Caledonia Mining : Fourth Quarter 2020 MD&A

CALEDONIA MINING CORPORATION PLC

March 22, 2021

Management's Discussion and Analysis

This management's discussion and analysis ("MD&A") of the consolidated operating results and financial position of Caledonia Mining Corporation Plc ("Caledonia" or the "Company") is for the quarter ended December 31, 2020 ("Q4 2020" or the "Quarter" and the year ended December 31, 2020 (the "Year") and the period ended March 22, 2021). It should be read in conjunction with the Audited Consolidated Financial Statements of Caledonia for the Year (the "Consolidated Financial Statements") which are available from the System for Electronic Data Analysis and Retrieval atwww.sedar.com or from Caledonia's website atwww.caledoniamining.com. The Consolidated Financial Statements and related notes have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. In this MD&A, the terms "Caledonia", the "Company", the "Group", "we", "our" and "us" refer to the consolidated operations of Caledonia Mining Corporation Plc and its subsidiaries unless otherwise specifically noted or the context requires otherwise.

Note that all currency references in this document are to US Dollars, unless otherwise stated.

TABLE OF CONTENTS

• 1. Overview

• 2. Highlights

• 3. Summary Financial Results

• 4. Operations at the Blanket Gold Mine, Zimbabwe

  • 4.1 Safety, Health and Environment

  • 4.2 Social Investment and Contribution to the Zimbabwean Economy

  • 4.3 Gold Production

  • 4.4 Underground

  • 4.5 Metallurgical Plant

  • 4.6 Production Costs

  • 4.7 Capital Projects

  • 4.8 Indigenisation

  • 4.9 Zimbabwe Commercial Environment

  • 4.10 Opportunities and Outlook

  • 4.11 Sale of Eersteling

  • 4.12 COVID-19

  • 4.13 Solar project

• 5. Exploration

• 6. Investing

• 7. Financing

• 8. Liquidity and Capital Resources

• 9. Off-Balance Sheet Arrangements, Contractual Commitments and Contingencies

• 10. Non-IFRS Measures

• 11. Party Transactions

• 12. Critical Accounting Estimates

• 13. Financial Instruments

• 14. Dividend Policy

• 15. Management and Board

• 16. Securities Outstanding

• 17. Risk Analysis

• 18. Forward-Looking Statements

• 19. Controls

• 20. Qualified Person

1. OVERVIEW

Caledonia is an exploration, development and mining corporation focused on Zimbabwe. Caledonia's primary asset is a 64% ownership in Blanket Mine ("Blanket"), a gold mine in Zimbabwe. Caledonia consolidates Blanket into the Consolidated Financial Statements; accordingly, operational and financial information set out in this MD&A is on a 100% basis, unless otherwise specified. Caledonia's shares are listed on the NYSE American LLC ("NYSE American") (symbol - "CMCL") and depositary interests in Caledonia's shares are admitted to trading on AIM of the London Stock Exchange plc (symbol - "CMCL").

2. HIGHLIGHTS

3 months ended December 31	12 months ended December 31	Comment
2019	2020	2019	2020
Gold produced (oz)	16,876	15,012	55,182	57,899	Gold produced in the Quarter was 11% lower than Q4 2019 ("the comparable quarter") due to lower grade and recovery. Production includes 1,585 ounces of gold which was sold after the end of the Quarter.
On-mine cost per ounce ($/oz)1	603	770	651	744	On-mine costs increased due to COVID-19 costs, higher share-based payment expense, increased diesel usage and increased maintenance costs on trackless equipment
All-in sustaining cost ($/oz) ("AISC")1	812	1,083	820	946	AISC increased due to higher on-mine costs, higher administrative expenses due to the increased cost of insurance and higher wages and salaries
Average realised gold price ($/oz)1	1,458	1,845	1,382	1,749	The average realised gold price reflects international spot prices and excludes revenues from the export credit incentive and predecessor schemes
Gross profit2	11,336	14,375	31,138	46,656	Gross profit is higher due to the higher gold price and (for the Year) higher production offset by increased production costs
Net profit attributable to shareholders	2,390	2,973	42,018	20,780	Net profit the Year was lower than 2019 which benefitted from foreign exchange gains, profit on the sale of a subsidiary and income from government grants. Increased profit for the Quarter is commensurate with increased gross profit
Basic IFRS earnings per share ("EPS") (cents)	21.5	24.0	382.0	173.4	IFRS EPS reflects the movement in IFRS profit attributable to shareholders after adjustment for increased shares in issue
Adjusted EPS1	11.7	74.9	145.1	204.2	Adjusted EPS excludes foreign exchange gains and losses and profit on disposal of a subsidiary, which benefitted prior periods
Net cash and cash equivalents	8,893	19,092	8,893	19,092	Cash increased due to a $13m (gross) equity issue in Q3 of 2020
Net cash from operating activities	4,794	11,617	18,060	30,962	Improved cash generation due to the higher gold price

increased cost of insurance and higher wages

1 Non-IFRS measures such as "On-mine cost per ounce", "AISC", "average realised gold price" and "adjusted EPS" are used throughout this document. Refer to section 10 of this MD&A for a discussion of non-IFRS measures.

2 Gross profit is after deducting royalties, production costs and depreciation but before administrative expenses, other income, interest and finance charges and taxation.

An excellent operating and financial performance

Production in the Year was 57,899 ounces, which was at the top end of the guidance range and was a new record for annual production. Production for the Quarter, although lower than the comparable quarter, was 15,012 ounces and was in-line with our expectations. The strong performance, despite the impediments arising from the COVID-19 pandemic, reflects the measures taken in previous quarters to improve tonnes mined and increase metallurgical recoveries.

The robust operating performance was supported by a rising gold price: gross profit for the Year was $46.6 million - almost 50% higher than 2019; gross profit for the Quarter was $14.4 million - almost 27% higher than the comparable quarter.

The net financial performance for the Year when compared to 2019 was adversely affected by the large foreign exchange gains and a significant profit arising on the sale of a subsidiary which were recognised in 2019. Adjusted earnings per share for the Year increased by 41% from 145 cents to 204 cents.

Central Shaft Project almost complete

The Central Shaft was fully equipped by the end of the Year and the production headgear was erected in January 2021. The shaft is now being commissioned and is expected to be fully operational before the end of the first quarter of 2021.

Rising production in 2021 and 2022

Production is expected to increase after the Central Shaft has been commissioned. Production guidance for 2021 is a range of 61,000 to 67,000 ounces; guidance from 2022 onwards is 80,000 ounces - 38% higher than the production in 2020.

60% cumulative increase in the quarterly dividend since October 2019

The Company paid a quarterly dividend of 11 cents per share in January 2021. This is the fourth increase in the quarterly dividend in the last 15 months. The total dividend per share paid in 2020 was 33.5 cents - a 21.8% increase from 2019.

Decision to implement a $12 million solar project

The Company has resolved to construct a 12MWac solar plant at a cost of approximately $12 million to improve the quality and security of Blanket's electricity supply and to reduce Blanket's environmental footprint. The plant is expected to provide approximately 27% of Blanket's total daily electricity demand. The plant will be constructed by Voltalia, an international renewable energy provider, and is expected to be operational in early 2022. Whilst the project is being done for largely defensive reasons, it is expected to yield a modest return to shareholders after taking account of the dilutive effect of the equity issued to fund it.

Successful equity issue to fund the solar project

During the third quarter of 2020, the Company issued approximately 600,000 shares to raise $13 million (before expenses) to fund the solar project. The number of shares issued was lower than the 800,000 new shares that the Company had expected to issue, thereby improving the anticipated returns to shareholders from the project.

Acquisition of new exploration assets

In the Quarter the Company entered into option agreements in respect of two properties in the Zimbabwe Midlands, which has historically been a substantial gold producing region. These options give the Company the right to explore each property for periods of 15 and 18 months; depending on the exploration success, the Company has the right to acquire each property for a consideration of approximately $5 million plus a net smelter royalty at 1%.

Appointment of an additional non executive director; management team strengthened