Africa-Press – Zimbabwe. JERSEY-DOMICILED miner, Caledonia Mining Corporation, has warned that Zimbabwe’s proposed 2026 gold royalty reforms will squeeze profitability and cash generation at Blanket Mine while also weakening returns from its Bilboes project, which has a five-tonne annual potential.
Beginning January, a new three-tiered gold royalty regime will apply: US$0–US$1 200 per ounce will attract a 3% royalty; US$1 201–US$2 500 (5%); and US$2 501 and above (10%).
In a statement commenting on these changes, Caledonia said this would reduce profits and cash flow when it plans to invest in developing its more lucrative Bilboes Mine over the next three years.
The company posted a 243,8% increase in profit after tax to US$53,41 million for the nine months ended September 30, 2025, driven by record gold prices.
During that period, free cash flow surged 394,8% to US$48,32 million.
Caledonia warned that under the new royalty regime, a sustained period of high gold prices could see a significant portion of earnings diverted to royalties, potentially curbing cash available for operations, development projects, and shareholder returns.
In a statement, Caledonia said Finance minister Mthuli had proposed two fiscal measure for the gold sector.
These include an increase in the royalty rate from 5% to 10% when the gold price exceeds US$2 500/oz (with the higher rate understood to apply to the full gold price), and a change to the tax treatment of capital expenditure whereby the current 100% upfront deduction would instead be spread over the life of the project, affecting the timing, but not the total amount, of tax payable.
“The company is assessing the implications of the proposed changes for its portfolio of assets, including in particular the potential effects on the recently announced economics of the Bilboes Gold Project.”
“In respect of the Caledonia group’s operating mine in Zimbabwe, Blanket Mine, the change in royalty, if implemented, would be expected to result in a lower level of profitability and cash generation relative to current market expectations,” Caledonia
said.
“Caledonia has a long-standing operating presence in Zimbabwe and continues to engage constructively with the relevant authorities. The company will provide a further update once more clarity is available.”
A technical report on Bilboes released last month showed it hosts 1,749 million ounces of proven and probable gold reserves, which will require US$584 million in development capital.
Additionally, the project contains 532 000 ounces in measured and indicated resources and 984 000 ounces in inferred resources — figures that exclude the 1,749 million ounces of mineable reserves.
At current gold prices, revenue potential based solely on the proven and probable reserves is over US$7,21
billion.
Caledonia revealed that it is transitioning to make Bilboes Mine its flagship, from Blanket Mine, over the next three years, when it expects to operationalise the project to produce five tonnes of gold annually.
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