CALEDONIA Mining has cut its full-year production target and raised expected costs at its Blanket gold mine in Zimbabwe after operational problems hit third-quarter production.
The London- and New York-traded gold miner produced 17,030 oz in the September quarter, down 11% from 19,106 oz a year earlier. Nine-month production fell to 49,158 oz from 58,846 oz.
Caledonia’s shares fell about 5.6% in early London trade on Friday.
The company lowered its 2026 production target to 69,000 to 72,500 oz from 72,000 to 76,500 oz previously.
Caledonia now expects on-mine costs of $1,700 to $1,900/oz, up from $1,600 to $1,800/oz previously. All-in sustaining costs are expected at $2,650 to $2,850/oz, compared with $2,500 to $2,700/oz previously.
Group capital expenditure was also revised down to $94.3m from $103.3m, although Caledonia said this largely reflected the timing of spending rather than a reduction in planned projects. Some expenditure on its 132kV power line project has shifted into 2027.
The revised figure includes $44m in sustaining capital at Blanket, down from $48m, and $43m in growth capital at Bilboes, down from $48m. Growth capital of $3.5m at Blanket and $3.8m in exploration spending at Motapa were unchanged.
Production during the quarter was affected by a shortage of compressed air in deeper, higher-grade mining areas and a temporary increase in gold held in Blanket’s processing plant.
Mining increasingly shifted to deeper, higher-grade areas in September, but delays in deploying four new compressors needed at these levels hit production. Two are now operating and the remaining two are on their way to Blanket, with production expected to normalise in the fourth quarter.
About 1,100 oz of gold was also temporarily retained in the processing plant following difficulties commissioning new equipment. Caledonia expects to start recovering this gold from mid-October.
“We expect production in the fourth quarter to benefit from improved access to higher-grade mining areas, the recovery from mid-October of approximately 1,100 ounces of gold retained within the metallurgical plant and the processing at Lima of additional ore arising from the seven-day shift system,” said CEO Mark Learmonth.
Bilboes funding
The weaker performance at Blanket comes as Caledonia prepares to develop Bilboes, its planned new gold mine in Zimbabwe, at a total cost of just under $600m, including interest and working capital. Bilboes is expected to produce about 200,000 oz of gold a year from 2029.
Blanket is expected to provide part of the funding. Caledonia said last month that at a gold price of $3,500/oz, cash generated by Blanket could contribute about $115m towards Bilboes, rising to $155m at $4,000/oz.
Caledonia said the latest production and cost revisions would have no adverse effect on its ability to use internal cash flows to contribute towards funding Bilboes.