Caledonia Mining has reduced its 2026 gold production guidance for Zimbabwe’s Blanket mine after operational disruptions cut output, increased unit costs and constrained cash generation available to support the company’s Bilboes development project.
The London-listed miner reported 17,030 ounces of gold production at Blanket in the third quarter, an 11% decline year on year. Compressed-air shortages restricted access to deeper, higher-grade mining areas, while commissioning difficulties in the processing circuit temporarily trapped approximately 1,100 ounces of gold, further reducing reported production. Caledonia now expects full-year production of 69,000 to 72,500 ounces, compared with its previous forecast of 72,000 to 76,500 ounces. Output during the first nine months of 2026 reached 49,158 ounces, down from 58,846 ounces over the corresponding period a year earlier.
Lower Output Pushes Up Unit Costs
The revised production outlook has also affected the company’s cost expectations. Caledonia forecasts all-in sustaining costs of approximately €2,360 to €2,540 per ounce, reflecting lower production volumes and increased operating expenditure. The company has also revised its anticipated 2026 capital expenditure to approximately €84 million, down from the previous estimate of €92 million. The reduction reflects the deferral of around €8 million in spending, rather than the cancellation of its wider investment programme. Parts of the planned 132 kV power-line project have been moved into 2027, accounting for part of the deferred expenditure.
Bilboes Development Retains Growth Funding
Caledonia has maintained approximately €38 million in planned growth expenditure for Bilboes during 2026, slightly below the previous budget. The allocation supports continued development of the project, which the company expects to become its larger long-term gold operation in Zimbabwe.
The reduced capital expenditure forecast does not represent a withdrawal from the broader development programme. Instead, the company is adjusting the timing of certain investments while retaining its planned spending on Bilboes. No new project debt, equity raising or institutional financing was announced alongside the revised production and expenditure forecasts. Caledonia continues to rely partly on internally generated cash to finance Bilboes, making operating performance at Blanket an important factor in the funds available for growth investment. The company said its revised spending programme should still enable it to contribute internally generated funds towards Bilboes development.
Compressor and Processing Improvements Target Recovery
Operational performance at Blanket remains central to Caledonia’s near-term cash generation. The company expects new compressors and processing improvements to support higher production in the fourth quarter.
The mine will need to demonstrate that these measures can stabilise output without another increase in costs. Blanket remains Caledonia’s core cash-generating asset, while the lower production guidance has not altered the company’s growth strategy. The combination of reduced output, higher unit costs and continued development expenditure at Bilboes places greater importance on an operational recovery at Blanket to maintain internally funded investment in the company’s Zimbabwean gold portfolio.
