Caledonia Mining Corporation Plc (CMCL) Earnings Call Transcript & Summary

Good afternoon, everybody. I'm going to talk before we start. Welcome to our Q1 results call for shareholders. So on the call from Caledonia, you've got Steve Curtis, our CEO; and Mark Learmonth, our CFO; Dana Roets, our COO; Maurice Mason our Vice President of Corporate Development, and then myself, Camilla Horsfall, I'm the Vice President of Investor Relations. So if you have any questions, please can you either just write them in the Q&A or raise your hand and we will unmute you at the end of the presentation. So I'm now going to pass you over to Steve and Mark, and they're going to talk through the results.

Thanks, Camilla. Yes. Good afternoon, everybody. We are going to go through a presentation that's being prepared for the Q1 results, and Camilla will share the screen as presentation is obviously available on our website. And if we go through it quickly, you've always got an opportunity to go back and have a look later. So thank you once again for joining us. Obviously, the disclaimer, as usual, and you'll be very familiar with that. So we've got a mixture here of sort of a summary results and then financial results. I'm obviously going to ask Mark to do the financial results. You will have seen these results before, because we announced production numbers at a particular time and we put out the MD&A and the Q1 results. So all of this should be familiar to you, but just to reemphasize the quality of the quarter. Production ounces, 40% up on the previous quarter -- on the comparable quarter, 2021, my apologies; average gold price, nothing in our control there, but we were beneficiaries of a higher gold price, which resulted in revenues 37% up. Pleasingly, gross profit 63% up. And EBITDA, 49% up on the comparable quarter. Also, which Blanket is well known for, all-in sustaining costs show a reduction of 7%. Management, they continued to do a very good job in controlling costs even as we ramp up production. And then profit attributable to shareholders, up 30%. And adjusted earnings per share, and Mark will talk a little bit more about the adjustments to arrive at that number, $0.625 for the quarter. Remembering, we paid $0.14 a quarter in terms of dividend, and therefore, you can see that the business is very cash generative, very profitable, and we are returning some of that to shareholders. Moving on to the next slide. Our safety performance, we have had an excellent track record of safety. But as we've reported previously, we have fortunately had a fatality in February. And as ever, we send our condolences to the family and the colleagues of the deceased. This is a very unfortunate accident and all the necessary follow-up procedures have taken place. But the statistics of lost time injury frequency rates nicely down. And we continue to be 100% focused on safety, especially as we get more and more people on the mine and the higher level of activity, meaning that there are more blasts, there are more open areas, there are more -- there's more training going on. So safety gets the requisite amount of time and attention. And now that COVID has subsided, and we are able to be in closer proximity to each other, the Nyanzvi training program and education program that Dana runs at the mine, that is back and it's operational. And that's very, very important to reinforce safety, the disciplines, the culture. So it's important for you to know that Nyanzvi is back in and running, and we are working very hard on our safety performances. This is just a summary of many of the things that you probably are also familiar with. I've already spoken about the answers. But importantly, the higher production is due to the increased tonnes, and that is critical for us to achieve our 80,000 ounces and an improved grade, which was over and above the average mine grade. But we are very happy that we are sticking to the mining plan, but you get some pleasant surprises and you get some unpleasant surprises in our business. And we are, at the moment, benefiting from higher grade, and we're very happy with that. The Central Shaft continues to contribute, although it's hosting waste. That just frees up all the capacity at the #4 Shaft. And the reason why it's hoisting waste mainly is because there is a lot of development and connecting work between the various levels to the Central Shaft, and it is fast, it's efficient. We can move the waste into that area, and we can then focus on the mining that can be brought -- where the ore can be brought up the #4 Shaft. And at the moment, to achieve the tonnages that we need to get 80,000 ounces, we have pretty much got the capacity to achieve the 80,000 ounce just using 4 Shaft. And as you can see, we've built up a significant stockpile because we're actually mining more than we are milling and crushing and that is because we are in a phase of bringing a new, what we call BM10, which is a new mill into the production process. So at the moment, we are not relaxing on the mining side, and we're building up the stockpile. So at any point in time, if we have a bad day in some aspects, we've got capacity on the surface. We continue to reiterate our guidance for 2022, 73,000 to 80,000 ounces, and the run rates that we have reported in the MD&A for April of nearly 6,800 ounces, if you extrapolate that out, that is just above 81,000 ounces. So we are very proud of a good first quarter, and we are seeing it continue as we go into the second quarter. So hats off to our production team. They are really delivering and making the asset work that they spend 4, 5 years actually putting into operation. Okay. So we're getting into the financial numbers. So this is an appropriate time to hand over to Mark. So Mark, over to you. Thank you.

Thank you, Steve. So very briefly, revenue was up 36%, that's driven largely by a 28% increase in gold sales, as Steve has already mentioned, a 6% higher gold price. Royalty stays fixed at 5% of revenues. Production costs, I've got a bit more detail on that in the next slide. So although the dollar value went up, there was actually a 17% reduction in the on-mine cost per ounce. And depreciation goes up substantially, because don't forget now that we've commissioned the Central Shaft. Unfortunately, we got to depreciate it. So that's gone up a bit. So hence gross profit up by 63% from $10.5 million to just under $17 million. G&A up from $1.6 million to $2.4 million. That's driven by a considerable increase in the quarterly charge for insurance. I've got some more information on that on how the G&A is made up on Slide #2, and also higher advisory expenses in the quarter. Net foreign exchange gain was just under $1 million, and that reflects a considerable step-up in the rate of devaluation of the RTGS dollar against the U.S. dollar in the quarter. Then other $3 million, that includes $1.7 million of mark-to-market costs on the various hedges, $0.5 million on exploration and evaluation asset impairment, and that primarily relates to the decision to walk away from the Connemara North asset and about $400,000 of LTIP costs, and the LTIP cost has increased because our share price was quite strong in the quarter. So that's profit before tax, up by 47%. So the tax expense increased to $4.7 million. I've got more information on that in a moment. But the tax, the income tax and the withholding -- sorry, the income tax, the deferred tax on the underlying profits was relatively stable, but there was a higher withholding tax incurred as we moved more money around the group. Adjusted earnings per share increased from $0.516 to $0.625. And that excludes things like foreign exchange gains, deferred tax, what have you. So a very creditable profit and loss performance. Move down Camilla. More information on production, which largely comprises wages and salaries, consumables and electricity. Wages and salaries increased quite substantially from $4.4 million to $5.9 million. But don't forget, don't forget we've had nearly a 24% increase in headcount at the mine. The mine employs about 2,000 people now, as we've increased personnel levels to cater for the increased rate of production. But also, don't forget that the comparable quarter, Q1 of 2021 was a very poor quarter, only 13,000 ounces. So there was no production bonus attributable to that quarter, whereas clearly, in the first quarter of 2022, it being a good quarter, there was a 12% production bonus. So hence the increase in wages and salaries. Late last year, very late last year, we took the decision to pay our on-mine workers entirely in U.S. dollars, which has cut through sort of an inflationary effect, which arises from the fact that although the local currency rate of inflation in Zimbabwe is extremely high, running about 100%. That's not reflected in the rate of devaluation of the local currency. And so what happens is if you're paying your workers in local currency and then accepting the local inflation rate, once that higher value is then translated back into U.S. dollars, it shows a very substantial increase in dollar-denominated costs. So we cut through that by now paying our workers entirely in U.S. dollars. And we're seeing no appreciable inflation arising from that. Consumables up from $4.2 million to $5.1 million. That's 21% increase. Part of that reflects the increase in tonnes milled. But it is fair to say that during the quarter, we did see price increases in most of the major imports being explosives, drill steels, and cyanide. And it's fair to say that after the end of the quarter, we've seen further price rises. And I think along with all other producers, I think we must prepare ourselves throughout the higher input price environment. Although as I hope, you'll see from this discussion that even if we are seeing inflation consumables, that is for a relatively small components of our overall on-mine cost base. So wages and salaries, we don't expect to see any significant inflation. And also electricity, we believe we've got the electricity costs well under control. Moving onto electricity then. Notwithstanding the higher production, electricity increased from $2.1 million to $2.3 million and that's because late last year, we spend some money to install some more autotap changes at $4 Shaft, which means the in Q1 of this year, we substantially reduced the amount of diesel that we used. Over the course of 2021, the amount of diesel we used increased from about 400,000 liters in the first quarter to about 1.1 million liters in the fourth quarter. And in this quarter, dropped back to about 83,000 liters, offset by obviously and increase in the price of diesel. Having seen that success, we are now intending to -- and also seeing a further deterioration in the quality of the grid power. We are now intending to invest about 3 million more dollars to further protect ourselves from the grid to improve the quality of the grid supply we get and therefore, substantially reduce the cost the amount of diesel that we use, and therefore reduce our overall electricity costs. So we feel like going forward, we got a very good handle on the electricity cost. Work in progress just reflects the movement in building work in progress. And it also in this quarter reflects the buildup of the old stockpile. I don't really think there's much more to explain in terms of production costs other than to say right at the bottom of the table, very pleased to see the on-mine cost per ounce fall from $836 to $698 an ounce. Here, we see the G&A. I think we should all recognize that as the world stumbles out of COVID, we are now going to see an increase in Investor Relations costs and travel costs as the activity levels return to normal. So that explains the increase in Investor Relations and travel. Advisory services, that increased quite significantly and that relates to legal fees and also executive search fees related to replacements of several senior executives. And wages and salaries increased from just over $1 million to about $1.1 million. Again, that reflects increased head count mainly in Johannesburg. As the mines has got bigger and more complex, we are now having to increase the compliments of technical staff in Johannesburg. So people like rock engineers to -- rock engineers to make sure the roofs stays up and people to improve the quality of our mine planning. Shall we move on? So that just pulls together the, as I mentioned, the on-mine costs fall from $836 to $698. And the all-in sustaining costs falls from just over $1,000 an ounce to $968 an ounce. Taxation, the ability for external viewers to see through the tax charge for the group in terms of underlying profitability, it's very, very difficult because the main elements of tax being Zimbabwe income tax, the Zimbabwe deferred tax, calculates on the basis of local currency denominated accounts, whereas we report obviously in the U.S. dollar accounts. It's safe to say that the main components of tax comprise of income tax in Zimbabwe, about $2.9 million, and also deferred tax, just under $1.5 million. If you express that income tax plus deferred tax as a proportion of the overall PBT arising in Zimbabwe, it comes out at about 32% of Zimbabwean tax, and in a corresponding quarters is about 34%. So there is underlying stability in terms of the -- if the tax charge in respect of the underlying profitability. And then on top of that, we incur what I'd called tax leakage, being tax arising in South Africa on intercompany profits, and then also withholding tax arising on the movement from Zimbabwe to South Africa and from Zimbabwe to the U.K. So that explains how the overall tax charge arises at what it is. Cash flow is very strong. Cash flow before working capital increased $9.7 million to $13.5 million. Working capital continued to increase somewhat in the quarter, clearly not as dramatically as in the first quarter 2021, which was adversely affected by anomalies in the payment system. We are working hard to reduce the overall level of working capital and particularly inventory levels and that's going to be a continued area of focus for management. So net cash from operating activities was just $10 million compared to, I'm going to say, eventually very anemic $2 million in the first quarter of 2021. Net investing continues to be high. We spent $10 million in the quarter in Central Shaft and on the solar projects and we do expect to have very high rate of net investment in Q2 and into Q3 before it begins to taper off. The cash position remains strong. I think we've got some more information on cash on the next page, don't we? Later on we have some information. The balance sheet, very strong. Obviously, noncurrent assets increased driven by the rates of capital investments. Current assets, $35 million, cash and cash equivalents of $15.3 million. The non-controlling interest of $21 million, that reflects the 36% minority interest in Blanket Mine. And the noncurrent liabilities of $11.6 million, that's mainly deferred tax and closure provisions. Current liabilities, that's mainly trade and tax payables, which includes $4 million of derivative liabilities. The shows where the cash is. So here we show for the last sort of few quarters or so, the cash split between Zimbabwe, South Africa, the U.K. And you can see that the end of the quarter, the end of March 2022, we apparently have $5.8 million in Zimbabwe, being a combination of U.S. dollars and RTGS. Actually of that $5.8 million, about $2.3 million was RTGS currency, which is ring fenced against a 90-day lateral -- a 90-day lateral credit. So what happens is that of that $5.8 million, $2.3 million in RTGS will be taken out of our bank account in Zimbabwe and a corresponding value in U.S. -- sorry, in South Africa rands will appear in Caledonia Mining South Africa in June. So that's a new mechanism that we put in place in the course of the year to enhance our ability to move RTGS into a hard currency being rands, which we then use to procure assets and stuff for the mine. So in Zimbabwe, actually, we were modestly overdrawn in the end of the quarter in RTGS. So we're not building up a pile of local currency, which is either unusable or unremittable, and we work very hard to maintain that position. Shall we move on? Steve, do you want talk about the solar project? Or Dana do you want to talk about the solar project? You are on mute.

Shall l go straight into the video?

Yes. Steve is on mute.

Sorry. Let's get Dana to talk about the solar farm.

The solar farm is progressing quite well. And we should see during July that we start commissioning and connecting to the mine. And we hope to be up and running fully by the end of July -- within August. You will see in the video has shown progress that the areas that we were going to -- that you can see the preparation for the solar panels in the beginning and then currently we almost complete all the solar panels being installed. It's a quite vast area that we have…

That video is a few weeks old, that's correct, isn't it, Dana? It's moved on quite a bit since then.

You can see the photograph right in the top corner, almost completed the installation of the solar panels. And yes, within the next couple of months, we will start using solar panel, which will help us quite a lot. I just want to remind everybody that these panels will be following the sun.

Yes. So, they tilt, so that they follow the sun, to improve their efficiency. Just a word now on the dividend. We paid dividend of $0.14 quarter. We've increased the dividend quite substantially over the last few years, but now we decided to hold it up $0.14 a share, given the high level of CapEx this year. And also as we begin to position the company to, say, invest in new projects, of which Maligreen is probably the front runner. So the company's transitioning a little bit away from being a sort of one-trick pony, focused on Blanket, to actually now beginning to look at investing in new projects. And hence it's appropriate overtime to begin to accumulate some more cash so we can bring those projects forward. Steve, I'm finished.

Short and sweet, very nice to talk to a great set of results. So thank you, Mark.

There are a couple of questions that have been typed into the Q&A session. I'll ask the team just to have a look at those. And if anybody else wants to ask a question, please raise your hand and then Camilla will drive the system accordingly.

Shall I do the first one on cash, increase dividends or pursue exploration? It's fair to say that over the last 7 years or so, we've probably not done Blanket the justice it deserves in terms of exploration expenditures. Exploration activities have historically been focused just going deeper, deeper, and deeper. And in the last few years, we just don't have the flexibility underground to do that. So we do intend to resume that deep-level exploration with the view to improve the confidence level that there's existing inferred resources at depth, but also finding more material. This year, from memory, l think it's the back end of the year, we're proposing to do 15,000 meters of drilling; next year, 25,000 meters of drilling. But in addition to that, we also believe there's potential for drilling in the shallower areas of Blanket, which have been -- historically, people have just gone deeper. And we think there are some areas there that merit further attention. In addition, we feel that there's potential for exploration immediately outside the existing mining area. So that's to the North and to the South. But also we'd like to begin to look at something called the [ Bembidion ] stone formation, which is about 800 meters to a kilometer to the east of the current mining area. So there is actually quite a lot of exploration potential at Blanket itself, which I thought could cost probably $2 million, $3 million a year. In addition to that, we are looking at Maligreen. At the moment, we're reevaluating all drill call with a view to improving the confidence level of the existing resource base, which is about 940,000 ounces at 1.9 grams a tonne. So we do intend to spend more money on exploration and it's going to be a balancing act between how much money we choose to retain in the business to fund those projects, and how much we choose to divert back to shareholders. When I say divert, that kind of implies it's not a useful use of the money. Clearly, there's a useful use of the money. So it's a balancing act. At this stage, we're sort of pausing to let the fact pattern catch up with where we are. That's the only answer I can give to that question now.

Thank you, Mark. Yes, Hal, the increase in the D&O costs, that's not just particular to us. It seems to be reflective from the beginning of the COVID in pandemic looking across at the American listed companies, but the whole market has gone nuts, and it is a huge cost. We used to pay $80,000 a year in premium. We're now paying just over $1 million. So that is very expensive. Joseph, the workforce, as Mark mentioned, is now being paid a 100% in U.S. dollars. So they are in the best situation to fund themselves against rising costs and the rising inflation in Zimbabwe. There's nothing more we can do to make their lives easier. They're already paid above the unionized market rate and we pay a 100% in U.S. dollars. So they are they are in a good space from Zimbabwe perspective, but all of us are being affected by these rising fuel costs, and we'll just have to watch this space.

But it is fair to say that the complexity of the exchange rate environment in Zimbabwe mustn't be underestimated. The service dollar earners, our workers presumably benefit from the informal exchange rate which runs at a massive, massive premium, if we look at it to the official exchange rate. So that buying power in local currency is increasing very, very quickly indeed, which is probably more than outweighing the effect of genuine food price inflation.

Mark, if l can just add that currently, there is no complaints from the mine side. The fact that we are paying 100% compared to previously only paying 60%, they workforce really are in a good position. So they're not complaining, they're happy. And even with some increases we see, they're in a much better position than last year.

Yes. I think Dana should talk about Maligreen.

Yes, please.

The Maligreen, what we found is that there is in fact resource, and we've got enough information that by re-logging and having a look at a core that's all available, that we can upgrade that into improved resource -- what's the word I'm looking for?

Improving the confidence after M&A.

Yes, indicated resource. And we're busy with that work. It's about 80% compete, and then we will compile our new results and report back to the market. But we are confident that we can actually upgrade the resource as we had communicated.

I guess the idea then would be that with increased confidence level, we would then proceed as quickly as we could to the feasibility study with a view to making some money out of the mine. The only other thing I can add to that is it may be that asset could be overtaken by another asset which may be more attractive and therefore pushes Maligreen down the pecking order. We do continue to look at other assets in Zimbabwe.

Thanks, Mark. I think we've answered the next question in terms of the stages in new mining projects. Our projects, new projects are brownfields. They are not mining projects at the moment. So I think Dana has answered that one already. Allan, you asked if exploration reveals increased resource? Can plant increase capacity relatively easily? You're obviously talking about at Blanket. And Blanket does have some spare capacity both in hoisting and in the CIL. But we will manage that situation because in the ramp-up process, we've got to get tonnes up to about 2,300 tonnes a day. We've got milling capacity at that rate once the new mill that is being installed is in operation, and we will have to then look at the cost of any incremental plant capacity. But that is not the big money. So I'm sure if additional resources are found that are economic to get out of the ground, then the right engineering decisions can be made. The other projects that are not contiguous to Blanket, that'll be standalone.

I forget, how much BM10 is? It's about -- I thought it's about $80,000, wasn't it?

$1.5 million.

Okay. But it's not big, it's not a large amount of money and it's relatively quick in the ordinary environment to get these things.

I just want to add that, if we need to add another mill, it will not be as much as the ball mill is concerned. We've got regrind mills, and then we've got our rod mills. And the regrind mills that we added now is actually -- added quite a lot of capacity. And we will -- in future if we look at expanding, we will add our primary mills, which is the rod mills, add more [indiscernible] big corrected. The last one we added was about $750,000. So it won't be as much as the regrind mill, and it's modular. If you want to add another mill -- yes, you're talking about $800,000 if you want to do that. And then if you want to add to the CIL tanks, that's roughly -- with the mill currently, we're adding an extra bank, and that's about $200,000. So if we need to increase, you're looking at extra [ 10 ], probably a lot more.

To put all that in context, the fact this mine is making approximately $1 million a week of operating cash flow.

Yes. Will asks a question about concerns about increasing consumable cost and possible supply chain issues. Yes, Will, we have to be cognizant of that. At the moment, we're not experiencing any supply chain issues. But we are experiencing certain consumable cost increases, explosives affected by the international change in pricing. So we are managing our working capital to the best of our ability. We are buying as intelligently as we can. But I think this is a fact of life, and it is something that our procurement people have to watch very, very closely. We have the ability to shake with anybody is trying to take an opportunistic approach to these rising prices and trying to profit here. And we will keep a very close eye on that. But yes, we're seeing diesel prices going up already quite significantly. And as Mark has already spoken, we do use quite a lot of diesel without our gensets. So the solar farm is very, very important to us.

Steve, I just want to add that, what we also see is that steel, the steel costs is part of our capital projects. And because of what's happening, we see some delays. Not big delays, but slight delays of about a month or so that we see that -- lot of the items that are all delayed because of the effect of the war. But we haven't seen severe increases yet, mainly diesel and steel and then some explosives.

On the question about supply chain, I don't know if Will intended this, but we were some more concerned about the extent to which our supply chain relied on bringing goods up from South Africa through by bridge. And we were pleasantly surprised, all of the -- virtually, everything for the solar project came through from the east, came through from the eastern border place through Mozambique. And that actually worked very well. And also, we're beginning to explore whether we can bring in projects from the west through Walvis Bay. So we're trying to create more flexibility to protect ourselves in the event that the South Africa border suffers from the same sort of disruption that happened last year when there was the insurrection in South Africa. Well, it's fair to say, most of our stuff does still come through by bridge.

Mark, maybe you want to just look at Joseph Parish's question on cash flows and new mining assets?

Certainly.

Just below Will's.

"With all the recent approved operating cash flows…" No, anything of any -- you mean Maligreen, 1 million ounces could possibly support a mine of say 50,000 ounces a year. That's going to cost about $60 million, $70 million. There's no way we could do that from our own internal cash resources. Even if you stop the dividend, that's not going to cover enough. When we make any investment evaluation, we take into account the -- obviously, the money that we expect to come from the project, any shares that we'd have to issue to fund the project. And at the moment, we believe if we didn't do anything, if we just ran Blanket for cash, we'd be able to distribute -- Maurice, what's the number today? It's about $2.75 a share?

No, that would be leaving nothing in the till.

Yes, just run it. If we just ran this business for cash, we could distribute $2.75. When we evaluate new projects such as Maligreen, we need to be comfortable that taking everything into account, both the shares we'd need to issue to fund the capital program, we need to be confident that the amount of cash we could distribute per share, fully diluted, must be appreciably more than say $2.75. Otherwise, it's not worthwhile. It's just not worthwhile. So we do take that into account.

Mark, if l can take the question -- earlier, that one of these new projects would go into production? I would say that within the next 2 years, hopefully we will start building a new mine and then -- if it's 2 years start to build a mine, then it will take about 1.5 years that you will start breaking even and start making money. So I would say, within the next 3.5 year, 4 years, we will start seeing a new mine looking after itself. But adding to production, I would say within next 3 years, because the contribution from new project adding to the ounces.

Well, then sort of building on what Dana just said and just following on from what I said, that doesn't mean we would need to raise all the money for new project by issuance of equity. Clearly, we'd expect to be able to raise some debt. And let's not forget, any new project, as sort of [ Synechron ] owner, for any new project, we'll be that we can export the gold ourselves and therefore that means that that project will be capable of debt funding. And then also we do expect to make some contribution to the costs through our own retained cash. It's not as though we'd have to go to the equity markets for all of the required funding. And let's face it, if for whatever reason the equity markets are closed, whatever reason, we just do the project more slowly, just defer it and do it as we did for Central Shaft, just do it by phasing it so we reinvest the cash that we're generating ourselves.

So thank you. Thank you to the team.

One more thing. I mean, I did see some comments somewhere to effect that management should put out some sort of guidance about a recent announcement from the Zimbabwe government relating to trying to clamp down on foreign exchange controls. So there was a -- I think Bloomberg reported a speech given by Mnangagwa. It is fair to say that Mnangagwa makes these speeches and announces big picture policy changes. But the detail invariably doesn't become clear for days if not weeks after that when that speech has been then converted into practice guidance notes issued by the RBZ and all the relevant statutory instruments. So in respect to that particular change in policy, all we believe it means is that our existing overdraft facilities at the mine are probably being canceled, the $3 million of existing overdraft facilities are probably being canceled. Although, we're not currently in overdraft right now. But we're confident that that's just a timing issue and we'll get those overdrafts reinstated, not that we actually need them particularly. But just understanding that it's very difficult for us to respond quickly to those Bloomberg reports because the underlying facts take quite some time to establish.

Yes. Mark, and to support that, even now we are hearing that the gold sector will be exempt from those new announcements made by the president. But until we see it in the statutory instrument, which is the legal standing, we just have to keep talking to the relevant authorities. But as Mark says, it only becomes fact once the statutory instrument is published, and then we adjust accordingly. But we've got our finger on the pulse. But Mark says, we're in a position where we can paddle our own boat, which is very comfortable.

And then again, having said that, genuinely, it's fair to say that the various mechanisms that we use for moving money around the place have stabilized and the system, although it's complex, works better than it has done for many years. So we're finding it, won't say easy, but we're certainly finding it very manageable to work in this environment, and I think that reflects the fact just the decision, just much more in the way foreign exchange available in Zimbabwe.

And the last question coming from Anthony Mitchell. I don't know what TOC means.

Total operating costs, I think. Dana, if you have seen that, you can…

Generally, our open cast operations are much cheaper than underground because, first of all, your work force is lot smaller. You're talking about 300 people compared to where we are employing over 2,000 now. And so that's why you can operate and open cast mines can make money at 1 gram a tonne to 1.5 gram a tonne. And I don't know if that answer your question, but normally, additionally, open cast mine can operate at about half the cost of a deep-pit mine.

We've got quite a lot of it. We use quite a lot of information from our technical consultants regarding sort of ballpark capital costs and ballpark operating costs for open cast and underground operations of particular type. But clearly, before we make any investment decision, even if we are going to fund the thing through internal cash flow than for equity, internal equity, we would do a feasibility study to get better sort of clarity on that.

I think that the biggest advantage of a service operation is that you can get it up and running very, very quickly. Normally, you can get it up and running and paying for itself within 2 years. Whereas with the underground mines and all, 10 years if you're lucky and then you start production, but lot less riskier.

The only problem with open-pit offering, is everyone can see mistakes, whereas unground, they're hidden.

Yes.

Are you finished?

Yes. So that has answered all the questions, and I see no more coming in. So thank you to all the participants. Thank you to the team for answering. And we look forward to talking to you again and we're very pleased to being able to present the results of a very good quarter, and giving you an indication that the Central Shaft investment is beginning to pay off. And therefore, we're confident to reiterate our guidance between 73,000 and 80,000 ounces. But as you see, April is already indicating that the mine is performing extremely well. So thank you. Thank you for participating, and we look forward to talking to you all again.

On our last note, it's kind of sad that this is Steve's final quarter, reporting quarter as Chief Executive. He'll be stepping down at the end of June. And on behalf of his colleagues, we'd like to thank him for all the work he's done since sort of late 2014, is we've rehabilitated the company, we made some great progress and I'm very pleased that you're handing it over in a reasonable shape. So thank you very much and well done.

Thank you, Mark. And I know the team is going to be successful going forward. And it's very, very pleasing that the succession work we have done is paying off. So the faces are going to be familiar to all of you, so you're in good hands. And I wish the team all the very, very best. Thank you, all. Thank you, Mils.

Great. Thank you.