Caledonia Mining Corporation is prioritising the funding of its major growth projects over immediate dividend hikes, despite the recent surge in gold prices, assuring shareholders that this patient approach will lead to significantly larger payouts in the future, Mining Zimbabwe can report.
By Rudairo Mapuranga
This strategy was confirmed by Caledonia Executive Director Victor Gapare during a media briefing in Harare on Tuesday. The company recently declared its quarterly dividend of US$0.14 per share for Q2 2025, maintaining a consistent payout level that has been in place since October 2021.
Gapare directly addressed the question on investors’ minds: why hasn’t the record-high gold price translated into a fatter dividend cheque?
“You’re absolutely correct. It’s a gold price,” Gapare acknowledged. “If you’d spoken to us a couple of months – less than a couple of months ago, we were in a very different situation.”
He explained that the recent influx of free cash flow is a “very recent occurrence,” and the company’s immediate priority is financing the construction of its large-scale Bilboes project, which requires an investment of “quite a few hundred million dollars.”
The capital for this transformative project, Gapare stated, will come from a combination of free cash flow and carefully considered financing that avoids diluting the value for existing shareholders.
“We want to continue paying – we can’t be too aggressive in terms of increasing that,” he said, outlining the company’s core financial formula. “That graph… is all about dividends, the reinvestment of all those dividends… but also not diluting. So that’s our formula, and if we’re going to create value for our shareholders, we want to try and do both of those.”
Gapare offered a clear vision of the reward for this patience, tying it directly to the completion of the Bilboes mine.
“The important message is, once Bilboes is built, we’re going to be significant – I think you’ll see a big improvement in terms of dividend distributions,” he assured. He noted that the company’s shareholders, including pension funds, value consistency but “obviously, they would want it bigger.”
Caledonia’s dividend history underscores its reputation as a reliable income stock. The current US$0.14 per share rate was established in October 2021, representing a 104 per cent increase from just two years prior. The company has paid a dividend every quarter since 2014, building a track record that began with its inaugural payout in 2012.
The message to shareholders is one of disciplined growth: forgo a short-term gain for a more substantial, long-term return. The steady US$0.14 dividend is not a ceiling but a foundation, with the promise of a “big improvement” once Bilboes is built and begins generating significant cash flow.
