One of the country’s leading bullion producers, Caledonia Mining Corp, has lowered its 2026 capital expenditure forecast by 42% to $103.3 million, citing clearer visibility on the timing of deposits for long-lead equipment at its Bilboes project in Zimbabwe, Mining Zimbabwe can report.
By Ryan Chigoche
The $75.6 million reduction comes as the gold producer redirects spending towards its Blanket Mine in Gwanda, where output is recovering from a weak start to the year.
The Victoria Falls, New York and London-listed company cut planned growth capital for Bilboes to $48 million from $132.1 million.
Sustaining capital at Blanket was increased to $48 million from $43 million, with an additional $3.5 million allocated to growth initiatives at the same operation. Exploration spending at the Motapa project was maintained at $3.8 million.
Management said the revised programme does not reflect any change to Bilboes’ timetable, scope or overall cost. Rather, it stems from a better understanding of when deposits for long-lead equipment are due, based on ongoing procurement activity.
“The reduction in the planned capital expenditure at Bilboes does not reflect any change in the project timetable, scope or costs,” the company said in its second-quarter results. “It reflects a better understanding of the timing of deposits required for long-lead-time equipment, which continues to emerge from the ongoing procurement programme.”
Production Recovery
The capital reset arrives alongside a stronger second-quarter performance, with surging gold prices offsetting an 18% year-on-year production decline at Blanket.
Profit after tax climbed 27% to $30.02 million from $23.60 million in the same period last year, while revenue increased 16% to $75.9 million from $65.3 million, largely driven by a higher realised gold price.
Turning to operational metrics, Blanket produced 17,360 ounces during the quarter, down from 21,070 ounces a year earlier. Yet output rose 18% compared to the first quarter of 2026, signalling early momentum in the company’s recovery strategy.
This improvement reflects three key operational changes: better access to higher-grade mining zones, the completion of an elution plant upgrade and the introduction of a seven-day working week. The new shift schedule is anticipated to boost ore processing by approximately 200 tonnes per day starting in September.
Financial metrics similarly improved, with earnings before interest, tax, depreciation and amortisation rising 16% to $45.8 million from $39.5 million, while net cash from operating activities edged up to $28.4 million from $28.1 million.
Exploration and Cost Pressures
While Caledonia advances exploration across its portfolio, cost pressures continue to weigh on the company’s near-term profitability.
Drilling at Motapa has confirmed mineralisation over approximately six kilometres of strike, with a maiden resource estimate expected later this year. At Blanket, the K-Pits programme has identified significant oxide and sulphide mineralisation near existing operations, which could provide a new near-term mining opportunity.
First-half costs remained elevated, partly due to non-operating items, including US$3.2 million in employee trust dividend payments, US$4 million in advisory fees from the convertible bond issue and US$3.2 million in additional government royalties tied to higher gold prices. Sustaining capital expenditure also rose, reflecting ongoing infrastructure and workforce investments.
Management maintained full-year on-mine cost guidance of US$1,600-US$1,800 per ounce, while all-in sustaining costs are expected to be between US$2,500 and US$2,700 per ounce. The higher AISC guidance reflects increased sustaining capital aimed at boosting production from 2027 onwards, with further details expected towards year-end.
The company faces a balancing act between investing for future growth and managing near-term cost pressures, although the strong gold price environment provides some cushion.
Safety Performance and Outlook
Beyond the production and profit gains, Blanket achieved a record safety performance during the quarter, with approximately 395 consecutive days without a lost-time injury and more than 5.4 million injury-free man-hours logged, according to Chief Executive Mark Learmonth.
The operational measures implemented to enhance mine flexibility and ore availability are beginning to bear fruit, Learmonth said. The June introduction of a seven-day working week represents a significant milestone, with the company expecting to process an additional 200 tonnes of ore per day from September. Combined with the elution plant upgrade completed earlier this year and continued progress in accessing higher-grade material, Caledonia anticipates further production strengthening in the second half of 2026.
The favourable gold price environment, coupled with these operational improvements, lifted quarterly revenue to $75.9 million and profit after tax to $30 million, while bolstering the company’s cash reserves.
Caledonia affirmed that it remains well positioned to finance growth initiatives at both Bilboes and Blanket while sustaining its dividend programme for shareholders.
