Operator: Welcome to the Caledonia Mining Q2 trading update. We are joined by Mark Learmonth and the management team. Mark, over to you.
Mark Learmonth: 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. Primarily to address worker fatigue, but it also means that we have increased our blasting days by 18%, and that is flowing through into increased run-of-mine production. From September onwards, we will be processing a portion of that incremental production through the Lima plant, which we will repurpose. Then into 2027, we will be spending some money, as you will hear shortly, to upgrade the main metallurgical plant to process all of that existing run-of-mine material through the main plant. The end of this month, the end of August, we will have completed an upgrade to the Alluvion plant, which will allow us to process about 40 tons of material that we have accumulated over the last 18 months or so at a grade of 6 or 700 grams a ton. So that will give us an extra 1,200 ounces across the months of September, October, November, December. Q2 was well ahead of Q1 on the back of the high-grade access. Should we move on to the next page? Traditional graphs, which we have seen before. I think the key things I would draw out here are the top graph, the blue line, the stability that we have experienced now for many quarters, and that really is because of the stockpile that we developed and we have been running. Fair to say, during this quarter, Q2, the stockpile was run down to zero and now we have started to rebuild that since we introduced the new shift system in June. The bottom line in that top graph is the grade, and you can see how the grade came down from Q2 2025, reached a low point in the first quarter, and has now recovered. As I say, in the second quarter, running at 2.88 grams a ton, target for the remainder of the year on average is about 3.16, and we are running at that level. Then the bottom graph just pulls it all together in terms of looking at the recovery and the ounces produced. It is fair to say that as the grade falls, your recovery falls. The tail grade, we cannot do much better than a tail grade of 0.2 grams a ton. So frankly, if the head grade goes down and the tail grade stays at 0.2, that means that your recovery goes down. So it is good to see that recovery bounce back again. Move on. That is just an overview of the operations. It all comes down to grade. With that, I will hand over to Ross, who has got quite a lot to cover.
Ross Jerrard: Thank you, Mark, and good afternoon, everyone. Just running through the financial results summary. Up on the table, you can see the impact of both gold sold and gold ounces produced. We were down for both the 3 months and the 6 months in terms of ounces. But we did benefit from a higher average realized gold price of $4,259 an ounce. That was a 34% increase quarter-on-quarter. We did produce some healthy revenues. As we go through our cost profile, that is one of the impacts in terms of higher royalties driven by those higher revenues. I will take a bit of time to go through our cost updates in terms of where we ended up. But the key message is really our on-mine costs were largely in line with where we had budgeted and we are managing to. In absolute terms, whilst those costs are shown to be up, there are some one-off or abnormal items that I will talk you through in terms of why those transactions occurred. But broadly, we are very happy with our mine costs and the teams are managing their cost base very well. Those top-line ounces really impacted on our unit metrics in terms of an ounce sold basis. You will see our all-in sustaining and our on-mine cost per ounce sold were largely up. But there were some quite significant increases on our ounce profile metric. But in absolute terms, we are broadly in line. Going into our financials, we are very happy with our EBITDA. That was up some 28.5% for the 6-month period. As you can see, some healthy numbers going through in terms of free cash flow and ultimate profit and earnings per share. Probably to highlight and remind everybody, our free cash flow number, the comparative period included our solar sale proceeds. That is probably not indicative of a normal operating cycle. But we are very happy in terms of where we ultimately ended up with some $23.8 million worth of profit at the end of the 3-month period and close to $40 million for the 6 months or almost 35% up against the comparative period. If we can move on to the next slide and talk a little bit about the profit and loss. You will see our top-line revenue as indicated. That was really driven by that higher average gold price, albeit that some of our sales ounces were a little bit down. But we are very happy in terms of our ultimate gross profit position, which was up some 17.4% for the 6 months or 16% for the quarter. Royalties were up, but that was driven by that higher top-line performance, and also we did have some shipments during the 6 months. I think there were three shipments over the $5,000 per ounce level, which attracted the higher royalty. But in terms of our production costs, we are up some 15% year-to-date, and I will talk to some of those specific items that went through. There were some timing differences. As already highlighted by Mark, there was a drawdown on the stockpile, and obviously, the costs that are released in terms of those ounces as they are put through, it does have a working capital impact. Below the line in terms of significant movements, probably the one to highlight is the administration expenses. There were some quite significant one-off costs that have related to our advisory fees, particularly on the senior loan note transaction, but our broader financing facility. As we go through Bilboes and our overall strategy, you will see that we have made some significant progress in terms of our funding initiatives. So it is money well spent in terms of those work streams. I will also highlight the fair value gain on our derivative financial instruments. That is financial accounting and some volatility that will go through the P&L, and it does result in some significant movements. I would ask you really to treat those as separate items when you are looking at the P&L, because they are really driven by some quite complex accounting. I have got a couple of slides that I will talk to you a little bit later in the deck. Overall, we are very pleased with our profit for the period. Up some 27% for the three months at $30 million, and up 40% for our six-month period, just shy of $50 million. The tax expense was down, but that was really around the capital gains tax that was paid on the solar in the comparative period. I guess our tax rate and effective tax rate is in line, and we are very happy with that. If we turn to the next slide, please. In terms of cash flows, probably the items to note is really the rolling of our various loan notes. You will see some ins and outs. But actually, there is no movement in terms of our net position there. In terms of pointing out significant movements, you will see the acquisition of our capped call options. The $14.4 million in the six-month period was a one-off item that came through, and equally, you will see the impressive $145 million of proceeds in the convertible loan notes that came through and bulking up our cash at the year-end position, which closed at just shy of $167 or $168 million closing cash, which really puts us in good stead as we move forward in terms of our strategic objectives. If we move to the next slide, you will see our overall liquidity position. We are very pleased with our cash on hand at $171 million. There was bullion on hand of $13.5 million, which was really the ounces that are held on hand and ready for shipment. There was a slight delay on one shipment at the end of the six-month period, which was driven by the demonstrations in Johannesburg. There was a timing difference in terms of ounces that were held as we got them to the refiner. But those were delivered the day after, and it was really driven by timing, so nothing untoward to highlight there. Overall, very pleasing to have a total liquidity of over $200 million as we stand at the end of the June period. A very healthy position as we move forward with the company and the various initiatives. The next slide just talks to our capital structure and debt, and we included that in terms of just summarizing basically our debt structure. What is held at our Caledonia Holdings Zimbabwe level in terms of our loan notes. As I mentioned, those movements that you see were really the successful rolling over of loans in terms of what was expiring. We are not intending to increase or decrease. It's really status quo in terms of those loan notes. What we're wanting to do is allocate those against strategic projects. In terms of our borrowings, we're keeping the facility levels at the same level. We have paid down a large portion of that. We're sitting in a very healthy position in terms of overall funding. In terms of the new convertible bond that sits on the balance sheet, increasing our total consolidated structure up to that $167 million that I'd mentioned previously. That just gives you a picture in terms of overall debt. Taking a bit more of a deep dive into those on-mine costs, if we move to the next slide. We just wanted to highlight in terms of on-mine costs at Blanket. I think it's very important to pull out a few key, I guess, transactions or cost centers. The first one is salaries and wages. These have stayed broadly in line. You can see a 4% movement year to date in terms of base increases, in terms of salaries and wages. Well managed, and we're very happy in terms of that overall cost center. What has moved, however, is the Blanket Employee Trust distribution. Previously, we've had the facilitation loan. Any distributions that are made from Blanket dividends have gone to offset, or a portion of them have gone to offset those facilitation loans, and those have now been paid off. Under IFRS, any distributions that are now made under that arrangement need to be classified as employee costs and sit within production costs. You'll see a big, significant $3.2 million charge going through in this last quarter, which has significantly moved our production costs. It hasn't changed any distributions or anything, and is actually a reflection of a great operation in terms of distributing funds. Unfortunately, it sits within our mine costs and has had quite a material impact and will continue to have a material impact in terms of the optics as we go forward. That is a standalone item. We will be reporting it separately, so everybody will be able to see that and deal with that specific cost or line item independently. The other big movement for the period was the electricity cost, where you'll see that's gone up 25%. This is in fact driven by increased wheeling charges, but our actual consumption has decreased. Again, something that's largely outside of our control, where we've done well in terms of our consumption of electricity, but we've been hit with some increased charges there. Again, another one-off that has hit us in terms of those cost centers. Largely, when you back out those areas, you look at the performance in terms of where we've exited the six-month period, it's really driven by lower grades. Those reduced ounces that have come through, in terms of production, has really hit us in terms of our unit metrics when you look at that on-mine cost metric at the bottom right of the chart, going up some 46% for the period. As that flows through onto the next slide in terms of our all-in sustaining costs, you'll see that the higher on-mine costs that I've just discussed, together with the higher royalty driven by that higher revenue that I mentioned at the start, has really flowed through in terms of our calculation of all-in sustaining costs. Whilst our capital expenditure has been well managed and in line with expectation, those costs of the BETS distribution, higher royalties and some higher administrative expenses, largely driven by those advisor fees and transactions fees for our funding strategy, have all fallen into that all-in sustaining bucket and driven that increase in terms of our overall costs. What does that mean? If we move to the next slide. We have had a look and done a whole 6 plus 6 exercise and looked at our outlook for the end of the year, and it has meant with those costs increasing, there will be classifications as we look towards the end of the year. We have increased our on-mine cash costs per ounce sold, increasing that by $100 from our previous guidance range. The updated guidance range is $1,600 to $1,800. A 6% increase. Our all-in sustaining cost per ounce sold has increased by some $400, up from $2,100 per ounce to $2,500 an ounce at the lower end, and increasing to $2,700 an ounce at the top end of the guidance range. Those are due to the new factors I have just discussed. But we have also introduced some new additional spend, which is indicated in the table below, and that is really around how we expect some of the CapEx to drop this year. We had previously announced in March that there was 133 kV power line project that had been approved by the board, but we had not done our costing and quotes, which have now come through subsequent to that announcement. Of the $14.2 million, $8.1 million is going to drop in 2026. We have included that in the guidance, together with an updated number for our AC/DC configuration, our central shaft rock winder project at $3.1 million. There is also some additional spend in terms of key projects that we do need to deliver. One of them is the housing project, which is fundamental to our core operating activities, which we have included a further $1.3 million. There are some exciting projects that I will leave Craig to discuss in terms of K-Pits and Leaver and our underground development, which again, are key additional spends that we need to deploy in terms of meeting our objectives. I just wanted to talk a little bit more about the CapEx profile. If we move to the next slide, you will see a breakdown in terms of what had previously been guided in terms of CapEx spend against each particular project. Our previous guidance in terms of sustaining capital expenditure was $26.6 million. Introducing the three new initiatives, which you can see indicated by reference B and E. It is the new power line, the AC/DC conversion, and the K-Pits projects, which pushes that CapEx profile up to $48 million. But we have also got updates in terms of our growth capital expenditure. Again, going through our Bilboes development and now having quotes coming through and a better understanding in terms of our, I guess, our deposit requirements, where previously we had factored in that a large deployment of cash was needed upfront in terms of ordering those long-lead items. We have got better financing terms. A lot of that cash has reduced, and we have been able to actually go with deposits and defer some of that cash into the early part of next year. That Bilboes $132 million spend has now been reduced for 2026 to $48 million, with $80-odd million being pushed into the first half of next year. We also have a new Blanket Mine plant upgrade, which is a new project of $3.5 million, which has been updated into the second half of this year. Overall, our CapEx number has moved from $162 million down to $103 million. A large portion of that is the Bilboes spend, which is really a reflection of timing. I will highlight it is not to do with the ability to finance or positioning in terms of the project. It will not delay the project, but it is just a wise or better use of deployment of funds, and it has been a very healthy update for us in terms of us moving forward. If we move to the next slide, please. As mentioned earlier, we do have quite a significant movement in our P&L in terms of the accounting for convertible notes. We are not proposing to go into chapter and verse in terms of the accounting. It is just to highlight that we have some significant movement with these convertible notes. It is driven by IFRS. We have independent valuations done. It is just to remind everybody that we have a split in terms of the accounting for the transaction, where we have a host debt on one side of the senior notes, which is really treated in the amortized cost basis, and we have an embedded derivative, which is a financial liability, on the other side of the transaction, which moves with fair value accounting. It does cause some quite considerable volatility through the P&L. It is fully disclosed. We are across it in terms of where we sit, and I am happy to take a deep dive as we account for it for anybody on the call. I am not proposing to go through each stage now, but just to flag that to your attention, that you will see some quite significant movements, and we will keep everybody briefed in terms of how that is accounted for. The last slide is really to remind everybody that we had the capped call option that was also associated with the convert. If we just move to the last slide, please. The accounting for the capped call is another derivative financial asset, which is also fair value through the profit or loss and provides some volatility and net worth. It does have an impact on the income statement as those fair values are recognized in the income statement each reporting period. Again, if a third-party valuation is coming up with the numbers, are fully disclosed and does provide some quite significant movements as you can see in terms of original cost at $14.4 million and the various fair value movements as we sit and carry a net position of $4.4 million on the balance sheet at the end of the period. Again, happy to take a deep dive and explain that more fully for anybody who would like a bit more detail on that. With that, I will hand across to Victor Gapare, who will talk us through the Bilboes update.
Victor Gapare: Thank you, Ross. Can we move to the next slide, please? Thank you very much. Basically, the message which we want to leave with you today is that Bilboes continues to advance on schedule and remains central to Caledonia's strategy to deliver sustainable long-term growth. What we have seen is that we've done quite some considerable work across various work streams, especially financing, engineering, and development during this last quarter. We completed geotechnical investigations for the process plant site. That also includes the tailing storage facility. We've advanced process plant optimization studies. We almost done with that. We moving on that. We've substantially completed the tender processes and procurement for long lead items. Here we're talking about the milling plant, really the processing plant, some items of the processing plant, and the major earthworks on site. This is going ahead. We've continued to engage with prospective financing providers. Ross will be back in a slide or two to just tell you where we are with that. But basically, what we're seeing is that quite a lot of progress is being made on this project. In terms of people moving on site, we expect the first contractors to be on site around October. We already have accommodation, but we're also starting additional work on accommodation facilities during October. Can we move to the next slide? As far as capital expenditure is concerned, Ross has already explained a few of the items. Year to date, we have spent $3.5 million against a budget of $8.3 million. This is really expenditure on the owner's team. We have recruited the team which will build this mine, our own team, which will be working with our EPCM contractor, DRA Global. That cost of that team, plus also the early work, which really at the beginning of the project is always the front-end engineering design work, which allows you to place orders for equipment. So that's where we've been spending money, really. The forecast for 2026, as Ross has said, is $48 million compared to the $132 million which we had on the budget. As Ross again explained, this is really a timing issue. We've now gone out to tender. We've received firm offers, firm tenders from the various tenderers with our payment terms, and a lot of those require us to pay a deposit, and then the balance of the cost will be paid as contractual milestones are reached. There's really no change in the project timetable, the cost envelope at this stage. Can we move on? The economic analysis, we've highlighted the economical analysis of this project over time, and it still is a very robust project for this company, and this will stand us in good stead in years to come. Can we go to the next slide, please? As far as the funding strategy for the project is concerned, Ross, can you take this on?
Ross Jerrard: Thank you, Victor. We are delighted in terms of providing an update on the funding strategy. You will see the four pillars that we have previously highlighted in terms of our step process, providing the hedge program, doing the convertible, and then have an interim funding facility while we position the project finance facility. The first two steps, as highlighted on the chart, have been delivered. It was important that we put that gold price hedging in place, and that basically hedged our position over the construction period, but provided a floor that supported the cash flows as we went through our discussions with the various banking institutions. You would have seen the delivery of the successful convertible note offering. Again, oversubscribed, and really delivered a great outcome in terms of treasury and positioning us well in terms of our funding initiatives. Those two pillars really meant that we have been able to advance with our banking syndications. The first being the interim funding facility. We have just come off the back of two weeks of bank visits, both with the interim funders and also the project funding institutions, where we had very good due diligence, excuse me, site visits with those institutions across our assets. In terms of our interim funding facility, we have got credit approval from our two co-leader arrangers, and we are working with other syndicate banks in terms of getting that $150 million facility in place. We are well down the track. We are going through all the final DD positions, and we hope that we will or we are planning for that to be closed in late August, early September. So well-positioned in terms of that work stream. In parallel, we have been working with our project finance banks, and again, that process is well underway. We have been very excited in terms of both the appetite and the reaction from those banks. As I mentioned, we have just come off a good visit to Zimbabwe, visiting both government, the assets, and the various management teams in country. So that is running parallel. We had previously indicated in terms of timelines that we felt that it was a little bit further out. So over the next 12 months, we thought that we could deliver that. But off the back of the work streams and how it is advancing, we are certainly planning for that to be closed by the end of the year or early into next year. So over the next to nine months maximum. But we are delighted with the progress, and we are well-positioned in terms of the various discussions that we have at play. If we move to the next slide, we just wanted to give you a quick update in terms of that total funding requirement. So this is an update to a previous slide that we have done in previous updates. On the right, you will see the use of funds and I guess the deployment that we are looking for with a capital cost, but including interest and working capital, looking for the better part of $600 million of funding using that $3,500 per ounce pricing that we have done in terms of our hedging facility. You can see the breakdown of our cash on hand that we now have at the 30th of June of $172 million. Our forecast cash flows from Blanket being $115 million. We are looking for best part of $300 million, just over $300 million in terms of senior debt to other facilities to meet that funding requirement. If we look at the middle chart, we have done that slicing at a price deck of $4,000 per ounce. You can see in terms of where that sits and moving that up slightly, it certainly reduces our senior debt facility down closer to order of $263 odd million. Both charts, we believe, totally achievable. I think we are well on track in terms of our funding work streams, and we are excited about the coming months in terms of making sure that those are closed out and we can really focus on delivering the project. With that, I will hand it across to Craig Harvey.
Craig Harvey: Good afternoon, all. I will take you through some of the exploration highlights that we have been encountering at Caledonia. I think throughout the finance and through some of the CEO's remarks, you have heard the term K-Pits. What is the K-Pits? The K-Pits is an area situated inside the Blanket mining lease area. During this period under review, or basically the last 6 months, we did over 2,000 meters of surface trenching. We did 7,000 meters of reverse circulation drilling. Shallow holes only down to about a depth of about 40 meters, purely to have a look at oxide mineralization potential. What you can see there on the selected drill highlights on the right, we have got oxide grades ranging between 1.5 and 2.5 grams per ton over drill lengths. Those are drill lengths between 15 and call it 25 meters. These are within 40 meters of surface. Below that, pleased to see that the mineralization continues, and very pleased to see what the sulphide grades actually look like as well. We are talking grades of 6 grams a ton over downhole widths of between 7 and 16 meters, all within 40 meters of surface. What we are currently doing is, quite clearly, we have completed our drilling exercise. We are drawing up a resource statement. We are doing metallurgical testing in terms of column testing, various sizes, various heights. We are currently constructing a small heap leach trial test bed to actually test it under conditions similar to what the column tests are, so that we can gauge that it is actually working. Results to date are encouraging. I obviously cannot say anything yet. One of the things that I just want to touch on is kind of those bottom three points. Why this discovery matters? I think for anybody that knows Blanket Mine, there was a whole lot of investment in Central Shaft. We can currently hoist and mine a lot more than what we can mill. Hence, there are some tweaks coming up to the plant in the near future. Still, with this as an external heap leach source, anything that we do here clearly does not need the actual Blanket Mine plant. That is just for the oxide material. Where the zone is situated, it is situated about 200 meters to the east of the closest known ore body that we are mining in the underground section of Blanket. We are currently in the process of laying out some surface drill holes to drill below this area now. We are also looking at drilling from line level, at our Sheet Shaft, which is about 200 meters below surface, to have a look for this area. Quite clearly, 200 meters vertical at quite a fat surface expression of the ore body at sulfide grades like that, it just opens up another whole opportunity. I think I have said it on this call before. One of the things that people that know Blanket should notice is that when you arrive at Blanket, you only see headgear. You do not see open pits. At Bilboes, you see open pits, you do not see headgear. This zone represents only a small portion of ground that we have rights to in terms of the mining license and in terms of our claim areas. In the coming years, this is going to be the model that we are going to follow, and it is going to be the first of many, I am pretty sure of that. If you could move on to the next slide. It is just going to be a recap of Blanket Underground. I just highlighted two intersections in red at the bottom there, the 2409 and the 2408 drill holes. Reminding that it is approximately 280 meters below 34 level, which is our deepest mining level at the moment. That represents four main mining levels. We are currently in the process, we are busy dotting the I's and crossing the T's on a Blanket Mine mineral resource update, which will include surface. You will see the K-Pits numbers there. If you can go onto the next slide. Just to highlight that those holes right at the bottom, 280 meters below our current deepest mining, still have ore body widths of 15 to 30 meters at grades of 2.5 to an off. If you take selected core zones, sort of the mineable zones, we are talking 8 meters wide still at anywhere between 3 and 5 grams per ton. That is very much what we are currently mining in and around 34 level. The takeaway here is that going deeper at Blanket, we are not seeing the ore bodies getting thinner, disappearing, grades dropping or anything like that. In actual fact, we are finding Blanket Seven, a new zone which we have not known before. Way up on the top at the K-Pits, there is a potential new zone. The old lady term Blanket is very far from sort of rolling over and playing dead. There is a lot yet to come. If you can go on to the next section, which we will just deal with Motapa quickly. Again, dotting the I's and crossing the T's. The mineral resource estimate is done. We should be publishing the results of that in the next couple of weeks. It is only based on the drilling results that we did in 2024 and 2025. The 2026 exploration program is ongoing, proceeding very well. It is focusing more on the central and southern shear zone. At the same time, we are continuing trenching. It is proving to be a great exploration tool for us. We have identified some new areas that will come out in an exploration drilling or exploration results release later in the year. But all these results are just underpinning Caledonia's view that Motapa is going to feed into the Bilboes project in some form or fashion, and we'll continue doing the work. So in a nutshell, it's looking good. With that, we'll hand back to our CEO, Mark, to close out.
Mark Learmonth: Thank you, Craig. Look, we've covered a lot of ground. We've taken 45 minutes. So just to draw it all together, the immediate focus by which I mean between now and the end of the year is to build on the success we've had at Blanket in this quarter and get Blanket running sweetly, increase production, improve the cash generation. Clearly, the big focus is Bilboes. Continue to get the funding in place and continue to deliver that project, targeting first production towards the end of 2028 and the first full year in 2029. And then as you've heard from Craig, we've got some very exciting further development and exploration opportunities both at Blanket and at Motapa. So look, we've taken 45 minutes. If we could pause there and open it for questions, please.
Operator: Thanks very much. If I could remind people, if they'd like to ask a question, please do so by raising your hand in the bottom of the screen. We've got our first question is from Nick Dinan. Dinham, sorry. Nick, please go ahead. Nick, please go ahead when you're ready. Nick, if you're ready, you just unmute yourself, and then please go ahead.
Nic Dinham: Sorry. I'm having some speaker issues here. Can you hear me now?
Operator: Yes, can hear you loud and clear, Nick.
Nic Dinham: Okay, great. All right, I am very interested in a couple of questions here around this potential capacity expansion that arises on the mine as a result of the conops. The first question would be, does 18% more blasts at the underground mine result in 18% more potential production, regardless of what happens to the mill?
Mark Learmonth: It should do. Yeah, it is not currently running at 18% uplift in run-of-mine production because we are still opening up new areas. But in the fullness of time, yes, we would expect, as you have said, that maths to work. Yeah.
Nic Dinham: Okay. It sounds like about 1 million tons a year.
Mark Learmonth: Just a bit less. Just a little bit less. About 990. Yes.
Nic Dinham: Okay. Now coming on to the plant itself. There has been a discussion about a ball mill and a tons per hour figure given. There was also a discussion about potentially increasing the crushing. Now you are talking about elution circuits, and you are talking about 200 tons per day. But what is that when it comes to the annual production capabilities of the plant when all of this is bedded down?
Mark Learmonth: Well, you are exactly right. The 200 tons a day that we are going to be putting through Lima is a short-term stop-gap measure, okay? Just to start harvesting some of the increased run-of-mine production as soon as possible. Do not get distracted on that. What happens to the Lima plant after we have upgraded the main number 4 shaft plant is another story. The elution upgrade is something we had planned to do anyway. That is a 3-ton elution vessel, which will come on stream at the end of this month, and that just allows us to reprocess these grits, this activated carbon, which currently we are accumulating and we cannot process. The new expenditure will be at the front end, the crushers. We will be upgrading the crushers. Well, that will increase it to about 990,000 tons a year. We will be spending some money on those crushers. Then the back end, the CIL, we need to put another CIL tank in. This one will be about twice the size of the existing tanks. That is so that we can keep the residence time at about 40 hours, otherwise we end up losing recovery. The ball mill, we have put in a new ball mill, BM3, that was commissioned in June. We are just basically bookending it, upgrading the crushing at the front end and upgrading the CIL at the back end. That will cost about $3.5 million. The actual phasing of that, how that gets phased, that is something we need to work on between now and the end of the year. I can't tell you between right now, at what point all of that work will be implemented so that the main plant will be running at that sort of target rate of 990,000 tons a year. I can't answer that yet. We'll do that by the end of the year, and also when we've been through the full sort of procurement and budgeting exercise. What I can't do is, at this stage, I can't tell you how that will convert into extra ounces in 2027, because at this stage, I don't know the exact timing of the implementation of the crusher and the CIL upgrades.
Nic Dinham: Okay, thank you. The next question to ask a little bit about the capital program. You've upgraded it to $48 million plus some growth CapEx in Blanket again. Yet to date, I can only find about $13 million have been spent in H1. This looks like quite a daunting task to spend the balance of the money, but you're obviously confident you can do it.
Mark Learmonth: Yeah. The spending isn't constrained by lack of funding. The spending has usually been constrained by slow delivery of materials. Case in point would be the AC/DC conversion. No, the elution plant that we're working on at the moment. We found that deliveries of steel have been slower than we expected, and that's a fairly consistent theme across all of our capital projects. It's not a failure on our part in terms of our capacity. It's just the supply chain that gets a bit stretched. But yeah, we're comfortable we can get there.
Nic Dinham: Okay. Thank you. Just a little bit about the new power line that you're proposing. We heard about that previously. You've changed the scheduling of that slightly.
Mark Learmonth: Again, that's because of extraneous events. Things move slower in Zim than we'd like, especially when we're not altogether in control of the project. The 132 kV line that we're putting into Eagle Vulture requires extensive engagement with ZETDC, which can take longer than you'd like. That should be in by about June next year.
Nic Dinham: Okay. The other question that was linked to that was that there was some question marks about how the pricing of power that would come through that line. Obviously, you now expect this enhanced capacity at the plant and at the mine you'll be able to create enough power from that or source enough power from that—
Mark Learmonth: Yeah.
Nic Dinham: —transmission line.
Mark Learmonth: Correct.
Nic Dinham: So—
Mark Learmonth: I mean, that is correct, because Blanket is currently using more power than it is allocated, and we can only get away with that for the time being for as long as the neighboring mine at Vubachikwe is on care and maintenance. If Vubachikwe came off care and maintenance, and I have to say, I see no immediate prospect for that, we would struggle with the amount of power we can get through the existing 33 kV line. With the 132 kV line, that disappears completely. That constraint disappears completely.
Nic Dinham: Have you settled your pricing, now? Apparently there has been a little bit of dispute between the various parties that entered into power supply agreements with you previously.
Mark Learmonth: Yeah. There is a bit of a dispute. I mean, Victor is closer to this than I am, but there is this thing called the Intensive Energy User Group in Zimbabwe, and there is also ZETDC. There seems to be a bit of a dispute between the two of them. We have incurred a higher wheeling charge, which has affected our electricity charge as Ross outlined. That is part of the play between ZESA and ZETDC and IEUG. The power that we would expect to come through the 132 kV line, we would expect that to be somewhat cheaper than we are currently paying. Let us be clear, if we continue to face supply difficulties in country, we can do what I believe some of the other very big users do, I think the platinum producers, which is just to import power directly ourselves. The power tariff, going forwards with the 132 kV has not been finalized, but there is no reason to suggest it will not be cheaper than it is at the moment.
Nic Dinham: Okay. Excellent. I have lots of questions, but I will ask one more I think to close it off. You have interim funding lined up for 2-3 months' time. It almost sounds like from the rate of spending that you think of having to spend over the next period in Bilboes will actually be a lot less than you originally thought. Does this mean you can be a little more relaxed about the interim funding time?
Mark Learmonth: No, we are still continuing. Especially you work at Standard Bank. Standard Bank is one of the core components of that interim funding structure, and there is no way we are going to freewheel on getting that funding together. We will go flat out as quickly as we can to get all that funding in place, even if it means that we get it earlier than we need it. I mean, Ross, do you want to Ross is the CFO. I mean, Ross, do you want to sort of comment on that?
Ross Jerrard: Absolutely. No, it is full steam ahead.
Mark Learmonth: Are you going to go on extended holiday and not raise the money?
Ross Jerrard: No, full steam ahead. We want it all in place, and then we can talk about timing of drawdowns and the like. But, it's—
Nic Dinham: Okay.
Mark Learmonth: Okay. Anything—
Nic Dinham: Thank you very much.
Mark Learmonth: Okay. Thank you.
Operator: Can I just remind people if they would like to ask a question, please do raise your hand, which is in the bottom toolbar. I am just going to pause for a moment whilst we wait for people to ask a question. We have our next question from Yuan Low. Please go ahead. Your line is open.
Yuan Low: Hello, everyone. Thanks for taking my questions, and congratulations on another good result. Can I ask whether you can give any color on things like commitment fees and like the interest rates, tenures and so on, for the interim funding and for the project finance? I know it is probably too early.
Mark Learmonth: Yeah. This stage is too early. All I can say is the two key criteria here are speed. A project of this size and quality, any delay in implementing it will cost money in terms of NPV per share. That is the first thing. The second thing, just to be clear, is that all of these debt funding structures, the cost of those compared to our cost of equity, do not even begin to. Our cost of equity is so eye-wateringly expensive that the cost of the various debt facilities is, I am not saying we are price insensitive, but it is not a major cause for concern. I think you are kind of splitting a hair that just does not need splitting. But at this stage, it is too early to say.
Yuan Low: Oh, that is fine. I am just asking for modeling purposes.
Mark Learmonth: Yeah, sorry.
Yuan Low: All right. For Craig Harvey, I know you have said it is also too early to give us any metallurgical results. I was just curious as to the nature of the refractoriness, if any, at the K-Pits in the sulfides, and potentially the transition zone. Also, why are you wearing a jacket? A heavy jacket.
Mark Learmonth: Just on—
Craig Harvey: I—
Mark Learmonth: Just on the last one. Because he is in Johannesburg and he is bleating about it being cold. That is why he is wearing a jacket.
Craig Harvey: It is freezing. It is freezing. But yes, look, I mean, what I can remind you is that just remember that the Blanket ore bodies that we mine are all free-milling. So I cannot go beyond that. We have done bottle roll testing on our drill core assays, and they are in the press release that we put out there. And bottle roll assays, so that is direct cyanide adsorption for 24 hours, to a fire assay value. We are getting 80%-85%. So I would be expecting on a heap leach to recover a- Yeah, 90%-95% of that.
Yuan Low: Okay. That is great. Thank you very much.
Mark Learmonth: Sorry, Yuan, was your question about the refractory nature of the sulfide, the underlying sulfide?
Yuan Low: Yes, I was asking about that. I was wondering whether it's sulfides, not single refractory, whether it's having carbon, that sort of thing.
Mark Learmonth: Craig, I mean, at this stage, you're able to give any indication as to whether we have any basis to believe that the underlying sulfide could be tricky to treat?
Craig Harvey: No. Look, at this stage, there's nothing that gives an indication, either way, that it's in any way different to the sulfide ores that we mine at Blanket at the moment. There's nothing that's saying that it is refractory, but I don't have any information that I can give you to say that it's not.
Mark Learmonth: But clearly, it's something we will be evaluating.
Craig Harvey: Yeah.
Yuan Low: Okay. Wonderful. Thank you.
Mark Learmonth: Thank you, Yuan.
Operator: Thank you. If I could just remind people, if anybody would like to ask a further question, please do so by raising your hand. I will just wait for one second to allow people to raise their hand. Mark, as we have got no further questions at the moment, please hand back to yourself for any closing remarks.
Mark Learmonth: Okay. Well, thank you all for your time. I think this quarter just finished has been a transitional quarter. From a very disappointing first quarter, I think we have set ourselves up for a very exciting sort of closing half to the year and a very good start to next year as well. Thank you all for your time and your attendance.
Operator: Thanks very much. That concludes the Caledonia Mining Q2 Trading Update. Thank you very much for your time today.