This meeting is being recorded.
Joined by Dana Roets, our Chief Operating Officer, Victor Gapare, who joined us from Bilboes. He's an Executive Director of Caledonia. By Chester Goodburn, our CFO, and by Camilla Horsfall, our Vice President, Investor Relations, and also Maurice Mason, our Vice President of Corporate Development. We're gonna run through a slide deck, which hopefully addresses the main issues. The slide deck will be made available on our website immediately after this presentation. There is an opportunity for questions at the end of the presentation. You can either do that by typing questions in or by doing it sort of traditionally using your mouth.
I would encourage you to do them verbally because typed questions always leave gaps in understanding and nuancing. I always feel very uncomfortable responding to typed questions because I don't always know if I've answered the question properly. With that, I'd like to start the presentation. Camilla's driving this. We seem to be on the summary page. Production for the quarter, as previously announced, was just over 16,100 ounces. Substantially down from the 18,500 ounces that we achieved in the first quarter of 2022.
Average gold price virtually unchanged. The fall in revenue was pretty much due to lower production and lower sales, movements in working capital. Gross profit substantially down from nearly $17 million to just less than $6 million. The net loss or profit attributable to shareholders went from a $6 million profit in the first quarter of 2022 to a $5 million loss in this quarter just finished. Correspondingly, a substantial reduction in earnings and loss per share. Dividend maintained at $0.14. A very substantial, instead of having a $10 million inflow from operating activities, in this quarter, we had about a $1 million outflow. We can move down, Camilla. Right.
In terms of overview, this, it should be pointed out, this is the first quarter that reflects our ownership of Bilboes. In any event, that was gonna have a short-term negative effect on our financial performance because it was always intended that we would start work at Bilboes on the oxide, stripping material to expose the oxide material and then only start production towards the very end of the quarter. That was always intended. I think the difference now is that we've been disappointed with the grade in some of the target mining areas, and so we've had to revise our guidance for that. Victor will talk in a bit more detail about the difficulties at Bilboes oxides. At Blanket, production was below plan, mainly due to tonnes.
When that was due to equipment failures and logistical issues, again, which Dana can talk about in a moment. There is evidence of some improvement in production in April, where on a daily basis, we achieved about 80,000 ounces per annum on an annualized rate. Operating costs at Blanket were higher than expected, and that's mainly due to increased higher than expected electricity consumption, and that was also affected by an increase in the tariff that we pay for grid power.
The solar plant was commissioned in the quarter, and that generates slightly more power than we'd expected, and we are seeing a benefit from that, both in terms of a reduce in the weighted average cost of power, and also it displaces quite expensive diesel. We started work on the feasibility study for the main Bilboes sulfide project, which we can talk about in a moment. We completed a fundraise in Europe, South Africa and Zimbabwe, which raised a total of about $16.6 million. Most of that was received in the quarter, and then about $5 million was received immediately after the end of the quarter. We stand behind our production guidance of Blanket for the year, of between 75,000 and 80,000 ounces.
Also, it's not on here, but we'll mention it later. We also reiterate our on-mine cost guidance for Blanket. I'll ask Dana to talk about this in a bit more detail, but look at the top graph in particular. The light line, the sort of light orange line, that shows tonnes, and you can see that the tonnes was substantially down in the quarter. And grade was also down somewhat. The lower grade was broadly as expected. We had expected the grade to be lower in the quarter, and so we weren't particularly disappointed by that. The real factor that drove disappointing production was tonnes. Perhaps I'd like to ask Dana to put a bit more context on why the tons were lower than we'd expected. Dana, could you help us?
Right. Normally in the first quarter, you struggle to get going after Christmas, especially when last year we showed a buildup of another 20% to achieve our 80,000 ounces. Added to that, we had our main winder at four shaft that failed on us, it was electrical motor commutator that failed, which resulted in the motor slipping gear brushes prematurely failing. We during the COVID era, we got spares in. We had critical spares, we couldn't get it from the preferred company. When we installed these brushes, we picked up issues with the winder where it kept on tripping.
We had to rush out and have other brushes made up, which we then installed. When we installed it, then we had some communication problems with our electronic cards. You know, that cost us a couple of days to sort that out. The net result was that we lost 12 days of production due to that because we couldn't hoist them. At the same time, at our new shaft, Central Shaft, we had an ore cart that was hanging up. It was a perfect storm at both shafts that we couldn't hoist. Now part of this is a question was asked before this. How do we know this won't happen again?
The 4 Shaft has been operating for the last 14 years. It's the first time in 14 years that we picked up an issue like this. It was unfortunate. It's not something that happens every day. With, towards the end of the year, 50% of our production will come via Central Shaft. The pressure on 4 Shaft will just start getting less and less and less. You know, going forward, especially from the second half of the year, we will basically have 4 Shaft as 50% spare while Central Shaft will only run at about a third of its capacity. It will put us in a much better position if something similar would happen.
Look, if anyone's got any further questions on that, we can come back to that towards the, you know, after we've been through the formal presentation. Can we, can we just move on and talk about, and talk about Bilboes? I'd just like to put the Bilboes thing, the Bilboes in context. We bought Bilboes entirely predicated on a large over 2 million ounce, sulfide resource at a grade of over 2 gms a ton. It's a large high grade resource. There's nothing has happened at Bilboes to dent our confidence in that resource. The oxide project was purely a small short-term project, over the course of the next two and a half years, during which period we might have produced about 50,000 ounces.
Primarily to generate cash so that we can maintain the operating integrity of the existing Bilboes business, which employs about 150 people, pending the commencement of work on the main sulfide project. Now, as Vic can, as Victor's gonna explain, we went off, we did the pre-stripping in the quarter to expose the first target mining area. At that area, the grades were disappointing, so we had to move to other areas. Our approach to the Bilboes oxide project is that we are now engaged in our own, quite intensive, evaluation drilling at the next target areas before we commit to waste stripping, so that we can improve the confidence level of those target mining areas before we start expending money.
By the end of this month, so by the end of May, we will have completed that evaluation drilling, which will give us a runway out to the end of September. Over the course of from June and July onwards, we'll then do further drilling to extend that mine life horizon for a longer period of time. At this stage, whilst we have withdrawn guidance for the Bilboes oxide project. At this stage, we believe it will broadly wash its face. Might make a small operating contribution.
At the same time, we're also now beginning to evaluate the ability to identify oxide resources at the Motapa property, which is immediately adjacent right next door to Bilboes, which we could use to extend the life of that oxide mining operation. What I'd like Victor specifically to address is a question that we received by email in the last day or so, which is it to specifically address the issue as to, you know, how can people be confident that the difficulties we found on the oxide resource don't read across to the sulfide resource? Victor, can you just comment on that, please?
Thank you, Mark. The company is very confident on the sulfide mineral resource estimates. The mineral resource estimates were estimated following extensive drilling amounting to just over 93,000 meters over four distinct phases. The drilling for sulfide resource is considered to be all new drilling, and the initial drilling was commenced in 1994 and managed by Anglo American. That was 17,000 meters of drilling out of the 93,000. The balance of that is drilling, which actually started from 2010. We are fairly confident about that drilling because that drilling was actually done in compliance with some guidelines. The rock chips and cores from the last three phases of sulfide resource drilling is being kept at the mine courtyard for reference.
The mineral resource estimates were compiled in compliance with the revision, with the definitions and guidelines for the reporting of exploration information, mineral resources and mineral reserves in Canada. That is the CIM Standards on Mineral Resources and Reserves Definition and Guidelines 2014. These mineral resource estimates also adhere to the rules and policies of the National Instrument 43-101, Standards of Disclosure for Mineral Projects, Form 43-101F1, and Companion Policy 43-101CP.
The resource classification follows the Canadian Institute of Mining, Metallurgy and Petroleum's definition for classification of inferred, indicated, and measured mineral resources. Classification of the estimated resources use the checklist approach, where various criteria were assessed to determine the confidence in continuing of geology and grades. The checklist included the following: data quality and integrity, data spacing for confidence in geological interpretations and grade interpolation, confidence in the geological interpretation from a regional and local perspective, and how that interpretation influences the controls for sulfide mineralization. Then geostatistical confidence in grade continuity and geostatistical parameters such as kriging, variance, kriging efficiency, and search distances to measure the relative confidence in the block estimates. Those estimates were checked by an independent CP and deemed compliant and accurate for the purpose of the feasibility study.
We are confident that our due diligence on the Bilbo sulfide project was done properly, and we stand by our decision on Bilbo's sulfide project.
Good. Thank you for that. I think the critical point is that the work that had been done on the disappointing oxide project was work that had been done many, many years previously, not by the existing vendor, not by the Bilboes's vendors. It was old information that had been inherited. Again, I just wanna put this oxide thing into context. Again, we can come back to that with any further questions if anybody wants to raise them later on. Can I ask? Sorry, Victor.
I suppose, Mark.
Yeah.
I suppose what I can also just add is that when Caledonia was purchasing Bilboes, the transaction was entirely based on the sulfide project.
Yeah.
The oxide were not part of that valuation, and it was like, a bonus in terms of the stripping. Because you were always going to come up with the oxides as you strip, and you treat them with the existing on the existing heap leach pads.
Yes, it's fair to say that our economic evaluation of Bilboes was based purely on the sulfides and nothing on the oxides at all. The oxides, as Victor says, was a cheeky freebie, which is good for us but less good for Victor as a vendor. Okay, we can come back to Bilboes again if anybody's got any further questions. Can I ask Chester to just canter through the financials, if you could please, Chester?
Sure. Thanks, Mark. With proper profit and loss statement between our existing flagship operations at Blanket, and when we started up, oxide project at Bilboes. It's positive to see that in the challenging quarter while introducing the new oxide startup operation, Blanket Mine remained profitable. Cash generator and all of our business remained robust with all these uncontrollable challenges we encountered at Blanket. Further, I was delighted to see productions Blanket in April and May attain Blanket's daily production running rate to achieve a production of between 77,000 and 90,000 ounces per annum. Current production rate profitability is also expected to improve in 2023.
Oxide production came late and the costs early in the quarter. As shared by Victor be shared by Victor's plan to be cash neutral and cover costs and further increase our group profitability levels when we achieve this. Blanket Mine, as you can see at the bottom, contributes $500 of accounting profits in Q1. When non-cash items and working capital fluctuations are ignored, generated approximately $8 million to our business. This shows that Blanket-
Chester, can I just interject there? The critical thing here is that clearly revenue is down from $35 million to $29 million because of lower production. Production costs up from $13.7 million to $16.1 million. Between you and Dana, could you just explain the reason why that's gone up? Primarily it is electricity. Could you just talk about that a bit?
Sure. Dana, do you wanna start or should I? Okay. Looking at the production numbers, it follows next. Our electricity costs at the Blanket Mine increased. That's partly due to additional usage and due to rate increases experienced in the quarter. We've subsequent to the quarter engaged in contract with IEUG. That's a consortium that imports power to Zimbabwe that gives us a lower rate, and we expect to get a benefit of approximately $150,000 per quarter. That's not included in these numbers. You'll see that going forward. We're also encouraging further initiatives via our operators to look at our kilowatt-hours usage as we move more towards the central shaft. We obtain our production in the east wings and less towards using the 4 shaft and Jethro Shaft. Reduce our kilowatt-hour usage.
What is not evident in our electricity costs on an on-mine cost basis is about $434,000 that we've saved by starting up the solar project. We're quite happy to see that that's operating slightly better than what we expected. Further, I don't know, Dana, if you wanna expand on the electricity side.
I think it's important to note as well that when we did the budget, with what happened in Ukraine, dollar inflation, as we know, or inflation worldwide went up. Our labor cost went up as well, where before we could get away with a, sort of a very stable working cost as far as labor is concerned. We gave our people a 4.5% increase. Added to that, in the upper section, the 1 section, we had some sliding where we had a porting in some of the slopes that we tried to undercut, and it just kept on coming down. Those big rocks blocked our draw points. We went through a period where we had to do a lot of secondary blasting, which also cost us as far as exposures is concerned. That also contributed to the higher cost.
Maybe to add to labor, Dana. You can see higher job creation levels if you compare it to the prior quarter. That's due to the ramp up of the ounces. That's not evident in quarter one 2022. We've added some to our labor force, and that helps us to increase and maintain up to the 80,000 ounce level.
Correct.
If we can move on to the next slide. You can see the breaking costs. Labor and staffing went up, as Peter said. It's also encouraging to see that we are paying our labor force a fair wage, that's good to see. We're paying them 100% in U.S. dollars. Further, electricity we've spoken about. We are planning to reduce that electricity cost with better rates of payment from the energy initiatives implemented with IEUG, and we have seen that realized in April. With all those oxides costs, we are looking at if turning those operations around and becoming cash neutral. Can you move to the next slide?
Just before you move on, there was a question. This isn't really about the financials, but as you mentioned, the IEUG. The IEUG is the Intensive Energy User Group, which is an initiative that's been set up under the auspices of the president. The aim of the IEUG is to allow large scale users such as Blanket to import power directly from outside the country. Usually Zambia or Mozambique, and then wheel that power through the Zimbabwe grid to, you know, to us. We started using that in April, first of April. We are seeing a reduction in tariff. At this stage I don't know if we're seeing any benefit in terms of a reduction in load shedding. Dana, have you got a view as to whether we're incurring less load shedding so far?
Yeah. We should actually start seeing it from next month, Mark.
The question was specifically, even if you're getting juice coming in from Zambia or Mozambique, you're still at risk with the Zimbabwe grid. Yes, we are. We can't fix the Zimbabwe grid. It is fair to say that the approach the Zimbabwean authorities is generally to prefer industrial users to domestic users, unlike in South Africa. Dana, could you just comment on the new line, the Umzingwane line that we've built?
Yeah.
Sort of even.
We with ZESA, we upgraded extra line that comes in, which give us an extra 6 MVA. That line we are busy connecting directly to our winders at central shaft. Apart from that, you know, we've got the solar farm, and then we've got 16 MVA of generator capacity. We again, we've got a lot more flexibility and to deal with the load shedding. If I look back at the question that was asked, Mark, there's nothing in the contract that says that ZESA are allowed to interrupt or take the power that we import. There's nothing like that.
Yeah, I think the question was more generally, you know...
Yeah.
If the grid collapses, the grid collapses. There's nothing we can do about it.
Yeah.
Well, whilst, let's just deal with this electricity situation whilst we're talking about it. Victor, could you just give a comment as to where Bilboes is in terms of the grid, and how Bilboes is situated in terms of, you know, its grid supply?
Okay. Bilboes is more towards the north. At the moment, in terms of the sulfide project, we've budgeted to build a new line, a direct line, coming from a substation. I think that line will be about 75 kms or so. However, in the last two years or so, the Zimbabwe Electricity Transmission and Distribution Company has been building a line which is coming direct from Hwange Power Station. As you know, at Hwange Power Station, they've constructed three generators, which will generate about 600 megawatts. That line passes very close to the Bilboes operations. We've gotten a chance, an alternative, to actually connect from a much closer-Line, plus also electricity supply, which is closer to Hwange is much more reliable maybe than compared to the south of the country.
Yeah. I think the upshot is that Blanket's not geographically not a great place for the grid. Bilboes is much better positioned for the grid than Blanket. Sorry. We had a bit of a departure onto, on electricity, but I just thought whilst we were talking about electricity, we should deal with it. Sorry to interrupt you, Chester. Do you wanna continue?
Sure. Turn the page, please. Administrative expenses increased due to a one-off cost of approximately $3.1 million paid to advisors on acquiring Bilboes Sulfides project. Bilboes Sulfide project is well worth the spending. It's also important to note that it's a one-off cost. Bilboes is expected to be highly profitable and much bigger than Blanket. Other than advisory fees, we had small increases in our uptick in travel post COVID-19 lockdowns, and other than that, it's pretty comparable to the previous quarter. We move on to cost of ounce. Here you can see a large portion of our costs was due to the oxide startup, and that affected our on-mine costs. We plan to turn the oxide cash neutral.
Energy savings, as we mentioned, through the IEG is expected to reduce our energy costs and higher production levels in future quarters that we have seen realized both quarters and is expected to lower the on-mine costs for the remainder of 2023. The on-mine production cost guidance is Blanket. Current crux of our business was set at $770 per ounce to $815 per ounce and ranks amongst the low end of the spectrum when compared to our industry peers. We move on to tax. Our effective tax rate was high in the quarter due to the oxide operating costs and acquisition fees totaling about $6.4 million, all being non-deductible. These costs are not best spent for tax purposes. A future benefit of these assessed losses are not reflected in the numbers.
In future, we'll be able to reap the benefit of assessed losses in our oxide project as it becomes profitable. To cash flow. Blanket said contributed approximately $8 million to the cash flows before working capital swings. This proves Blanket remains strong and is expected to improve throughout this year. This has reduced the once off advisory fees and the completion of the Bilboes Sulfide project and the negative cash flows of the oxide startup operation. We've issued solar bonds at the value of $7 million. Four and a half million of that was issued before quarter one end and raised $16 million equity raises, of which $5 million was not reflected in these numbers. The bullion receivable outstanding at quarter end of $6.7 million, as was received post-quarter end.
In total, these mentioned cash flows represent approximately $14 million that arrived in our bank account post-quarter end. Further normalization of our bullion receivable due to our new sales mechanism should improve our deliveries and our cash flows and make our deliveries less lumpy, along with the cash flows that follows that. Moving on to the balance sheet. Non-current assets included approximately $70 million due to the acquisition of the sulfide project. Current assets increased due to the increased cash availability in the group. Current liabilities include approximately $4 million of liabilities not settled in cash. It was settled by the issuance of shares post year-end and deferred consideration for all Bilboes. Four and a half million dollars of liabilities was acquired in the Bilboes deal.
I'm also excited to share, there goes my power. Apology. That we expect to make a huge dent in our overdraft facilities by the end of 2023, when we pay off a large portion of our overdrafts, plus the African production guidance levels, our current gold price. We can move over to cash. On this slide, the uptick in our net cash position is evident as we've improved our production at Blanket. You can see the payments continuing to be made, giving an indication of the production profile as claimed at Blanket. Further, we are expected to reduce our borrowings by year-end. Our transfers of cash from Zimbabwe continued normally. This enabled us to maintain the dividend of $0.14 per share per quarter and pay all our related expenditures outside of Zimbabwe.
Chester, just pause there. One of the things that's changed in the course of the last year or so is the availability in Zimbabwe of dollar-denominated debt. On the basis that it's available, we choose to take it. The guiding principle behind it is we don't like to leave dollars sitting in Zimbabwe, and if we can borrow in dollars in Zimbabwe, we will do. As Chester said, over the course of the year, we do make provision to repay about $10 million of these overdrafts. You know, if they continue to be available, we'll keep them in situ and use the cash elsewhere in the business. It's just worth noting that. I just wanna be absolutely clear, we are not accumulating a pile of local Zimbabwe dollars for which we have no use and which we can't remit.
I think that very much wraps up the finance segment. Should we move over to other matters?
Just a few other matters. Just on the Bilbo- on the sulfides, we started working earnest on that in April. Initially, we're doing a series of high-level studies, three high-level studies, which I would The overall objective is to achieve a production rate of 170,000 ounces a year. There are various ways to do that, we're looking at three approaches. The first I'd call like a hop, skip, and a jump. The second would be a hop and a skip, and the third one would just be a jump straight to 170,000 ounces a year. What we're doing is we're balancing the slower growth with a more achievable funding profile.
It'll be slower growth, but by minimizing dilution. I mean, the overall objective is to identify the outcome that maximizes the uplift in NPV per share. My expectation would be that the big, the single jump project will probably give the best return, but that may be difficult in terms of funding. Maybe we have to do a two-stage process. At this stage, we're looking at all realistic options and then we'll identify the one that works best. The idea, I think, at this stage is that we should hopefully have got the bankable feasibility study completed within the first quarter of next year. That's very much ongoing.
As Chester mentioned, we have started the direct export of gold. In 2022, the regulations changed such that there's a policy announcement which allowed people like us to export gold ourselves. The policy announcement, it took a long time, about 6 months, to convert that into practical steps that were acceptable to the Zimbabwean authorities. We were very pleased in early April that we were able to make our first deliveries of gold to a refiner outside Zimbabwe. We export to a refiner in Dubai. The most recent export was done on Sunday, and we received payments on Monday in US dollars directly into our Zimbabwean bank account. That considerably improves our ability, our cash.
It takes the lumpiness out of our cash flows. Whilst we've never really had a significant difficulty getting paid by Fidelity, it does address a sort of longstanding shareholder concern about the credit risk. That's good. We raised equity in March and early April. We raised about $16 million. We were surprised at the strength and depth of demand in Zimbabwe, and we'd always intended that the Vic Falls listing was really only there to, we only secured it to take advantage of various concessions. Actually, it is a real living source of equity on a competitive basis. That's a, an issue of, quite, it comes as quite a pleasant surprise to us.
Also, as Chester mentioned, we're issuing loan notes from the solar vehicle. We did $4.5 million in the quarter, and then about $2.5 million immediately after the quarter. That is purely to sort of this housekeeping to make the capital structure of the solar vehicle more in accordance with what it should be for a company of that nature, which has got a high degree of predictable, very predictable cash flows. Those are the other matters. In terms of outlook, we, as I've already said, we reiterate our production guidance for 2023 of 75,000-80,000 ounces. We reiterate Blanket's online guidance of $770-$850 an ounce.
We've withdrawn guidance both in terms of production and costs for Bilboes because of the uncertainty. Clearly, in due course, Bilboes will have an effect on all-in sustaining costs. Pretending that Bilboes didn't exist, we're looking at an all-in sustaining cost for Blanket of between $935 and $1,035 an ounce. As I mentioned, we expect the final feasibility study for Bilboes to be completed in the first quarter of 2024. We've got board approval now to commence the first phase of an initial drilling campaign at Motapa, initially focused on looking for oxides to supplement what we're doing at Bilboes.
With a clear trajectory to then move into the sulfides with a view to identifying a substantial sulfide resource, which will complement what we have at Bilboes. I think that brings the formal part of the presentation to an end. Can we open this to questions, please? Camilla, a re the lines open or?
I am just gonna allow to talk here.
Oh, I can see one from [Damian Cameron].
Yeah.
Okay.
Yeah.
Can you hear me?
He's unmuted. Yeah.
Cool. Thank you. Thank you for the presentation. I thought that's very comprehensive, a very good rundown. I suppose a couple of questions. I mean, profits, I mean, obviously revenues and profits seem to have encountered pretty much every possible headwind you can imagine in this first quarter. I can make a judgment on which one of the headwinds are kinda one-off, which are ongoing, but I was wondering what your perspective was on which headwinds are gonna kinda continue throughout the year.
I think we got our hands around production. Electricity, the effect of higher than expected electricity consumption will continue for some time until we can rationalize the use of all the infrastructure that we're using. By that I mean, until we can actually start closing down things like the number four shaft. We are now beginning to see benefits in terms of a lower tariff. The cash drain that we've and now we're really, really thinking cash terms. The cash drain that we've experienced at the Bilboes should be stemmed sort of June, July this year. We can deal with that we can deal with that. If that answers your question.
Okay. Thank you. The second question was, you guided the on-mine cost at Blanket to be between $770 and $850 for this year, which is obviously above the $735 cost for full year 2022. This kind of suggests the remaining quarters are gonna return to a prior cost level or better, given how much higher Q1 was?
Quite, quite right. Quite right. It does, it does, it does, don't forget a large proportion of the cost of Blanket is fixed. Just by increasing production, there's a sort of a virtuous circle. More production means that your the marginal cost per ounce is quite low, so that does bring things down. You're quite right, we are expecting to see an improvement. Having said that, you know, we have seen, as Dana was saying, we have seen inflationary pressure both from wages and salaries and input costs like cyanide and explosives and what have you.
Okay. No, thank you.
Even that guidance range that we've reiterated is higher than what we incurred in 2022, and there's good reasons for that.
Okay. Actually, a third question just occurred to me is that obviously with Blanket, you're guiding production of 75,000-80,000 ounces this year. Obviously 80,000 ounces was something that's achieved in a central shaft. Is there any scope for going higher than that from Blanket in terms of, you know, there's drilling exploration going on there or is all of your efforts being focused on the other sites?
No, I'll let you talk about that.
Right. We lost Mark. He's back.
Mm-hmm.
We must remember that, you know, Blanket was in a build-up phase for the last six years, we achieved our target of 80,000 ounces. Normally when you're in the build-up phase, you develop like hell and open up resources as quick as possible. You want to create flexibility, that's what we need to focus on now. We want to create flexibility, do a lot of development and be in a much better position to deal with those ship moments, like when staffs go unpaid and so on. Ideally you want to have, you know, at least two years of reserves ahead of you, create that flexibility and carry on.
At the moment I don't foresee that we're going to increase on the 80,000 ounces, especially for that. If we wanna start doing more, there's still a lot of areas that the upside potential for exploration at Blanket. If we start looking at that and it looks promising and we want to look at maybe increase, we'll have to then expand the plant because the plant is running at full capacity. Once you start looking at that, then it's a whole new business case on its own. We're simply running at full capacity and that's it.
Okay. Right. I guess the capacity that you've got at central shaft and this kind of thing cannot be utilized at the moment.
Yeah. The central shaft has surplus capacity. What Dana is saying is, if we wanted to take production materially above 80, we'd have to start expanding things like the CIL tanks, the mills and that sort of stuff. Which can be done, but it's got a cost attaching to it. Also, you know, we're still I think we're still playing catch up with the costs associated with increasing the headcount at the mine. Because don't forget, we accommodate all those people on our village, which is now quite full. It comes down to basic stuff like if we, if we increase production, we need more people, we need more houses, we need to do we need to process more sewage, we need more, more water.
All these costs build, get, add up. Okay?
Sure. Really, I guess, yeah, I mean, really Blanket is kind of at a steady state hopefully, and it's the other, it's the other sites that will provide the upside.
Yes. I think for material purposes, that's correct. Yeah.
Great. Thank you. That's all my questions.
Okay. I don't see any more questions from anybody else.
No. [Andy's] got a question.
Who has?
I've got a question concerning Bilboes. The target mining rate is, what? Around 20,000 ounces, 20,000 tons per month? What's the head grade?
What, the oxides?
Yes. That oxide.
We're not giving guidance on the oxides.
You mentioned that you wanna be cash flow neutral, right?
Yeah, but that's as far as we're going. That's as far as we're going. We're not giving guidance on the oxides. We've made that very clear. If I start giving, having told the market I'm not giving guidance on oxides, and then I start giving guidance on the oxides, that, I can't do that. Clearly we have our own internal expectations, but we will, we will manage ourselves, as far as possible to be cash neutral, and that comes down to balancing the costs of the business with the, obviously with the revenues. That one, we can't go further than that, I'm afraid.
Okay. Well, the costs for April were $1.6 million. Is that sort of the typical cost that you expect at Bilboes?
Really, look, we're not giving any further guidance. We've already said this. We've been very clear. Sorry to be unhelpful, I mean, we have withdrawn guidance in terms of costs and production from Bilboes oxides. I can't go further than that.
Okay. Thank you.
Any further questions?
Yeah. There's one here from Alan Ground.
Okay.
Okay. Thank you very much for your presentation and for answering three of my questions as you presented. I do have a question about the Motapa. You obviously bought that resource with a view to developing alongside Bilboes. Is there any early view based on historical drilling about how the sulfide resources might be developed there? Or is it still too early stage to get any idea?
It is very early stage. Probably Victor, do you wanna comment on that?
Thank you, Mark. Like, before, Anglo American worked on this property, and they did a little bit of drilling, but those results are just too old. In terms of, relying on them, for guidance, I think it would be wrong to give any impression. What we do know is that they are sulfides because there was some drilling which took place there. Our idea is that, this is an exploration property, which is what we reported when we bought the property. It's an exploration property. We want to do exploration on it. We believe in the long term, when you combine it with Bilboes, you can have a much longer life of mine. Also you can actually increase your production. That, in terms of, the quantity of production will be much higher than what we are anticipating from Bilboes.
Yeah. At this stage it's just too early to say whether we would. I mean, the Bilboes project has got various mining areas. Some close by and some further away. In due course, if we find more material quickly at Motapa, it may be that we in due course rephase the accessing of some of the more remote mining areas at Bilboes, particularly Bubi, and replace those with things from Motapa. It's just far too early to be, it's far too early to go down that route. As Victor says, it could either be a completely... It could allow us to increase production above 170,000 and/or allow us to extend the life of production beyond the initial 10 years. It could be both. Frankly, we just need to go drilling before we can start talking about that properly.
Okay. Thank you for that answer. One question I'd sent in by email, was the, a couple of years ago, there'd been talk about extending ownership of Blanket-.
Oh, yeah. Yeah
... beyond 64%.
I forgot about that. Yeah.
Yeah.
That is the idea, as you know, we used to have 49%. We increased it to 64% when we bought the 15% of Bilboes that was held by Fremiro. We committed to keeping the workers in there for 10% and the community in there for 10%. There is a stake of 16% that's held, used to be held by something called the National Indigenisation and Economic Empowerment Fund, which is a sort of a government entity. That fund under the new government. When government changed from Mugabe to Mnangagwa, that whole Indigenisation thing disappeared. The ownership of Blanket has been sort of moved from pillar to post within the government structures.
For some time we found it very difficult to actually find who to engage with at government, to have the sorts of discussions that you're outlining. What's happened now is that there appears to have been set up something called, the Sovereign Wealth Fund. This is one of the assets in the Sovereign Wealth Fund. I think we've got to be clear. So we've got clarity as to where this asset sits now. I think we've got to understand that any decision as to what happens with the Sovereign Wealth Fund's interest in Blanket Mine will largely be political. We are within a few months of an election, so you're just not gonna get that sort of political direction that we need.
For the time being, it's not something I can see happening, but it is something that we do hope to do because it would give the Sovereign Wealth Fund a much broader interest across the group. Rather than just focusing on Blanket, it would give them a much better perspective across the whole group and give them, as a shareholder in Caledonia, it would give them gold congruence with all Caledonia shareholders, not just as a shareholder of Blanket. It's on the table, but it's not gonna move very far very quickly, I'm afraid.
Okay. Thank you for that.
Mark, just to add to that, in terms of where that asset sits at the moment, it sits in the Ministry of Industry and Trade.
Yeah.
Right? In terms of the reorganization, whether it ends up at the Mutapa Investment Fund, we expect it to end up at the Mutapa Investment Fund. At the moment, it sits in the Ministry of Industry.
Okay.
Yeah.
Thank you.
Okay. Do you wanna pause for any further questions? Can you see anything, Camilla?
No. I don't think there are any more questions.
Okay. Well, with that, thank you all for joining. We'll have another call at the end of our Q2 results, which we'll put out in the middle of August, and hopefully it'll be rather more cheerful than the first quarter. Thank you very much for your attendance.
Sure. Thanks, Mark. Thanks, everyone.