Mark Learmonth: Okay. Talk about Bilboes €“ I’m sorry, Motapa.
Victor Gapare: Thank you, Mark. Again, Motapa, is a property which is contiguous to the Bilboes assets. Actually, in the 1990s, Anglo entered into a joint venture with the original owners of Motapa and actually mined the oxides from the Motapa claims. They also started drilling for sulfides because the idea was that with the sulfides, which were expected at Bilboes in the sulfides at Motapa, we should be able to establish a mine with reasonable scale by Zimbabwe standards. However, Anglo also €“ anywhere on this when they were getting out of gold at the end of the 90s. So the current Bilboes team actually went on the Motapa project because some of the mining, which was taking place there, the oxides, some of them were being transported to the Bilboes heap leach operations.
The current plan is actually to put in some money, start exploration, hopefully get some oxides because we do know where the targets, we have some targets for oxides. Maybe if we establish the oxides, complement the oxides which are being mined at Bilboes and actually hopefully improve the cash flow from that operation. But long-term, the idea is to actually carry out exploration for the sulfides because we believe if you combine the sulfides at Motapa and the sulfides at Bilboes, you can actually get a mine scale with economies of scale in this area.
Mark Learmonth: Okay. Sorry to interject. So just before we move on to the financials, by itself, Bilboes is a very attractive asset. It’s relatively large, it’s relatively high grade and we acquired it at a very, very competitive price. The work we are doing on our own feasibility study isn’t just to revalidate the feasibility study done by Victor and his team to reflect the current environment. We’re also looking to see whether it’s possible to do that on a phased €“ to do that project on a phased basis with the view to minimizing equity dilution. So it’s always going to be a balancing act between achieving growth and minimizing dilution. So we’re solving for the best net present value per share, not the potentially highest NPV of the project.
So I think that’s quite important. But Bilboes together with Motapa really is potentially a very, very attractive asset. And the nice thing is that we’ve got the same geological team at Bilboes who successfully identified the resource base at Bilboes, and they can transfer their skills and experience and using pretty much the same infrastructure that they’ve already got at Bilboes to go and start looking across the road at Motapa. And that’s one of the reasons why we wanted to accelerate that process by having the modest equity raise that we completed last week. But I’ll come onto that a bit later. So frankly, Bilboes and Motapa together is now standing asset package. I think €“ should we just move on and talk about the financials? Chester, are you able to just give us a couple minutes on the new slide, please?
Chester Goodburn: Thank you, Mark. 2022 financial results pretty much reflects the success story of 80,000 ounce target we set ourselves at Blanket Mine, and it also sets us up for our future growth phase of our newly acquired mining assets as Victor earlier explained. When looking at the revenues, I’m pleased to see that increase in ounces at Blanket Mine and later on, we’ll also see in the cash flow statement, increase in cash generation because of the production costs. This growth phases remained in check. You’ll see that this has occurred during a period where our peers had significant increase in inflationary costs. But let’s talk about production a bit later. Our G&A has increased for positive reasons, we’ve increased costs and expenditures on our advisory services costs to acquire Motapa and Bilboes.
And we’ve also increased our salary wages €“ salaries and wages bill of our senior staff members to set ourselves up for this new future growth phase at Caledonia. Our profit after tax includes non-cash items such as $7 million of deferred tax expenditures. In our tax expenses, we’ve also got foreign exchange losses that are unrealized, also non-cash. And this might fuel the question on why the EPS is different to the adjusted EPS of $2.2 per share. Also, including that is in payment expenses of $8 million that we’ve incurred on areas above 750 meters that are mined out and currently not a Caledonia life of mine plan. Could move over to production costs, please. Our production costs are looking good. Costs decreased on our per ounce basis due to the increase in our ounces, it went down from 742 to 735.
And we’ve increased our wages and salaries in absolute terms, that’s due to our bonus paid in Zimbabwe for online staff due to the higher production ounces that we’ve achieved. Consumables that increased due to inflationary pressures and some maintenance and I’d also like to highlight electricity expenses that’s come down due to the solar plant is connected to the Blanket mine grid in November. Also, it shows a decrease due to transformers that we’ve installed at the Blanket Mine improving our power factor and also reducing our kilowatt hour usage. We move on to the next slide. Our G&A, our admin costs were higher due to advisory services fees to obtain the Bilboes and top assets as explained earlier. And you can also see the salary expenses that has increased to help us to unlock the value at Motapa and Bilboes mine.
We move on to the next slide, please. Taxation, most of our tax is paid in Zimbabwe to the Zimbabwean government. It’s got a pretty large non-cash component of approximately $7 million, and it’s very difficult to reconcile this back to our U.S. dollar based profits as the taxation calc is performed in some dollars. Moving on to cash flows. I’m pleased to see the net cash from operating activities increasing by 12 million due to the increased transfers. We’ve balanced the reinvestment of those cash flows worth returning money to our shareholders pointing that we can realize cash returns from Zimbabwean assets and reinvest that in initiatives such as the solar plant and the new mining assets that we obtained. Moving over to the statement of financial position.
You can see here that our non-cash €“ our non-current assets increased, and that’s due to the investments in Central Shaft, Bilboes, Motapa and the solar plant. Our cash has come down due to this, but what is important to note is that our balance sheet remains conservatively geared, and that enables us to obtain potential funding to unlock the future growth phase. In summary, cash generation was up in 2022. A good balance was achieved in reinvesting in cash generation and new assets while distributing cash to our shareholders. And it’s also very exciting to see that our balance sheet is in a good position to enable us to unlock our future opportunities.
Mark Learmonth: Thank you, Chester. Just a few words on the fundraise that we did last week in conjunction with the announcement of the 2022 results. So we raised about $10 million in London and we’re currently €“ and that was through an accelerated bookbuild. That was primarily to allow us to fast track, we’ll get going on some of these new properties that we’ve acquired. So in particular, the feasibility study at Bilboes kick start the exploration project at Motapa, where we’re hopeful not just the long-term objective of finding significant sulfides, but maybe also the potential to find some near-term oxide material that we could turn into cash quite quickly. We’d like to, we need to establish a, what we call a shared services center in Bulawayo, which will allow us to begin to realize the synergies of having Blanket in the South towards the South of Bulawayo and Motapa and Bilboes to the North of Bulawayo by having a shared facility providing things like financial accounting, HR, technical services and a procurement and goods receiving facility, so that we can actually try and realize some synergies there.
And then finally, just initiate some exploration work at Maligreen. It won’t be lost on €“our net cash position at the end of December was about $1.5 million. And it’s fair to say that we €“ whilst Blanket is highly cash generative, we have a factor have been using Blanket as a piggy bank to fund strategic activities that don’t relate to Blankets. So in particular, the initial purchase price for Motapa, the fees that we’ve incurred on, which were quite substantial because the complexity of the transactions on Motapa and Bilboes. And then historically looking backwards further, the acquisitions that we made of Maligreen and also the €“ when we looked at things like Connemara North and Glen Hume. So we did a modest raise that we were looking for about $10 million in the UK.
Why we chose the U.K. as we wanted to do things relatively quick to do something in the States would’ve taken quite a bit longer because the SEC registration requirements. And also it’s fair to say that we wanted to give the UK a chance to see if it works or not for us. We’ve spent a lot of time and effort over the past years marketing in the UK and we wanted to see whether there actually was that just test the strength and depth of demands from institution investors in the UK. And I’m pleased to see that we got three new institutional investors on the register who are mining specialists and will hopefully, – they recognize the vision going forwards and hopefully will provide further support for this as we go forwards. It was done at a difficult time when our share price shot up early in the week of marketing and then stabilized.
So the issue price was about a 3% discount to the 20-day and that’s where we are on the fundraise. The Zimbabwe raised approximately $3 million is still open and that is to allow time for Zimbabwe institutions to get their liquidity in place so that they can participate. The nature of the investment climate in Zimbabwe is that whereas in institutions have appetite to invest in us, but don’t always have the money available at the right time. And so they need a bit more time to be able to sort of shuffle things around and subscribe. So that’s the fundraising. Can we just turn to the dividend. This is old news really. We paid a dividend for about 10 years or so. Initially it was denominated in Canadian dollars when we were a Canadian company until 2016, but it was about US$0.07 per share per quarter.
And then in early 2020, we started €“ as we were getting closer to the end of the Central Shaft project, and we were more comfortable with our cash flows, we felt able to loosen the purse strings a bit. And so we started increasing the dividend buy about $0.01 per quarter. We paused in March, April, 2020, to just allow us time to see what the effect of COVID was on the business. But once we’d done that, we then felt comfortable to continue the rate of increase, but by the time we got to about January last year, it became apparent to us that we knew we were going to be getting, move into a situation where we were going to get our hands on new assets and that would put us into position into a position of becoming more of a growth company with a requirement for capital.
And so in that situation, we felt it is just disingenuous to continue to increase the dividend further. So the dividend policy is to put it simplistically, is our dividend policy is to pay a dividend. Our intention is to maintain the dividend at current levels, about 414 per share, per quarter, keep it at that level. And then as and when, we bring new projects on stream and they become cash generative then to resume dividend increases. So for the foreseeable future, I wouldn’t expect to see any increase in the dividend. Having said that though, barring any unforeseen eventuality, I wouldn’t expect the dividend to be reduced. Should we move forward and give €“ move forward for this €“ this is extracted from RNS we put out in January. So gold production for Bilboes is from the oxides is approximately 15,000 ounces for the year.
We say between 12.5 and 17,000, at Blanket, between 75,000 and 80,000 ounces. So that would be for the year and between 87,000, to 97,000 ounces. Online costs, now we split €“ online costs, we need to be a little bit careful about how we explain this because the online costs at Blanket, having looks to be in the order of about $770 to $850 an ounce. And that’s quite a wide range because it is fair to say that we are experiencing some input inflation and it’s difficult for us to predict where that will end up. But Blanket and Bilboes the online cost of Bilboes will be considerably higher because that is a low-grade oxide project, cash generative, but much higher cost in terms of the cost per ounce. And so blending those together, the online costs of Bilboes are about 1200 to 1320 plus the online cost of Blanket are 770 to 850 gives a blended group online cost per ounces of about $900 to $1000 an ounce.
But that is clearly, largely skewed by the effect of the Bilboes oxide. It’s also fair to say that the cost, the online cost per ounce that Blanket of 770 to 850 doesn’t reflect the benefit of $35 an ounce are referred to earlier, doesn’t reflect the benefit of the solar plant because the solar plant is owned by Caledonia, not by Blanket. And we own 64% of Blanket. So the idea is that we Caledonia sell power, sell power from a solar project to Blanket at a price which reflects Blanket’s long-term average cost of electricity, which means that the minority investors in Blanket and either advantage nor disadvantaged by the solar project. And the benefit of the $35 an ounce is reflected at group level in the all-in-sustaining cost, which is between 1150 and 1250.
If you were to reverse out from the all-in-sustaining cost, the effect of the online cost at Blanket. The all-in-sustaining cost, excluding Blanket would be in the order of about a $1000 an ounce, which is about just 1% or 2% higher than the cost that we incurred in 2022. So I just think it’s important to put the projections for our costs in context with the effect of the short-term effect of the Bilboes oxide project. CapEx for this year is going to be about $31 million on the group level. $28 million of that is a Blanket. Of that $28 million, about $10 million is going to be spent on a new tailings facility. The old tailings facility is now pretty close to its maximum capacity, and we will need a new facility, which will set the business up for the next sort of tens of years.
But we need to get that up and running before the end of this year. Then there’s going to be another $10 million or so spent on deep level capital development at Blanket mines, which is the effect of the horizontal development from Central Shaft, at very low levels to allow us to continue production and also gives us platforms to resume our deep level exploration. So I think that is a relatively quick counter through the formal presentation. We can open that to questions.