Two Mining Stocks Trending on LSE – Caledonia Mining Corporation & Alien Metals

Summary

• Caledonia Mining Corporation reported revenue of USD 22.9 million in Q2 FY2020. The revenue increased year on year due to higher amount of gold production.
• The gross profit improved from USD 7.0 million in Q2 FY2019 to USD 9.2 million in Q2 FY2020.
• Alien Metal's primary focus is to develop the iron ore projects in Australia. It would also seek drilling license for silver projects in Mexico.
• The acquisition of Elizabeth Hill silver project is expected to complete in mid-September.

The gold production for Caledonia Mining Corporation grew at a CAGR of 7 percent between 2015 and 2019. The Company produced 55,182 ounces of gold in 2019 and targets to produce 80,000 ounces of gold by 2022. Shares of Caledonia Mining Corporation are down by close to 25.79 percent from their 52-week high. Shares of Alien Metals Limited touched their 52-week high of GBX 0.9455 per share on 3 September 2020, and it is currently trading down by 21.73 percent from the 52-week high.

Caledonia Mining Corporation PLC (LON:CMCL) - Announced dividend of 8.5 USD cents for July 2020

Caledonia Mining Corporation PLC is a mining and exploration company. Blanket Mine in Zimbabwe is the main asset of the Company. Caledonia Mining Corporation is listed on the FTSE AIM index.

“At the Market” Fundraising for Solar Project in Zimbabwe

On 4 September 2020, Caledonia Mining Corporation raised USD 13 million through the issue of At the Market (ATM) shares. The Company issued 597,963 shares as a part of the ATM sales agreement deal with Cantor Fitzgerald & Co reached in July 2020. The funds raised from the new shares would be used to fund the construction of a 12 MW solar power plant. The solar power plant is expected to complete in Q3 FY21, and it would supply electricity to the Blanket mine. Once the plant is operational, it would meet approximately 27 percent of the power required by the mine, and it would increase the free cash flow by USD 3 million per annum.

Results of Q2 FY20 (ended 30 June 2020) as reported on 13 August 2020

(Source: Company website)

During the quarter, Caledonia Mining Corporation produced 13,499 ounces of gold, which was up by 6.19 percent year on year from 12,712 ounces produced a year ago. The production was supported by a higher amount of tonnes milled with a good recovery rate. In Q2 FY20, the tonnes mined and milled increased by about 5.0 percent year on year.

The production was not hugely impacted due to the pandemic, and it was around 1.2 percent below the target. However, in Q1 FY20 and Q2 FY20 combined, the production was above the target level. The average realized price for the gold was USD 1,696 per ounces, which increased by 31 percent year on year in Q2 FY20. The on-mine cost was USD 811 per ounces, and all-in sustaining cost was USD 868 per ounces in Q2 FY20.

In Q2 FY20, Caledonia Mining Corporation reported revenue of USD 22.9 million, which was up by 39 percent year on year from USD 16.5 million a year ago. The gross profit improved from USD 7.0 million in Q1 FY19 to USD 9.2 million in Q2 FY20. The net cash from operating activities was USD 4.0 million in Q2 FY20, and Caledonia Mining Corporation had cash of USD 11.7 million as on 30 June 2020. The Company paid a dividend 7.5 USD cents for April 2020, and it announced a dividend of 8.5 USD cents for July 2020. The Company contributed close to USD 1.0 million to fight against covid-19 in Zimbabwe.

Share Price Performance Analysis

1-Year Chart as on September-4-2020, after the market close (Source: EODHD/Others, Thomson Reuters)

Caledonia Mining Corporation PLC's shares last traded at GBX 1,410.00 (as on 4 September 2020, after the market close). CMCL's 52-week High and Low were GBX 1,900.00 and GBX 530.00, respectively. Caledonia Mining Corporation had a market capitalization of around £209.91 million.

Business Outlook

Caledonia Mining Corporation expects to produce gold in between 53,000 ounces to 56,000 ounces in FY20. The on-mine cost would be in the range of USD 693 to USD 767 per ounces and the all-in sustaining cost would lie between USD 951 and USD 1,033 per ounces in FY20. The Company highlighted that it would produce 80,000 ounces by 2022. The cash flow would improve as the production increases, and the cost of production and capital expenditure would decline from 2021. Mine life would be extended beyond 2034 as the Company is carrying out deep level exploration. The Company would seek new exploration activities in Zimbabwe, and it would invest in projects that have an yearly production capacity of 50,000 ounces.

Alien Metals Limited (LON:UFO) - Raised £1.25 million through the placement of shares

Alien Metals Limited is a mining and exploration company. The Company has an interest in Donovan 2 project (copper and gold), San Celso and Los Campos (silver) projects in Mexico. The Company has 51 percent interest in Hancock Ranges iron ore project and Brockman iron ore project in Australia. Alien Metals is in the process to acquire the Elizabeth Hill silver project in Australia. Alien Metals is listed on the FTSE AIM index.

Issue of new shares

On 4 September 2020, the Company placed close to 227 million shares at 0.55 pence per share. Alien Metals raised a gross amount of £1.25 million through the placement of shares that would be used to start the exploration activity in Australia and Mexico. It would start the surface sampling and trenching programme at the Elizabeth Hill silver project shortly. The Company would determine the grade, strike and depth length at the Los Campos and San Celso silver projects in Mexico. It is also planning for a next phase of drilling at Donovan 2 copper-gold project. It plans to acquire new projects, but the primary focus would be the development of the iron ore projects in Australia.

Recent Events

• On 2 September 2020, Alien Metals issued close to 22.2 million new shares at the issue price of 0.30 pence per share and about 18.7 million new shares were issued at 0.15 pence per share. The new shares were issued on exercise of the warrants.
• On 10 August 2020, the Company announced that it is on track to complete the acquisition of the Elizabeth Hill silver project. Karratha Metals Group currently owns the project and it is expected that Alien Metals would own the project by the mid of September 2020. Elizabeth Hill silver project is in Australia, and the mining at the project ceased in 2009 when the silver prices were low. In the past, a million ounces had been produced at the mine at an average silver production rate of 70.24 ounces per tonne.

Share Price Performance Analysis

1-Year Chart as on September-4-2020, after the market close (Source: EODHD/Others, Thomson Reuters)

Alien Metals Limited's shares last traded at GBX 0.7400 (as on 4 September 2020, after the market close). UFO's 52-week High and Low were GBX 0.9455 and GBX 0.061, respectively. Alien Metals had a market capitalization of around £21.40 million.

Business Outlook

Alien Metals would use the funds raised to expedite the work at its projects. At the end of September, it is planning to start the work at Hamersley iron ore project in the Pilbara region in Australia. The Company would also seek drill permits in Mexico to start the drilling programme at San Celso and Los Campos silver projects.