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Note 27 - Share-based Expenses | 12 Months Ended
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Dec. 31, 2019
Statement Line Items [Line Items] |
Disclosure of share-based payment arrangements [text block] |
27 | Share-based expenses
27.1 | Cash-settled share-based expense
The Group has separately disclosed the following cash-settled share-based payment arrangements in the statements of profit or loss and other comprehensive income for the years ended December 31:
|  | Note |  | 2019 |  |  | 2018 |  |  | 2017 |
Restricted Share Units and Performance Units |  | 27.1.(a) |  |  | 616 |  |  |  | 218 |  |  |  | 853 |
Caledonia Mining South Africa employee incentive scheme |  | 27.1.(b) |  |  | 73 |  |  |  | 97 |  |  |  | 123 |
|  |  |  |  | 689 |  |  |  | 315 |  |  |  | 976 |
| (a) | Restricted Share Units and Performance Units
Certain key management members were granted Restricted Share Units (“RSUs”) and Performance Units (“PSUs”) pursuant to provisions of the 2015 Omnibus Equity Incentive Compensation Plan. All RSUs and PSUs were granted and approved by the Compensation Committee of the Board of Directors. The RSUs will vest three years after grant date given that the service condition of the relevant employees is fulfilled. The value of the vested RSUs will be the number of RSUs vested multiplied by the fair market value of the Company’s shares, as specified by the Plan and in the award agreements, on date of settlement. The PSUs have a service condition and a performance period of three years. The performance condition is a function of production cost, gold production and central shaft depth targets on certain specified dates. The number of PSUs that will vest will be the PSUs granted multiplied by a 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 noon rate immediately preceding the dividend payment. PSUs have rights to dividends only after they have vested. RSUs and PSUs were originally granted to be settled in cash. On May 8, 2018 the Board approved amendments to the awards to allow for settlement of the vesting date value in cash or shares issuable at fair market value or a combination of both at the discretion of the unit holder. The fair value of the RSUs, at the reporting date, was based on the Black Scholes option valuation model. The fair value of the PSUs, 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 it was assumed that there is a 93% - 100% probability that the performance conditions will be met and therefore a 93% - 100% ( 2018: 85%; 2017: 94% ) average performance multiplier was used in calculating the estimated liability. The liability as at December 31, 2019 amounted to $524 ( December 31, 2018: $2,043 ). Included in the liability as at December 31, 2019 is an amount of $107 ( December 31, 2018: $43; December 31, 2017: $311 ) that was expensed and classified as production costs; refer note 9. During the year PSUs and RSUs to the value of $2,243 vested of which $963 was issued as share capital. The following assumptions were used in estimating the fair value of the cash-settled share-based payment liability on December 31:
|  | 2019 |  | 2018 |
|  | RSUs |  |  | PSUs |  | RSUs |  |  | PSUs |
Fair value ($) |  | $ | 8.46 |  |  |  | $8.19 |  |  | $ | 5.46 |  |  | $ | 5.46 |
Share price ($) |  | $ | 8.46 |  |  |  | $8.46 |  |  | $ | 5.46 |  |  | $ | 5.46 |
Performance multiplier percentage |  |  | - |  |  | 93 | - | 100% |  |  | - |  |  |  | 85 | %
Share units granted:
|  | RSUs |  |  | PSUs |  |  | RSUs |  |  | PSUs |
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, 2017 |  |  | 4,443 |  |  |  | 17,774 |  |  |  | 4,443 |  |  |  | 17,774 |
Grant – January 19, 2019 |  |  | - |  |  |  | 124,027 |  |  |  | - |  |  |  | - |
Grant – June 8, 2019 |  |  | - |  |  |  | 14,672 |  |  |  | - |  |  |  | - |
RSU dividend reinvestments |  |  | 11,316 |  |  |  | - |  |  |  | 10,960 |  |  |  | - |
Settlements |  |  | (87,434 | ) |  |  | (306,920 | ) |  |  |  |  |  |  |  |
Total awards at December 31 |  |  | 5,052 |  |  |  | 156,473 |  |  |  | 92,130 |  |  |  | 324,694 |
On January 11, 2020 and January 19, 2020 an aggregate of 121,332 PSUs and 17,585 RSUs were awarded executives as well as to certain senior management of the companies in the Group.
(b) | Caledonia Mining South Africa employee incentive scheme
From July 2017, Caledonia Mining South Africa Proprietary Limited granted 52,282 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 £6.07 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 $16 ( December 31, 2018: $47 ) and the expense amounted to $73 ( December 31, 2018: $97; December 31, 2017: $123 ) for the year ended December 31, 2019. The following assumptions were used in estimating the fair value of the cash-settled share-based payment liability on December, 31:
|  | 2019 |  |  | 2018 |
|  | Awards |
Grant - July 2017 (3-year term) |  |  | 37,330 |  |  |  | 37,330 |
Grant - August 2018 (3-year term) |  |  | 5,918 |  |  |  | 5,918 |
Grant - August 2019 (3-year term) |  |  | 9,034 |  |  |  | - |
Awards paid out |  |  | (44,985 | ) |  |  | (26,864 | )
Total awards outstanding December 31 |  |  | 7,297 |  |  |  | 16,384 |
Estimated awards expected to vest at December 31 |  |  | 100 | % |  |  | 100 | %
27.2 | Equity-settled share-based expense
The Group has expensed the following equity-settled share-based payment arrangements for the years ended December 31:
|  | Note |  | 2019 |  |  | 2018 |  |  | 2017 |
Share option programmes |  | 27.2 (a) |  |  | - |  |  |  | 14 |  |  |  | 29 |
Facilitation and advanced dividend loan modification |  | 27.2 (b) |  |  | - |  |  |  | - |  |  |  | 806 |
|  |  |  |  | - |  |  |  | 14 |  |  |  | 835 |
| (a) | Share option programmes
The Omnibus Equity Incentive Compensation Plan (“OEICP”) was established for grants after May 2015. Share options issued before May 2015 were issued in terms of the Rolling Stock Option Plan (“RSOP”), which was superseded by the OEICP. In accordance with the OEICP, options are granted at an exercise price equal to the greater of volume weighted average trading price for the five days prior to grant or the closing price on the day immediately prior to the date of grant. The options vest according to dates set at the discretion of the Compensation Committee of the Board of Directors at the date of grant. All outstanding option awards that have been granted, pursuant to the plan, vest immediately. Terms and conditions of share option programmes The maximum term of the options under the OEICP is 10 years and under the RSOP 5 years. The terms and conditions relating to the grant of options under the RSOP are that all options are to be settled by physical delivery of shares. Equity-settled share-based payments under the OEICP will also be settled by physical delivery of shares. Under both plans the aggregate number of shares that may be issued pursuant to the grant of options, or under any other share compensation arrangements of the Company, will not exceed 10% of the aggregate issued and outstanding shares issued of the Company. At December 31, 2019, the Company has the following options outstanding:
Number of Options |  |  | Exercise Price |  |  | Expiry Date
|  |  | Canadian $ |  |  |
| 5,000 |  |  |  | 4.00 |  |  | Oct 8, 2020
| 18,000 |  |  |  | 11.50 |  |  | Oct 13, 2021
| 5,000 |  |  |  | 8.10 |  |  | May 30, 2022
| 10,000 |  |  |  | 9.30 |  |  | Aug 25, 2024
| 38,000 |  |  |  |  |  |  |
The continuity of the options granted, exercised, cancelled and expired under the Plan were as follows:
|  | Number of Options * |  |  | Weighted Avg. Exercise Price |
|  | Canadian $ * |
Options outstanding and exercisable at January, 2017 |  |  | 92,280 |  |  |  | 5.85 |
Granted |  |  | 5,000 |  |  |  | 8.10 |
Exercised |  |  | (69,280 | ) |  |  | 4.50 |
Options outstanding and exercisable at December 31, 2017 |  |  | 28,000 |  |  |  | 9.55 |
Granted |  |  | 10,000 |  |  |  | 9.30 |
Exercised |  |  | - |  |  |  | - |
Options outstanding and exercisable at December 31, 2018 |  |  | 38,000 |  |  |  | 9.48 |
Granted |  |  | - |  |  |  | - |
Exercised |  |  | - |  |  |  | - |
Options outstanding and exercisable at December 31, 2019 |  |  | 38,000 |  |  |  | 9.48 |
The weighted average remaining contractual life of the outstanding options is 2.14 years ( 2018: 3.14 years). Inputs for measurement of grant date fair values The fair value of share-based payments noted above was estimated using the Black-Scholes Option Pricing Model as the fair value of the services could not be estimated reliably. Service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value. The following assumptions were used in determining the fair value of the options:
Options granted |  | 10,000 |  | * 5,000 |  | *18,000
Grant date |  | February 27, 2018 |  | May 30, 2018 |  | October 13, 2017
Risk-free interest rate |  | 2,86% |  | 2.40% |  | 0.53%
Expected stock price volatility (based on historical volatility) |  | 32% |  | 118% |  | 119%
Expected option life in years |  | 3 |  | 3 |  | 5
Exercise price |  | CAD 9.30 |  | * CAD 8.10 |  | * CAD 11.50
Share price at grant date |  | CAD 9.30 |  | * CAD 8.10 |  | * CAD 11.50
Fair value at grant date |  | $1.40 |  | * $ 5.81 |  | *$9.45
The exercise price was determined as the prevailing Toronto Stock Exchange share price on the day of the grant. Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price. The expected term has been based on historical experience. The share-based payment expense relating to the grants amounted to $Nil ( 2018: $14; 2017: $29 ). * Amounts stated after the 1:5 share consolidation effected on June 26, 2017.
(b) | Facilitation and advance dividend loan modification
On June 23, 2017, the Group, Blanket Mine and the indigenous shareholders reached agreement to change the interest rate on the facilitation and advanced dividend loans from the previously agreed 12 month LIBOR + 10% to the lower of a fixed rate of 7.25% per annum, payable quarterly or 80% of the dividends paid in the financial quarter. The modification was beneficial to the indigenous shareholders and resulted in an equity-settled share-based payment expense of $806. The Monte Carlo simulation approach was followed to value the fair value of the indigenous shareholders’ equity before and after the modification date. The fair value of the indigenous shareholders’ equity was based on simulating the future Blanket Mine dividend yields. The following assumptions were used in determining modification of the expense:
Modification date |  | June 23, 2017
Blanket Mine dividend yield |  | 23.70% | - | 89.88%
Risk free interest rate |  | $ swap curve
Group market capitalisation at grant date ($’000) |  | $68,436

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