EX-99.1 2 exh_991.htm EXHIBIT 99.1

Exhibit 99.1

Caledonia Mining Corporation Plc

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION

To the Shareholders of Caledonia Mining Corporation Plc

Management has prepared the information and representations in this interim report. The unaudited condensed consolidated interim financial statements of Caledonia Mining Corporation Plc and its subsidiaries (the “Group”) have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and, where appropriate, these statements include some amounts that are based on best estimates and judgment. Management has determined such amounts on a reasonable basis in order to ensure that the unaudited condensed consolidated interim financial statements are presented fairly, in all material respects.

The accompanying Management Discussion and Analysis (“MD&A”) also includes information regarding the impact of current transactions, sources of liquidity, capital resources, operating trends, risks and uncertainties. Actual results in the future may differ materially from our present assessment of this information because future events and circumstances may not occur as expected.

The Group maintains adequate systems of internal accounting and administrative controls, within reasonable cost. Such systems are designed to provide reasonable assurance that relevant and reliable financial information are produced.

Management is responsible for establishing and maintaining adequate internal controls over financial reporting (“ICFR”). Any system of ICFR, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

At June 30, 2019 management evaluated the effectiveness of the Group’s ICFR and concluded that such ICFR was effective.

The Board of Directors, through its Audit Committee, is responsible for ensuring that management fulfils its responsibilities for financial reporting and internal control. The Audit Committee is composed of three independent directors. This Committee meets periodically with management and the external auditor to review accounting, auditing, internal control and financial reporting matters.

These condensed consolidated interim financial statements have not been audited by the Group’s auditor.

The unaudited condensed consolidated interim financial statements for the period ended June 30, 2019 were approved by the Board of Directors and signed on its behalf on August 13, 2019.

(Signed) S. R. Curtis		(Signed) J.M. Learmonth

Chief Executive Officer		Chief Financial Officer

Caledonia Mining Corporation Plc

Condensed consolidated statements of profit or loss and other comprehensive income
(in thousands of United States dollars, unless indicated otherwise)
Unaudited			For the 3 months ended June 30					For the 6 months ended June 30
	Notes			2019		2018			2019		2018
Revenue				16,520		16,198			32,440		34,257
Less: Royalties				(864	)	(811	)		(1,683	)	(1,715	)
Production costs		6		(7,571	)	(9,297	)		(17,340	)	(19,307	)
Depreciation				(1,052	)	(946	)		(2,100	)	(1,868	)
Gross profit				7,033		5,144			11,317		11,367
Other income		7		749		1,720			2,038		3,101
Other expenses				(220	)	-			(309	)	-
Administrative expenses		8		(1,309	)	(1,660	)		(2,705	)	(3,202	)
Profit on sale of subsidiary		9		-		-			5,409		-
Equity-settled share-based expense				-		-			-		(14	)
Cash-settled share-based expense		10		(9	)	(223	)		(370	)	(337	)
Net foreign exchange gains		11		21,645		89			24,925		160
Gold hedge expense		12		(194	)	-			(324	)	-
Operating profit				27,695		5,070			39,981		11,075
Finance income				44		10			50		18
Finance cost				(16	)	(39	)		(70	)	(63	)
Profit before tax				27,723		5,041			39,961		11,030
Tax expense				223		(1,787	)		(1,296	)	(3,897	)
Profit for the period				27,946		3,254			38,665		7,133
Other comprehensive income
Items that are or may be classified to profit or loss
Exchange differences on translation of foreign operations				144		(648	)		-		(440	)
Reclassification of accumulated exchange differences on the sale of subsidiary		9		-		-			(2,109	)	-
Total comprehensive income for the period				28,090		2,606			36,556		6,693

The accompanying notes on page 7 to 23 are an integral part of these condensed consolidated interim financial statements.

On behalf of the Board: “S.R. Curtis”- Chief Executive Officer and “J.M. Learmonth”- Chief Financial Officer.

Caledonia Mining Corporation Plc

Condensed consolidated statements of profit or loss and other comprehensive income

(in thousands of United States dollars, unless indicated otherwise)

Unaudited		For the 3 months ended June 30			For the 6 months ended June 30
	Notes		2019	2018		2019	2018
Profit attributable to:
Owners of the Company			23,303	2,604		32,621	5,758
Non-controlling interests			4,643	650		6,044	1,375
Profit for the period			27,946	3,254		38,665	7,133
Total comprehensive income attributable to:
Owners of the Company			23,447	1,956		30,512	5,318
Non-controlling interests			4,643	650		6,044	1,375
Total comprehensive income for the period			28,090	2,606		36,556	6,693

Earnings per share
Basic earnings per share ($)			2.11	0.24		2.99	0.53
Diluted earnings per share ($)			2.11	0.24		2.99	0.53

The accompanying notes on page 7 to 23 are an integral part of these condensed consolidated interim financial statements.

On behalf of the Board: “S.R. Curtis”- Chief Executive Officer and “J.M. Learmonth”- Chief Financial Officer.

Caledonia Mining Corporation Plc

Condensed consolidated statements of financial position
(in thousands of United States dollars, unless indicated otherwise)
Unaudited			June 30,		December 31,
As at	Notes		2019		2018
Assets
Property, plant and equipment		13	104,625		97,427
Trade and other receivables		15	970		-
Deferred tax asset			76		98
Total non-current assets			105,671		97,525

Inventories		14	9,729		9,427
Prepayments			1,550		866
Trade and other receivables		15	6,492		6,392
Cash and cash equivalents			7,875		11,187
			25,646		27,872
Assets held for sale			-		296
Total current assets			25,646		28,168
Total assets			131,317		125,693

Equity and liabilities
Share capital			56,065		55,102
Reserves			140,681		142,790
Retained loss			(96,286	)	(127,429	)
Equity attributable to shareholders			100,460		70,463
Non-controlling interests			14,247		8,345
Total equity			114,707		78,808

Liabilities
Provisions			3,319		3,309
Deferred tax liability			2,896		23,328
Long-term portion of term loan facility			912		5,960
Cash-settled share-based payments		10	284		2,090
Total non-current liabilities			7,411		34,687

Trade and other payables			7,601		10,051
Income tax payable			1,598		1,538
			9,199		11,589
Liabilities associated with assets held for sale			-		609
Total current liabilities			9,199		12,198
Total liabilities			16,610		46,885
Total equity and liabilities			131,317		125,693

The accompanying notes on pages 7 to 23 are an integral part of these condensed consolidated interim financial statements.

Caledonia Mining Corporation Plc

Condensed consolidated statements of changes in equity

(in thousands of United States dollars, unless indicated otherwise)

Unaudited	Share Capital	Foreign currency translation reserve		Contributed surplus	Equity-settled share-based payment reserve	Retained loss		Total		Non-controlling interests (NCI)		Total equity
Balance at December 31, 2017	55,102	(5,885	)	132,591	16,746	(135,287	)	63,267		5,944		69,211
Transactions with owners:
Dividend paid	-	-		-	-	(1,456	)	(1,456	)	(305	)	(1,761	)
Equity-settled share-based expense	-	-		-	14	-		14		-		14
Total comprehensive income:
Profit for the period	-	-		-	-	5,758		5,758		1,375		7,133
Other comprehensive income for the period	-	(440	)	-	-	-		(440	)	-		(440	)
Balance at June 30, 2018	55,102	(6,325	)	132,591	16,760	(130,985	)	67,143		7,014		74,157
Balance at December 31, 2018	55,102	(6,561	)	132,591	16,760	(127,429	)	70,463		8,345		78,808
Transactions with owners:
Dividend paid	-	-		-	-	(1,478	)	(1,478	)	(142	)	(1,620	)
Shares issued	963	-		-	-	-		963		-		963
Total comprehensive income:
Profit for the period	-	-		-	-	32,621		32,621		6,044		38,665
Other comprehensive income for the period	-	(2,109	)	-	-	-		(2,109	)	-		(2,109	)
Balance at June 30, 2019	56,065	(8,670	)	132,591	16,760	(96,286	)	100,460		14,247		114,707

The accompanying notes on pages 7 to 23 are an integral part of these condensed consolidated interim financial statements.

Caledonia Mining Corporation Plc

Condensed consolidated statements of cash flows
(in thousands of United States dollars, unless indicated otherwise)

Unaudited			For the 3 months ended June 30					For the 6 months ended June 30
	Note			2019		2018			2019		2018

Cash generated from operating activities		16		2,484		749			9,117		8,433
Net interest				16		(44	)		(96	)	(82	)
Tax paid				(362	)	(1,921	)		(608	)	(2,522	)
Net cash from/(used in) operating activities				2,138		(1,216	)		8,413		5,829

Cash flows from investing activities
Acquisition of Property, plant and equipment				(4,186	)	(5,618	)		(9,326	)	(10,776	)
Proceeds from disposal of subsidiary				-		-			1,000		-
Net cash used in investing activities				(4,186	)	(5,618	)		(8,326	)	(10,776	)

Cash flows from financing activities
Dividend paid				(882	)	(862	)		(1,620	)	(1,761	)
Repayments of term-loan facility				-		(375	)		-		(750	)
Net cash used in financing activities				(882	)	(1,237	)		(1,620	)	(2,511	)

Net decrease in cash and cash equivalents				(2,930	)	(8,071	)		(1,533	)	(7,458	)
Effect of exchange rate fluctuations on cash held				1,063		(1	)		(1,779	)	10
Net cash and cash equivalents at beginning of period				9,742		13,380			11,187		12,756
Net cash and cash equivalents at end of period				7,875		5,308			7,875		5,308

The accompanying notes on pages 7 to 23 are an integral part of these condensed consolidated interim financial statements.

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

1	Reporting entity

Caledonia Mining Corporation Plc (the “Company”) is a company domiciled in Jersey, Channel Islands. The address of the Company’s registered office is 3rd Floor, Weighbridge House, St Helier, Jersey, Channel Islands. These unaudited condensed consolidated interim financial statements as at and for the 6 months ended June 30, 2019 comprise the Company and its subsidiaries (the “Group”). The Group is primarily involved in the operation of a gold mine and the exploration and development of mineral properties for precious metals.

Caledonia’s shares are listed on the NYSE American stock exchange (symbol - “CMCL”) and on the Toronto Stock Exchange (symbol - “CAL”). Depository interests in Caledonia’s shares are admitted to trading on AIM of the London Stock Exchange plc (symbol - “CMCL”).

2	Basis for preparation
i)	Statement of compliance

These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all the information required for full annual financial statements. Accordingly, certain information and disclosures normally included in the annual financial statements prepared in accordance with IFRS as issued by the IASB have been omitted or condensed. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended December 31, 2018.

ii)

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for:

•	equity-settled share-based payment arrangements measured at fair value on grant date;
•	cash-settled share-based payment arrangements measured at fair value on grant and re-measurement dates; and
•	derivative financial instruments measured at fair value.

iii)

Functional currency

These unaudited condensed consolidated interim financial statements are presented in United States dollars (“$”), which is also the functional currency of the Company. All financial information presented in United States dollars have been rounded to the nearest thousand, unless indicated otherwise. Refer to note 11 for changes to the RTGS$ currency and the effect thereof on the statement of profit or loss and other comprehensive income.

3	Use of accounting assumptions, estimates and judgements

In preparing these unaudited condensed consolidated interim financial statements, management has made accounting assumptions, estimates and judgements that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in estimates are recognised prospectively.

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

4	Significant accounting policies

The same accounting policies and methods of computation have been applied consistently to all periods presented in these unaudited condensed consolidated interim financial statements as compared to the Group’s annual financial statements for the year ended December 31, 2018. In addition, the accounting policies have been applied consistently by the Group entities.

5	Blanket Zimbabwe Indigenisation Transaction

On February 20, 2012 the Group announced it had signed a Memorandum of Understanding (“MoU”) with the Minister of Youth, Development, Indigenisation and Empowerment of the Government of Zimbabwe pursuant to which the Group agreed that indigenous Zimbabweans would acquire an effective 51% ownership interest in the Zimbabwean company owning the Blanket Mine (also referred to herein as “Blanket” or “Blanket Mine” as the context requires) for a paid transactional value of $30.09 million. Pursuant to the above, members of the Group entered into agreements with each indigenous shareholder to transfer 51% of the Group’s ownership interest in Blanket Mine whereby it:

sold a 16% interest to the National Indigenisation and Economic Empowerment Fund (“NIEEF”) for $11.74 million;

sold a 15% interest to Fremiro Investments (Private) Limited (“Fremiro”), which is owned by indigenous Zimbabweans, for $11.01 million;

sold a 10% interest to Blanket Employee Trust Services (Private) Limited (“BETS”) for the benefit of present and future managers and employees for $7.34 million. The shares in BETS are held by the Blanket Mine Employee Trust (“Employee Trust”) with Blanket Mine’s employees holding participation units in the Employee Trust; and

donated a 10% ownership interest to the Gwanda Community Share Ownership Trust (“Community Trust”). In addition, Blanket Mine paid a non-refundable donation of $1 million to the Community Trust.

The Group facilitated the vendor funding of these transactions which is repaid by way of dividends from Blanket Mine. 80% of dividends declared by Blanket Mine are used to repay such loans and the remaining 20% unconditionally accrues to the respective indigenous shareholders. Following a modification to the interest rate on June 23, 2017, outstanding balances on these facilitation loans attract interest at a rate of the lower of a fixed 7.25% per annum payable quarterly or 80% of the Blanket Mine dividend in the quarter. The timing of the repayment of the loans depends on the future financial performance of Blanket Mine and the extent of future dividends declared by Blanket Mine. The facilitation loans relating to the Group were transferred as dividends in specie intra Group and now the loans and most of the interest thereon is payable to the Company.

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

5	Blanket Zimbabwe Indigenisation Transaction (continued)

On November 5, 2018 the Company and Fremiro entered into a sale agreement for Caledonia to purchase Femiro’s 15% shareholding in Blanket Mine. As at the date of approval of these financial statements the transaction remained subject to, amongst other things, approvals from various Zimbabwean regulatory authorities to be effective. In terms of the sale agreement, the Company plans to issue 727,266 shares at $7.15 per share to Fremiro for the cancellation of their facilitation loan which stood at $11,466 as at June 30, 2018 and the purchase of their 15% shareholding in Blanket Mine, increasing the Company’s total shareholding in Blanket Mine to 64%. The Company will continue to consolidate Blanket Mine in the consolidated financial statements after the transaction becomes effective.

Accounting treatment

The directors of Caledonia Holdings Zimbabwe (Private) Limited (“CHZ”), a wholly owned subsidiary of the Company, performed a re-assessment, using the requirements of IFRS 10: Consolidated Financial Statements (IFRS 10), and concluded that CHZ should continue to consolidate Blanket Mine after the indigenisation and accordingly the subscription agreements with the indigenous shareholders have been accounted for as a transaction with non-controlling interests and as a share based payment transaction.

The subscription agreements, concluded on February 20, 2012, were accounted for as follows:

Non-controlling interests (“NCI”) were recognised on the portion of shareholding upon which dividends declared by Blanket Mine will accrue unconditionally to equity holders as follows:

(a) 20% of the 16% shareholding of NIEEF;

(b) 20% of the 15% shareholding of Fremiro; and

This effectively means that NCI is recognised at 16.2% of the net assets of Blanket Mine.

The remaining 80% of the shareholding of NIEEF and Fremiro is recognised as non-controlling interests to the extent that their attributable share of the net asset value of Blanket Mine exceeds the balance on the facilitation loans including interest. At June 30, 2019 the attributable net asset value did not exceed the balance on the respective loan accounts and thus no additional NCI was recognised.

The transaction with BETS is accounted for in accordance with IAS 19 Employee Benefits (profit sharing arrangement) as the ownership of the shares does not ultimately pass to the employees. The employees are entitled to participate in 20% of the dividends accruing to the 10% shareholding in Blanket Mine if they are employed at the date of such distribution. To the extent that 80% of the attributable dividends exceed the balance on the BETS facilitation loan they will accrue to the employees at the date of such declaration.

The Employee Trust and BETS are entities effectively controlled and consolidated by Blanket Mine. Accordingly, the shares held by BETS are effectively treated as treasury shares in Blanket Mine and no NCI is recognised.

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

5 Blanket Zimbabwe Indigenisation Transaction (continued)

Amendments to the facilitation and advanced dividend loan agreements

Interest modification

On June 23, 2017, the Group, Blanket Mine and the indigenous shareholders of Blanket Mine reached agreement to change the interest terms of the facilitation and advanced dividend loan agreements. The agreements changed the interest rate from the previously agreed 12 month LIBOR plus 10% to the lower of a fixed 7.25% per annum, payable quarterly or 80% of the Blanket Mine dividend in the quarter. The modification was considered beneficial to the indigenous shareholders and gave rise to an equity-settled share-based expense of $806 on June 23, 2017 when all parties reached agreement to modify the interest charged. It was agreed that the interest change was to be applied to the facilitation and advanced dividend loan balances from January 1, 2017.

Dividend and interest moratorium

Blanket Mine suspended dividend payments from January 1, 2015 until August 1, 2016 to facilitate capital expenditure on the Blanket Mine investment plan. As a result, the repayments of facilitation loans by the indigenous shareholders were also suspended. A moratorium was placed on the interest of the facilitation and advanced dividend loans until such time as dividends resumed. Due to the suspension of dividends and the moratorium on interest, no repayments were made or interest accumulated from December 31, 2014 until July 31, 2016. The dividends and interest resumed on August 1, 2016, when Blanket Mine declared a dividend. The amendment was not considered beneficial to the indigenous shareholders.

Blanket Mine’s indigenisation shareholding percentages and facilitation loan balances
							Balance of facilitation loan #
USD	Shareholding		NCI Recognised		NCI subject to facilitation loan			June 30, 2019	Dec 31, 2018
NIEEF	16	%	3.2	%	12.8	%		11,876	11,876
Fremiro	15	%	3.0	%	12.0	%		11,464	11,466
Community Trust	10	%	10.0	%	-			-	-
BETS ~	10	%	-	*	-	*		7,642	7,644
	51	%	16.2	%	24.8	%		30,982	30,986

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

5 Blanket Zimbabwe Indigenisation Transaction (continued)

Amendments to the facilitation and advanced dividend loan agreements (continued)

The balance on the facilitation loans is reconciled as follows:

	2019		2018

Balance at January 1,	30,986		31,052
Dividends used to repay loans	(540	)	(1,158	)
Interest accrued	536		1,090
Balance at June 30,	30,982		30,984

* The shares held by BETS are effectively treated as treasury shares (see above).

~ Accounted for under IAS19 Employee Benefits.

# Facilitation loans are accounted for as equity instruments and are accordingly not recognised as loans receivable.

Advance dividends

In anticipation of completion of the underlying subscription agreements, Blanket Mine agreed to an advance dividend arrangements with NIEEF and the Community Trust as follows:

Advances made to the Community Trust against their right to receive dividends declared by Blanket Mine on their shareholding as follows:

· a $2 million payment on or before September 30, 2012;

· a $1 million payment on or before February 28, 2013; and

· a $1 million payment on or before April 30, 2013.

These advance payments were debited to a loan account bearing interest at a rate at the lower of a fixed 7.25% per annum, payable quarterly or the Blanket Mine dividend in the quarter to the advanced dividend loan holder. The loan is repayable by way of set off of future dividends on the Blanket Mine shares owned by the Community Trust. Advances made to NIEEF as an advanced dividend loan before 2013 have been settled through Blanket Mine dividend repayments in 2014.

The advance dividend payments were recognised as distributions to shareholders and they are classified as equity instruments. The loans arising are not recognised as loans receivable, because repayment is by way of uncertain future dividends.

The movement in the advance dividend loan to the Community Trust is reconciled as follows:

	2019		2018

Balance at January 1,	2,053		2,606
Dividends used to repay advance dividends	(175	)	(375	)
Interest accrued	37		91
Balance at June 30,	1,915		2,322

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

6 Production costs

	2019	2018
Salaries and wages	7,727	6,923
Consumable materials	5,466	5,795
Electricity costs	2,715	4,473
Site restoration	10	10
Safety and evaluation	399	559
Cash-settled share-based expense (note 10 (a))	70	51
On mine administration	953	1,496
	17,340	19,307

7 Other income

	2019	2018

Government grant – Gold sale export incentive	866	2,985
Government grant – Enhanced gold price	1,064	-
Other	108	116
	2,038	3,101

Government grant – Gold sale export incentive

From May 2016 the Reserve Bank of Zimbabwe (“RBZ”) announced an export credit incentive (“ECI”) on the gold proceeds received for all large-scale gold mine producers. On January 1, 2018 the ECI decreased from 3,5% to 2,5% and on February 1, 2018, increased to 10%. Cash receipts of the ECI were received in Blanket’s RTGS$ account. In the monetary policy statement issued on February 20, 2019 the RBZ announced the cancellation of the ECI.

Government grants – Enhanced gold price

Blanket is contractually entitled to receive the London bullion market association gold price which is fixed in the afternoon of the day after the bullion delivered by Blanket to Fidelity Printers and Refiners (Pvt) Ltd (“Fidelity”) has been assayed (“LBMA fixed price”). In terms of the contract with Fidelity, 55% of Blanket’s proceeds are received as US Dollars and the remainder is received as RTGS$. The amount of RTGS$ to be received is calculated at the mid-price of the RTGS$/US Dollar interbank exchange rate. From March 6, 2019 Blanket received an additional amount over and above the LBMA fixed price in the same ratio of US Dollars to RTGS$ as its contractual cash flows, no enhanced gold price was received when the gold price exceeded $1,368 and no formal communication has been received from Fidelity or the RBZ as to the terms, conditions and tax treatment of these additional receipts. All government grants were fully received at the date of issue of these financial statements.

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

8 Administrative expenses

	2019	2018
Investor relations and corporate development	255	418
Audit fee	118	110
Advisory services fee	195	342
Listing fees	170	268
Directors fees company	112	112
Directors fees Blanket	8	25
Employee costs	1,383	1,455
Other office administration cost	309	220
Travel costs	138	165
Eersteling Gold Mine administration costs	17	87
	2,705	3,202

9 Sale of subsidiary

On May 31, 2018 the Group entered into an amended share sale agreement with SH Mineral Investments Proprietary Limited (“SH Minerals”) to sell the shares and claims of Eersteling Gold Mining Company Limited (“Eersteling”), a South African subsidiary previously consolidated as part of the Group, that has been on care and maintenance since 1997. The amended share sale agreement allowed for a purchase price of $3 million which will be settled by three payments of $1 million payable on the completion date, 12 and 18 months after the completion date. On January 31, 2019 all suspensive conditions for the sale were met, ZAR13.9 million ($1 million) was received as payment towards the purchase price and the Group transferred the registered and beneficial ownership of Eersteling to SH Minerals.

Details of the disposal are as follows:

Carrying amounts of net assets over which control was lost:			2019
Non-current assets
Property, plant and equipment			227

Current assets
Trade and other receivables			84
Total assets			311

Non-current liabilities
Rehabilitation provision			650

Current liabilities
Trade and other payables			8
Total liabilities			658

Consideration receivable:
Cash received			1,000
Deferred consideration (at January 31, 2019)			1,953
Total consideration			2,953

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

9	Sale of subsidiary (continued)

			2019
Profit on sale of subsidiary:
Net liabilities derecognised			347
Cumulative exchange differences in respect of the net liabilities of the subsidiary reclassified from equity on loss of control of subsidiary			2,109
Fair value of consideration receivable (at January 31, 2019)			2,953
Profit on sale of subsidiary			5,409

10 Cash-settled share-based payment expense

The Group has expensed the following cash-settled share-based payment arrangements for the period ended June 30:

	Note		2019	2018

Restricted Share Units and Performance Units		10(a)	344	276
Caledonia Mining South Africa employee incentive scheme		10(b)	26	61
			370	337

(a)

Restricted Share Units and Performance Units

Certain key management members were granted Restricted Share Units (“RSUs”) and Performance Units (”PUs”) pursuant to provisions of the 2015 Omnibus Equity Incentive Compensation Plan. All RSUs and PUs were granted and approved by the Compensation Committee of the Board of Directors.

RSUs vest three years after grant date given that the service condition of the relevant employees have been fulfilled. The value of the vested RSUs is the number of RSUs vested multiplied by the fair market value of the Company’s shares, as specified by the plan, on date of settlement.

PUs have a service condition and a performance period of three years. The performance condition is based on key business metrics and includes production cost, gold production and/or central shaft depth targets. The number of PUs that vest will be the PUs granted multiplied by the Performance Multiplier, which will reflect the actual performance in terms of the performance conditions compared to expectations on the date of the award.

RSU holders are entitled to receive dividends over the vesting period. Such dividends will be reinvested in additional RSUs at the then applicable share price calculated at the average Bank of Canada rate immediately preceding the dividend payment. PUs have rights to dividends only after they have vested.

On January 11, 2019, March 23, 2019 and June 8, 2019 87,364 RSUs and 306,920 PUs vested. These RSUs and PUs were settled by a cash payment of $1,280 and by the issue of 159,888 shares to the value of $963.

The fair value of the RSU liability, at the reporting date, was based on the Black Scholes option valuation model. The fair value of the PU liability, at the reporting date, was based on the Black Scholes option valuation model less the fair value of the expected dividends during the vesting period multiplied by the performance multiplier expectation. At the reporting date the PU performance multiplier was estimated at between 93-100% when calculating the liability. The liability as at June 30, 2019 amounted to $209 (December 31, 2018: $2,043). Included in the liability as at June 30, 2019 is an amount of $70 (June 30, 2018: $51) that was expensed and classified as production costs; refer to note 6.

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

10	Cash-settled share-based payment expense (continued)
(a)	Restricted Share units and Performance Units (continued)

The following assumptions were used in estimating the fair value of the cash-settled share-based payment liability on June 30:

	2019						2018
		RSUs			PUs			RSUs		PUs
Fair value (USD)	$	5.92			$5.47-5.76		$	6.86	$	6.65
Share price (USD)	$	5.92		$	5.95		$	6.86	$	6.86
Performance multiplier percentage		-			93-100%			-		94	%
Share units granted:
		RSUs			PUs			RSUs		PUs
Grant - January 11, 2016		60,645			242,579			60,645		242,579
Grant - March 23, 2016		10,965			43,871			10,965		43,871
Grant - June 8, 2016		5,117			20,470			5,117		20,470
Grant - January 19, 2018		4,443			17,774			4,443		17,774
Grant January 11, 2019		-			124,027			-		-
Grant June 8, 2019		-			14,672			-		-
RSU dividend reinvestments		11,144			-			9,165		-
Settlements		(87,364	)		(306,920	)		-		-

Total awards at June 30		4,950			156,473			90,335		324,694

(b) Caledonia Mining South Africa employee incentive scheme

During July 2017 and August 2018, Caledonia Mining South Africa Proprietary Limited granted 37,330 and 5,918 awards respectively to certain of its employees that entitle them to a cash pay-out at the Company’s share price on November 30, each year over a 3 year period from the grant date. The cash-settled share-based payment liability was calculated based on the number of awards expected to vest multiplied by the Company’s Black Scholes option valuation fair value of £4.66 at the reporting date and apportioned for the quantity vested over the total vesting period. The liability relating to these cash-settled share-based payment awards amounted to $75 (December 31, 2018: $94) and the expense amounted to $26 (June 30, 2018: $61) for the quarter ended June 30, 2019. The following assumptions were used in estimating the fair value of the cash-settled share-based payment liability for the quarter ended June 30, 2019.

	2019		2018
	Awards
Grant - July 2017 (3 year term)	37,330		37,330
Grant - August 2018 (3 year term)	5,918		-
Awards paid out	(33,875	)	(12,447	)
Total awards outstanding June 30	9,373		24,883

Estimated awards expected to vest at June 30	100	%	100	%

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

11	Net foreign exchange gain

On October 1, 2018 the RBZ issued a directive to Zimbabwean banks to separate foreign currency from RTGS$ on the accounts held by their clients and pegged the RTGS$ at 1:1 to the US Dollar. On February 20, 2019 the RBZ issued a further monetary policy statement, which allowed inter-bank trading between RTGS$ and foreign currency. The interbank rate was introduced at 2.5 RTGS$ to 1 US Dollar and traded at 6.5432 RTGS$ to 1 US Dollar as at June 30, 2019. On June 24, 2019 the Government issued S.I. 142 which stated “ Zimbabwe dollar (RTGS$) to be the sole currency for legal tender purposes for any transactions in Zimbabwe ”. Throughout these announcements and to the date of issue of these financial statements the US Dollar has remained the primary currency in which the Group’s Zimbabwean entities operate and the functional currency of these entities.

Previously there was uncertainty as to what currency would be used to settle amounts owed to the Zimbabwe government. The announcement of SI142 clarified the Zimbabwean Government’s intentions that these liabilities were always denominated in RTGS$ and that RTGS$ would be the currency in which they would be settled. The devaluation of the deferred tax and electricity liabilities contributed the largest portion of the foreign exchange gain set out below.

The table below illustrates the effect the weakening of the RTGS$ and other non-RTGS$ currencies had, against the US Dollar, on the statement of profit or loss and other comprehensive income. Post quarter end the RTGS$ continued to weaken against the US Dollar. In preparing the Quarter 2 financial statements, it was assumed that government obligations are denominated in RTGS$, whilst in preparing the quarter 1 financial statements these obligations were assumed to be denominated in US Dollar.

	2019		2018

Unrealised Foreign exchange gains	25,447		35
Realised foreign exchange (loss)/gains	(522	)	125
Net foreign exchange gain	24,925		160

12 Gold hedge

On January 10, 2019 the Company entered into a hedge in respect of 4,500 ounces of gold per month from February to June 2019. The hedge protected the Company if the gold price fell below $1,250 per ounce and was entered into by the Company for economic hedging purposes to ensure sufficient cash availability for Blanket’s capital investment plan, not as a speculative investment. The total cost of the derivative contract amounted to $324.

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

13	Property, plant and equipment

	Land and buildings			Mine development, infrastructure and other			Exploration and Evaluation assets		Plant and equipment			Fixtures and fittings			Motor vehicles			Total

Cost

Balance at January 1, 2018		9,434			61,498			6,967		27,881			943			2,329			109,052
Additions*		-			18,719			-		899			202			95			19,915
Impairments		-			(60	)		-		(529	)		(216	)		(17	)		(822	)
Assets held for sale		(140	)		(74	)		-		-			-			-			(214	)
Reallocations between asset classes		1,068			(5,525	)		-		4,457			-			-			-
Foreign exchange movement		(23	)		(49	)		-		(33	)		(6	)		(5	)		(116	)
Balance at December 31, 2018		10,339			74,509			6,967		32,675			923			2,402			127,815
Additions*		-			8,840			-		344			169			64			9,417
Impairments		-			-			-		(144	)		-			-			(144	)
Reallocations between asset classes		-			(573	)		-		573			-			-			-
Foreign exchange movement		-			-			-		5			53			1			59
Balance at June 30, 2019		10,339			82,776			6,967		33,453			1,145			2,467			137,147

* Included in additions is an amount of $8,711 (December 31, 2018: $19,323) relating to capital work in progress (“CWIP”) and contains $92 (December 31, 2018: $61) of borrowing costs capitalised from the term loan. As at quarter end $71,335 of CWIP was included in the closing balance (December 31, 2018: $62,624).

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

13	Property, plant and equipment (continued)

	Land and buildings		Mine development, infrastructure and other		Exploration and Evaluation assets		Plant and equipment			Fixtures and fittings			Motor vehicles			Total
Accumulated depreciation and Impairment losses

Balance at January 1, 2018		3,636		5,172		-		15,382			761			2,023			26,974
Depreciation for the year		775		649		-		2,404			99			144			4,071
Impairments		-		-		-		(429	)		(170	)		(15	)		(614	)
Foreign exchange movement		-		-		-		-			(41	)		(2	)		(43	)
Balance at December 31, 2018		4,411		5,821		-		17,357			649			2,150			30,388
Depreciation		445		214		-		1,272			94			75			2,100
Foreign exchange movement		-		-		-		-			34			-			34
Balance at June 30, 2019		4,856		6,035		-		18,629			777			2,225			32,522
Carrying amounts
At December 31, 2018		5,928		68,688		6,967		15,318			274			252			97,427
At June 30, 2019		5,483		76,741		6,967		14,824			368			242			104,625

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

14 Inventories

	December 31,
	2019	2018

Consumable stores	9,729	9,210
Gold in progress	-	217
	9,729	9,427

15 Trade and other receivables

	December 31,
	2019	2018

Deferred consideration for the sale of subsidiary	970	-
Trade and other receivables – long-term portion	970	-

Bullion sales receivable	3,575	2,695
VAT receivables	1,580	2,743
Deferred consideration for the sale of subsidiary	991	-
Deposits for stores and equipment and other receivables	346	954
Trade and other receivables – short-term portion	6,492	6,392

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

16	Cash flow information

Non-cash items and information presented separately on the cash flow statement:


	2019		2018

Operating profit	39,981		11,075
Adjustments for:
Unrealised foreign exchange gains	(25,447	)	(35	)
Cash-settled share-based expense (note 10)	370		337
Cash-settled share-based expense included in production costs (note 6)	70		51
Settlement of cash-settled share-based payments	(1,280	)	-
Equity-settled share-based expense	-		14
Depreciation	2,100		1,868
Disposals and scrappings	-		9
Derecognition of property, plant and equipment	144		-
Profit on sale of subsidiary (note 9)	(5,409	)	-
Site restoration	10		10
Cash generated by operations before working capital changes	10,539		13,329
Inventories	(302	)	(942	)
Prepayments	(529	)	(623	)
Trade and other receivables	347		(2,853	)
Trade and other payables	(938	)	(478	)
Cash generated from operating activities	9,117		8,433

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

17	Operating Segments

The Group's operating segments have been identified based on geographic areas. The strategic business units are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s CEO reviews internal management reports on at least a quarterly basis. Zimbabwe and South Africa describe the operations of the Group's reportable segments. The Zimbabwe operating segment comprise CHZ and subsidiaries. The South Africa geographical segment comprise the sales made and services rendered by Caledonia Mining South Africa Proprietary Limited to Blanket. The Company and Greenstone Management Services Holdings Limited (a subsidiary in the UK) responsible for administrative functions within the Group are taken into consideration in the strategic decision-making process of the CEO and are therefore included in the disclosure below. Reconciling amounts do not represent a separate segment. Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management report that are reviewed by the Group's CEO. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

*Geographic segment profit as at June 30, 2019*	Zimbabwe		South Africa		Inter-group elimination adjustments		Corporate and other reconciling amounts		Total

Revenue	32,440		6,092		(5,878	)	(214	)	32,440
Royalty	(1,683	)	-		-		-		(1,683	)
Production costs	(17,320	)	(5,365	)	5,345		-		(17,340	)
Management fee	(1,123	)	1,123		-		-		-
Depreciation	(2,217	)	(55	)	172		-		(2,100	)
Other income	2,036		2		-		-		2,038
Other expenses	(309	)	-		-		-		(309	)
Administrative expenses	(54	)	(955	)	-		(1,696	)	(2,705	)
Foreign exchange gain	24,896		11		-		18		24,925
Cash-settled share-based expense	(149	)	(84	)	-		(137	)	(370	)
Net finance costs	(62	)	36		-		6		(20	)
Profit with the sale of Eersteling	-		-		-		5,409		5,409
Margin call on gold hedge	-		-		-		(324	)	(324	)
Profit before tax	36,455		805		(361	)	3,062		39,961
Tax expense	(1,026	)	(253	)	23		(40	)	(1,296	)
Profit for the period	35,429		552		(338	)	3,022		38,665

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

17	Operating Segments (continued)

As at June 30, 2019	Zimbabwe		South Africa		Inter-group elimination adjustments		Corporate and other reconciling amounts		Total
*Geographic segment assets*

Current (excluding intercompany)	18,013		4,205		(52	)	3,480		25,646
Non-current (excluding intercompany)	106,349		326		(1,974	)	970		105,671
Expenditure on property, plant and equipment (note 13)	10,009		(71	)	(521	)	-		9,417
Intercompany balances	-		7,089		(48,757	)	41,668		-


Geographic segment liabilities
Current (excluding intercompany)	(7,497	)	(1,364	)	-		(338	)	(9,199	)
Non-current (excluding intercompany)	(7,647	)	(73	)	519		(210	)	(7,411	)
Intercompany balances	(1,250	)	(32,729	)	48,757		(14,778	)	-

*Geographic segment profit as at June 30, 2018*	Zimbabwe		South Africa		Inter-group elimination adjustments		Corporate and other reconciling amounts		Total

Revenue	34,257		7,267		(7,267	)	-		34,257
Royalty	(1,715	)	-		-		-		(1,715	)
Production costs	(19,411	)	(6,756	)	6,860		-		(19,307	)
Management fee	(990	)	990		-		-		-
Depreciation	(2,007	)	(20	)	159		-		(1,868	)
Other income	3,020		2		-		79		3,101
Administrative expenses	(25	)	(1,386	)	-		(1,791	)	(3,202	)
Foreign exchange gain/(loss)	76		(161	)	-		245		160
Cash-settled share-based expense	(152	)	(61	)	-		(124	)	(337	)
Equity-settled share-based expense	-		-		-		(14	)	(14	)
Net finance costs	(63	)	11		-		7		(45	)
Profit before tax	12,990		(114	)	(248	)	(1,598	)	11,030
Tax expense	(4,230	)	275		58		-		(3,897	)
Profit for the period	8,760		161		(190	)	(1,598	)	7,133

Caledonia Mining Corporation Plc

Notes to the Condensed Consolidated Interim Financial Statements

(in thousands of United States dollars, unless indicated otherwise)

17	Operating Segments (continued)

As at December 31, 2018	Zimbabwe		South Africa		Inter-group elimination adjustments eliminations		Corporate and other reconciling amounts		Total
Geographic segment assets

Current (excluding intercompany)			3,489		(91	)	3,265		28,168
Non-current (excluding intercompany)	98,700		466		(1,641	)	-		97,525
Intercompany balances	20,436		370		(891	)	-		19,915
Expenditure on property, plant and equipment (note 13)	-		6,926		(46,240	)	39,314		-
Assets held for sale	-		296		-		-		296

Geographic segment liabilities
Current (excluding intercompany)	(10,445	)	(1,403	)	-		(350	)	(12,198	)
Non-current (excluding intercompany)	(33,043	)	(47	)	446		(2,043	)	(34,687	)
Intercompany balances	(1,345	)	(33,032	)	46,240		(11,863	)	-
Liabilities directly associated with assets held for sale	-		(609	)	-		-		(609	)

Major customer

Revenues from Fidelity Printers and Refiners in Zimbabwe amounted to $32,440 (2018: $34,257) for the period ended June 30, 2019.

Additional Information

DIRECTORS AND OFFICERS at August 13, 2019

BOARD OF DIRECTORS	OFFICERS
L.A. Wilson (2) (3) (4) (5) (7) Chairman of the Board	S. R. Curtis (5) (6) (7) Chief Executive Officer
Non-executive Director	Johannesburg, South Africa
Florida, United States of America

S. R. Curtis (5) (6) (7)	D. Roets (5) (6) (7)
Chief Executive Officer Johannesburg, South Africa	Chief Operating Officer Johannesburg, South Africa

J. L. Kelly (1) (2) (3) (5) (7)	M. Learmonth (5) (7)
Non-executive Director Connecticut, United States of America	Chief Financial Officer Jersey, Channel Islands

J. Holtzhausen (1) (2) (4) (5) (6) (7)	M. Mason (5) (7)
Chairman Audit Committee Non-executive Director, Cape Town, South Africa	VP Corporate Development and Investor Relations London, England

M. Learmonth (5) (7)	A. Chester (5)
Chief Financial Officer Jersey, Channel Islands	General Counsel, Company Secretary and Head of Risk and Compliance Jersey, Channel Islands
Chief Financial Officer Jersey, Channel Islands
John McGloin (1) (3) (4) (6) (7)	Board Committees
Non-executive Director	(1) Audit Committee
Bishops Stortford, United Kingdom	(2) Compensation Committee
	(3) Corporate Governance Committee
	(4) Nomination Committee
	(5) Disclosure Committee
	(6) Technical Committee (7) Strategic Planning Committee

Additional Information

CORPORATE DIRECTORY as at August 13, 2019

CORPORATE OFFICES	SOLICITORS
Jersey – Head and Registered Office	Mourant Ozannes (Jersey)
Caledonia Mining Corporation Plc	22 Grenville Street
3^rd Floor	St Helier
Weighbridge House	Jersey
St Helier	Channel Islands
Jersey JE2 3NF
South Africa	Borden Ladner Gervais LLP (Canada)
Caledonia Mining South Africa Proprietary Limited	Suite 4100, Scotia Plaza
P.O. Box 4628	40 King Street West
Weltevreden park	Toronto, Ontario M5H 3Y4 Canada
South Africa
	Memery Crystal LLP (United Kingdom)
	44 Southampton Buildings
Zimbabwe	London WC2A 1AP
Caledonia Holdings Zimbabwe (Private) Limited	United Kingdom
P.O. Box CY1277
Causeway, Harare	Dorsey & Whitney LLP (US)
Zimbabwe	TD Canada Trust Tower
	Brookfield Place
Capitalisation (August 13, 2019)	161 Bay Street
Unlimited: 10,763,041	Suite 4310
Shares, Warrants and Options Issued:	Toronto, Ontario
Shares: 10,763,041	M5J 2S1 Canada
Options: 38,000
	AUDITORS
SHARE TRADING SYMBOLS	BDO South Africa Incorporated
NYSE American - Symbol "CMCL"	Wanderers Office Park
AIM - Symbol “CMCL”	52 Corlett Drive
Toronto Stock Exchange - Symbol “CAL”	Illovo 2196
	South Africa
BANKERS	Tel: +27(0)105907200
Barclays
13 Library Place	REGISTRAR & TRANSFER AGENT
St Helier, Jersey	Computershare
	100 University Ave, 8^th Floor,
	Toronto, Ontario, M5J 2Y1
	Tel: +1 416 263 9483