Caledonia expects improved fourth-quarter output, greater consistency in 2027
While production at Caledonia Mining's Blanket mine, in Zimbabwe, was below expectations in the third quarter ended September 30, CEO Mark Learmonth says the company has a good understanding of the operational issues that affected production.
Reporting on the company’s operational and financial performance for the quarter, he assures shareholders that Blanket has taken clear steps to address them, including adding compressed-air capacity at the deeper levels and increasing processing capacity to recover gold temporarily retained in the plant.
“These initiatives will support improved production in the fourth quarter and greater consistency in 2027.”
Guidance for the 2026 financial year has, however, been revised to between 69 000 oz and 72 500 oz.
The Blanket mine produced 17 030 oz of gold in the third quarter, compared with the 19 106 oz produced in the third quarter of 2025 and sold 18 713 oz of gold, compared with the 20 355 oz sold in the third quarter of 2025.
Revenue increased by 10.5% year-on-year to $78.9-million for the quarter under review, driven primarily by a significantly higher average realised gold price of $4 134/oz, compared with the average realised gold price of $3 434/oz in the third quarter of 2025.
Gross profit increased by 13.6% year-on-year to $41.9-million, reflecting improved margins owing to the higher average realised gold price.
Net profit, however, decreased by 39.3% year-on-year to $11.3-million, mainly owing to a noncash fair value loss of $12.9-million on the company’s derivative financial instruments associated with the issue of the convertible senior notes in January and the gold price hedge put options.
The fair value loss on derivative instruments in the Quarter compares with a fair value gain of $11.5-million in the prior comparable quarter.
Caledonia’s board has approved a quarterly dividend of $0.14 a share.
Learmonth, meanwhile, also assures shareholders that the company continues to make important progress on its growth strategy.
“Bilboes is our immediate growth priority, with first gold targeted for the fourth quarter of 2028, and we are maintaining momentum. The signing of the interim facilities agreement enabling the group to borrow up to $150-million to fund the Bilboes project is an important step in providing additional financial flexibility as we advance construction activities and progress the broader project funding strategy.
“Beyond Bilboes, we continue to make encouraging progress across our wider portfolio. The increase in Blanket’s mineral resource base reinforces our confidence in the long-term potential of the mine and provides a stronger foundation for extending its life and evaluating opportunities for future production growth,” he points out.
He adds that the receipt of the environmental-impact assessment certificate in respect of large-scale oxide mining and heap leach operations at Blanket means this project may commence early in 2027, subject to the success of the heap leach trial, which is now in progress.
“Modifications to increase the capacity of Blanket’s metallurgical plant will be completed in the middle of 2027; in the interim, some of Blanket’s increased run-of-mine production is expected to be processed at the newly refurbished Lima plant.
“At Motapa, the declaration of a maiden mineral resource is an important first step in demonstrating the scale and potential of what we believe could become another significant asset for the group. Further exploration continues at Motapa. These achievements demonstrate the depth of our asset base in Zimbabwe and the opportunities we have to create value,” Learmonth says.