Caledonia Mining (NYSEAMERICAN:CMCL) said second-quarter production increased 18% from the first quarter as the company regained access to higher-grade mining areas at its Blanket Mine and implemented operating changes intended to lift output.
Chief Executive Mark Learmonth said revenue rose 16% to $76 million during the quarter, while EBITDA increased 16% to nearly $46 million, supported by stronger production and a higher gold-price environment. Profit after tax increased 27% versus the comparable 2025 period to $30 million, and quarterly earnings per share rose 29% to $1.36.
Blanket Mine recovers as grades improve
Learmonth said Blanket Mine’s recovery was primarily driven by improved access to higher-grade areas after fall-of-ground incidents during 2025 had restricted access to those zones. The mine had operated at lower grades in recent quarters, with grade averaging 2.5 grams per ton in the first quarter before rising to approximately 2.88 grams per ton in the second quarter.
Caledonia is targeting an average grade of about 3.16 grams per ton for the remainder of the year and said it is currently operating at that level. Higher grades also improved recovery rates, as the company said lower head grades reduce recovery when tail grades remain near 0.2 grams per ton.
The company moved Blanket Mine to a seven-day workweek in June, a change intended principally to address worker fatigue. Learmonth said the schedule also increased blasting days by 18%, which is expected to support higher run-of-mine production over time. He said the mine could ultimately produce just under 990,000 tons annually under the expanded operating arrangement, although it is not yet producing at the full uplift as new mining areas are opened.
Caledonia plans to process a portion of the incremental material through its repurposed Lima plant beginning in September. The company also expects an elution-plant upgrade to be completed by the end of August, allowing it to process approximately 40 tons of accumulated material grading between 600 and 700 grams per ton. Learmonth said this is expected to add about 1,200 ounces across September through December.
Looking further ahead, Caledonia plans to upgrade crushing capacity and add a larger carbon-in-leach tank at Blanket’s main plant. The estimated $3.5 million project is intended to enable the main plant to process about 990,000 tons annually while maintaining recovery rates. Learmonth said the timing of implementation and the resulting impact on 2027 gold production have not yet been determined.
Costs and capital guidance increase
Chief Financial Officer Ross Jerrard said Caledonia benefited from an average realized gold price of $4,259 per ounce, up 34% year-over-year, although gold ounces sold and produced were lower for both the three-month and six-month periods.
Jerrard said mine costs were broadly in line with budget in absolute terms, but per-ounce metrics were affected by lower output and certain items classified as production costs. These included a $3.2 million Blanket Employee Trust distribution that is now required under IFRS to be recorded as an employee cost following repayment of a facilitation loan.
Electricity costs rose 25% because of higher wheeling charges, even as electricity consumption declined, Jerrard said. Higher gold prices also increased royalties, while advisory and transaction costs associated with Caledonia’s financing strategy contributed to higher administrative expenses and all-in sustaining costs.
- On-mine cash cost guidance was increased by $100 per ounce to a range of $1,600 to $1,800 per ounce sold.
- All-in sustaining cost guidance was raised to $2,500 to $2,700 per ounce sold, from a previous lower-end estimate of $2,100 per ounce.
- Total 2026 capital expenditure guidance was reduced to $103 million from $162 million, primarily due to the timing of Bilboes expenditures.
The updated capital program includes $48 million of sustaining capital expenditure, including spending on a 132 kilovolt power line, an AC/DC conversion project, K-Pits work and other Blanket initiatives. Learmonth said the planned power line should remove a constraint on available electricity capacity at Blanket Mine and is expected to be completed around June of next year.
Bilboes development and financing progress
Executive Director Victor Gapare said the Bilboes gold project remains on schedule and central to Caledonia’s long-term growth strategy. During the quarter, the company completed geotechnical investigations for the proposed process plant and tailings storage facility, advanced plant optimization studies, and substantially completed tendering and procurement processes for long-lead equipment and major earthworks.
Gapare said the first contractors are expected on site around October, with additional accommodation work also scheduled to begin then. Year-to-date spending totaled $3.5 million against an $8.3 million budget, largely covering the owner’s project team and front-end engineering work.
The company forecast $48 million of Bilboes spending during 2026, compared with a previous estimate of $132 million. Gapare and Jerrard said the reduction reflects supplier payment terms that defer more spending into early next year, rather than a change in project scope, total cost or timeline.
Jerrard said Caledonia has received credit approval from its two co-lead arrangers for a proposed $150 million interim funding facility and is working with additional syndicate banks. The company is targeting a close in late August or early September. Project-finance discussions are also progressing, with Caledonia now targeting completion by the end of the year or early next year.
Learmonth said the company continues to target first production at Bilboes toward the end of 2028, followed by its first full year of production in 2029.
Exploration points to additional opportunities
Vice President of Technical Services Craig Harvey highlighted drilling and trenching at the K-Pits area within Blanket Mine’s lease. The company completed more than 2,000 meters of surface trenching and 7,000 meters of reverse-circulation drilling focused on shallow oxide mineralization.
Harvey said selected oxide intersections ranged from 1.5 to 2.5 grams per ton over drill lengths of approximately 15 to 25 meters, while sulphide mineralization returned grades of about 6 grams per ton over downhole widths between 7 and 16 meters. Caledonia is preparing a resource statement and conducting metallurgical work, including column tests and a small heap-leach trial.
The company is also finalizing a mineral resource update for Blanket Mine and expects to publish a maiden resource estimate for Motapa in the coming weeks. Harvey said ongoing work at Motapa supports Caledonia’s view that the area could contribute to the Bilboes project in some form.
About Caledonia Mining (NYSEAMERICAN:CMCL)
Caledonia Mining Corporation PLC is a UK‐domiciled gold producer listed on the NYSE American under the ticker CMCL and on the London AIM market. The company’s flagship asset is the Blanket gold mine, located near Gwanda in southwestern Zimbabwe. Blanket is a conventional underground and surface gold operation that includes a carbon‐in‐leach processing plant and tailings retreatment facilities, providing a structurally diverse resource base and established production infrastructure.
Caledonia acquired the Blanket mine in 2004, adding to its long operating history that traces back to the early 20th century.
