Caledonia Mining (NYSEAMERICAN:CMCL) reported a weaker production quarter at its Blanket Mine in Zimbabwe, but management said higher gold prices helped lift revenue, earnings and cash generation while remediation efforts are beginning to improve mine performance.
During the company’s first-quarter 2026 results presentation, Chief Executive Officer Mark Learmonth said gold production from Blanket totaled about 14,700 ounces, with the shortfall “entirely due” to lower grades mined during the period. Despite the production challenge, Learmonth said financial performance remained “robust” because of the stronger gold price environment.
Lower Grades Weigh on Blanket Production
Learmonth said the lower production was tied to a decline in grade following two falls of ground that restricted access to higher-tonnage, higher-grade areas at Blanket. The mine continued to process about 200,000 tonnes per quarter, but the grade fell progressively from the second quarter of last year through the first quarter of 2026.
The lower grade also affected recovery rates, Learmonth said, because the tail grade deposited onto the tailings facility remains near a practical floor of about 0.2 grams per tonne. As a result, when the head grade is lower, recovery tends to decline.
The grade trend has improved since late 2025, according to Learmonth. He said grade increased from 2.55 grams per tonne in December 2025 to 2.6 in January, 2.7 in February and 3.0 in March. The mine was running at about 2.9 grams per tonne at the time of the call, which he said was “pretty much” in line with expectations for the second quarter.
“Blanket has now returned to the production level that we had anticipated,” Learmonth said, adding that April and early May performance had “very much improved.”
Caledonia is pursuing three initiatives to improve Blanket’s performance:
- A contractor has started work to accelerate access to higher-grade areas and restore development flexibility.
- The mine is moving from a six-day to a seven-day shift system, which Learmonth said is primarily intended to reduce worker fatigue and is expected to increase run-of-mine production by an annualized 100,000 tonnes.
- An additional ball mill, BM3, is expected to be commissioned in June or July, increasing milling capacity by about 200 tonnes per day.
Costs Rise Per Ounce, But Spending Stays Near Budget
Chief Financial Officer Ross Jerrard said the quarter reflected “the higher gold price offsetting a lower production period.” He reported an average gold price of $4,816 per ounce for the period.
Unit costs were pressured by the lower ounce output. Learmonth said all-in sustaining cost increased to $2,700 per ounce, but noted that cost per tonne was in line with expectations. Jerrard said on-mine costs totaled just under $24 million and all-in sustaining spending totaled $38 million, with expenditures largely tracking budget.
Jerrard said EBITDA increased 50% to just under $34 million, while earnings per share rose 78% compared with the prior-year quarter. Net cash from operating activities increased 41%, and free cash flow was $12 million, up 153% from the comparative quarter, according to Jerrard.
Caledonia ended the period with $161 million in closing cash and cash equivalents. Jerrard said the company’s liquidity position, including bullion on hand of about 3,600 ounces and gold sales receivables, supports its capital allocation plans, particularly the development of Bilboes.
Bilboes Development Moves Through Design and Funding
Executive Director Victor Gapare said Caledonia and its engineering, procurement and construction management contractor, DRA, have frozen the scope for the Bilboes Gold Project and are working on front-end engineering design. The company expects to conclude the design work by the end of the third quarter or into the fourth quarter of 2026, allowing it to place orders for long-lead items late in the year.
Gapare said construction is expected to take place over 2027 and 2028, with first gold pour targeted toward the end of 2028.
Jerrard said Caledonia’s four-part Bilboes funding strategy is progressing. The first two pillars — a hedging program and a $150 million convertible note raise — have been completed, with funds received and held in treasury. The company is working with a consortium of Zimbabwean and South African banks on a $150 million interim funding facility, with Stanbic and CBZ as co-lead arrangers. Jerrard said the facility is expected to be in place by mid-2026 or by July 2026 at the latest.
A broader project finance facility is also in progress, although Jerrard said financial close is expected on a longer timeline over the next year or so. He said the total expected funding requirement for Bilboes is $590 million, including capital costs, working capital and capitalized interest. At a $3,500 per ounce gold price assumption, Caledonia estimates a $304 million gap to be filled by senior debt and other facilities. At a gold price closer to $5,000 per ounce, that requirement falls to $154 million.
Exploration Supports Longer-Term Plans
Caledonia also highlighted exploration results at Blanket and Motapa. Craig Harvey, who presented the exploration update, said drilling at Blanket continued to show ore bodies extending about 250 meters below current workings in the BQR and Blanket ore body areas.
Harvey pointed to results from the newly named Blanket 7 ore body, which he said included widths of about 40 meters at grades between 3 and 4 grams per tonne. He said selective mining within that zone could target narrower widths at higher grades, based on drilling assays. Caledonia drilled just over 10,300 meters between its June 2025 and April 2026 exploration updates and plans to update its mineral resource estimate during 2026, with results to be reported before year-end.
At Motapa, located adjacent to Bilboes, Harvey said the company has received the remaining assay results needed to close out its 2025 exploration program. Caledonia is targeting an early third-quarter 2026 maiden mineral resource estimate for the Motapa North sulfide mineralization, reflecting approximately $5 million of work completed during 2023 and 2024.
Learmonth closed the call by saying Caledonia’s immediate priorities are to restore Blanket to “good health” and bring Bilboes into production as quickly as possible. “The first quarter was a disappointment in terms of production,” he said. “The gold price saved us, but as you’ve heard, I’m personally very optimistic about the trajectory both for Blanket and for Bilboes.”
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.
