Caledonia Mining has lowered its 2026 gold production guidance and increased its cost forecast following equipment capacity constraints and processing difficulties at the Blanket mine in Zimbabwe. The operational setbacks have reduced output and added pressure to cash generation as the company continues preparations for its larger Bilboes gold project.
Blanket produced 17,030 ounces of gold in the third quarter, compared with 19,106 ounces in the same period a year earlier. Production for the first nine months of the year declined to 49,158 ounces, from 58,846 ounces over the corresponding period. The company has revised its full-year production forecast to 69,000–72,500 ounces, down from the previous range of 72,000–76,500 ounces.
Underground Access and Processing Problems Affect Output
Caledonia attributed the lower production outlook to operational restrictions affecting deeper underground mining areas and problems in the metallurgical circuit.
Insufficient compressed-air capacity limited access to higher-grade areas of the mine. At the processing plant, commissioning difficulties temporarily trapped approximately 1,100 ounces of gold within the circuit, reducing reported production. Additional compressors are being installed, while work is also under way to improve gold recovery through the processing circuit. Caledonia expects these measures to support higher output during the fourth quarter.
All-In Sustaining Cost Forecast Raised
Alongside the production downgrade, Caledonia increased its expected all-in sustaining costs to US$2,650–US$2,850 per ounce, compared with its previous forecast of US$2,500–US$2,700 per ounce. The revised cost guidance comes as lower production volumes and operational difficulties affect the performance of Blanket, the group’s principal producing asset. Caledonia also reduced its capital expenditure forecast to approximately US$94.3 million, from US$103.3 million. Much of the reduction reflects the postponement of planned spending into 2027 rather than the cancellation of investment.
Bilboes Funding Depends on Blanket Cash Generation
The revised operating outlook comes as Caledonia prepares to advance the Bilboes gold project, which is larger than Blanket. Management has maintained that weaker performance at Blanket should not materially reduce the company’s planned internal contribution towards Bilboes funding. That approach depends on the producing mine continuing to generate sufficient cash to support development expenditure. If operating costs remain elevated or production continues to fall short, the funds available for internal investment could come under additional pressure.
Blanket remains central to Caledonia’s strategy of financing new development without relying excessively on external capital. The company’s immediate operational priority is to restore production during the fourth quarter while controlling unit costs through the installation of additional compressors and improvements to gold recovery.
