as we go forward, we will also generate sample material for metallurgical testing on the sulfides at Motapa to see if they are amenable to the proposed Bilboes plant.
What's the depth of weathering? I mean, is it just Motapa Central that you see oxide potential?
O n Motapa North, Motapa Central, Motapa South, there's been historic oxide mining down to depths approaching somewhere between 30-40 meters. The weathering profile does change. It's not quite uniform. But I think in general, we could look at a 20, possibly a 25-meter depth of weathering.
Okay. Thank you very much.
Okay. Are there any further questions?
No, I think that's it.
Okay. Just pause for a moment so anyone has any further questions, then put your hand up now or quickly send something. But I don't see anyone coming through, so thank you for your time this afternoon, and we will be doing the same thing again when we publish our full year results, which will be towards the back end of March next year, so thank you very much for your participation. Goodbye.