An enhanced feasibility study will be worth the wait for Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) and its investors - that’s the view of analysts at Panmure Liberum.
Caledonia on Monday released results for 2024 and revealed that the feasibility study for the Bilboes project had been extended to evaluate options that could significantly reduce capital costs.
Optimisation options include the potential to export concentrate and relocate the tailings facility, potentially lowering upfront investment needs.
Panmure Liberum analyst Duncan Hay has repeated a ‘buy’ recommendation for the London-listed, Zimbabwe-based gold miner – with an unchanged price target of 2,054p which implies more than 100% upside to the current share price of 990p.
Hay in a note highlighted that envisaged optimisation changes to the project plan (for which the study has been delayed) are expected to result in lower project capital costs, lower operating costs, higher recoveries and, significantly, lower technical risk.
Looking ahead, the analyst added: “Key upcoming events are the Bilboes Feasibility Study and the sale of the 100%-owned solar plant at Blanket for US$22.4m in cash, which is expected to close during the first half of 2025.”
Caledonia’s results
The company described 2024 as ‘a year of significant progress’, financially and operationally, as it reported record annual results.
Operating cash flow totalled $42 million, from $14.8 million, on 76,656 ounces of gold production. Gross revenue rose to $183 million, from $146.3 million in 2023, whilst gross profit increased by 86% to $77 million.
The company, meanwhile, reported a net attributable profit of $17.9 million versus a $7.9 million net loss in the prior year.
On a per-share basis, it reported earnings (adjusted) of 125.2 cents. Meanwhile, shareholders are set to receive a 14 cents per share dividend.
“Our financial performance benefited from a higher gold price environment, which resulted in a significant increase in gross profit and operating cashflows,” chief executive Mark Learmonth said.
CEO sets out vision
Learmonth, meanwhile, highlighted that Caledonia’s strategic vision remains to become a multi-asset, Zimbabwe-focused gold producer – with immediate attention on the Bilboes mine, where extended feasibility work is expected to unearth cost-saving opportunities and enhance project economics.
"Bilboes remains a highly attractive project, and we are confident that we will find the optimal development method to maximise returns for shareholders,” Learmonth added.
He added: “We are confident that by taking a disciplined approach we can develop the project in a way that creates long term value while maintaining financial prudence.”