• Padenga produced 696.7kg of gold in Q1 2026, up 13% from 618.9kg in the prior period, driven by higher average mill feed grades across Eureka and Pickstone
• The average gold price rose 69% to US$4,875/oz, lifting the revenue impact of Padenga’s production growth, with Q1 gold output equivalent to roughly 22,400 ounces and estimated gross gold revenue of about US$109 million before deductions
• Key mining projects are advancing, with Eureka’s Gravity Upgrade Project on track for Q2 commissioning, the 5MW solar plant reaching first power in April, while agribusiness skin sales rose 172% mainly from discounted clearance of excess stock

Harare- Padenga Holdings Limited, Zimbabwe’s second largest gold producer has reported gold production of 696.7 kilograms for the first quarter ended 31 March 2026, a 13% increase from 618.9 kilograms in the comparable prior period, driven by higher average mill feed grades across its Eureka and Pickstone operations.

The trading update arrives at a moment when the gold price environment is doing significant work for the company's financial performance, with the spot price averaging US$4,875 per ounce during the period compared to US$2,887 in the prior year, a 69% increase that is amplifying the revenue impact of what is a relatively modest production increase.

This comes after a period in which Padenga has been investing steadily in its Dallaglio Mining operations through capital projects at both the Eureka and Pickstone Peerless mines. The Gravity Upgrade Project at Eureka remains on track for commissioning in the second quarter of 2026 within the approved budget.

The cyclone cluster upgrade project at Eureka, approved by the Dallaglio board, is in the procurement phase with installation and commissioning targeted for the fourth quarter of 2026. The Eureka solar power project achieved first power in April 2026 following completion of the 33kV line and high voltage tie-in works, with ramp-up to full 5MW capacity expected before the end of Q2 2026.

A 13% increase in production is a meaningful operational result, reflecting the higher average mill feed grades achieved across both operations, but a 69% increase in the average realised gold price is a transformational revenue event that would have produced strong financial performance even if production had been flat.

At US$4,875 per ounce average for the quarter, Padenga's 696.7 kilograms of production, equivalent to approximately 22,400 troy ounces, represents gross revenue of approximately US$109 million from gold alone at that average price, before royalties, processing costs, and other deductions.

In the prior year period, 618.9 kilograms at US$2,887 per ounce would have generated approximately US$57 million. The doubling of revenue on a 13% production increase is almost entirely a price story.

The introduction of the sliding scale royalty system during the quarter added a structural dimension to how rising gold prices translate into Padenga's net revenue position. Under the new system, a 10% royalty applies to gold sold at US$5,000 per ounce and above, up from a flat 5% previously. With gold averaging US$4,875 during Q1 and the price having been trading above US$4,500 through much of the period, the royalty rate increase is not yet fully activated on the Q1 average, but it is approaching the threshold at which it becomes a material cost variable.

Eureka: solar power, gravity upgrade, and cyclone clusters

The concentration of capital investment at the Eureka mine reflects its central role in the Dallaglio Mining portfolio. Three concurrent projects are in various stages of execution simultaneously, which is operationally ambitious and financially committed.

The Gravity Upgrade Project, targeting improved processing plant recovery in the Carbon-In-Leach section, is the most immediately consequential for production economics. The company states it remains on track for commissioning in Q2 2026 within the approved budget, which is a meaningful disclosure given the cost overrun risks that capital projects in Zimbabwe's mining sector have historically carried. Once commissioned, the upgrade is expected to drive improved overall processing plant recovery and deliver cost efficiencies, meaning the same ore feed will yield more gold at lower unit cost. The production and margin impact of this project will first become visible in Q2 results.

The cyclone cluster upgrade, which targets increased milling circuit capacity, is in the procurement phase with Q4 2026 commissioning targeted. This is a capacity expansion investment that will increase the volume of ore the Eureka plant can process per unit of time, providing the throughput headroom to translate higher ore availability into higher production. Its commissioning in Q4 positions Eureka for a stronger production profile entering the 2027 financial year.

The Eureka solar power project achieving first power in April 2026 is operationally significant for reasons that extend beyond the direct energy cost saving. Mining operations in Zimbabwe have been acutely exposed to electricity supply disruptions that generate both direct production losses and diesel backup costs. A 5MW solar installation providing a portion of Eureka's power requirements reduces that exposure materially. The ramp-up to full 5MW capacity expected before the end of Q2 will give the company a full quarter of maximum solar contribution in Q3, with the cost benefit flowing into the second half of the financial year.

Pickstone Peerless: reserve building for the long term

At Pickstone Peerless Mine, the focus during the quarter was described as being on diamond drilling and mine development aimed at expanding reserves, sustaining consistent ore hoisting, and informing future capital investment decisions. Exploration diamond drilling will prioritise confirming the orebody at Concession Hill and establishing depth continuity of the reef below the Peerless open pit.

This work is less visible in quarterly production numbers than the Eureka capital projects, but it is arguably more consequential for the long-term value of the mining portfolio. Reserve expansion through successful exploration drilling is the foundation on which future production guidance, mine life extension, and capital investment decisions are built. A mine that is hoisting ore consistently while simultaneously drilling to confirm and extend its resource base is managing both near-term production and long-term sustainability in parallel.

The group's market outlook for mining operations projects a robust financial performance through year end for Dallaglio, supported by stable and consistent production at Eureka, improving ore hoisting performance at Pickstone Mine, and a favourable gold price outlook that remains at elevated levels. That outlook is grounded in the operational trajectory described in the trading update and in a gold price environment that, on current levels, materially exceeds the assumptions under which most of Padenga's capital projects were originally justified.

Agribusiness: 172% skin sales volume on distressed terms

The Padenga Agribusiness division, which operates crocodile farming and skin sales through its operations, reported skin sales of 17,667 skins over the period, representing a 172% increase above the 6,495 skins sold in the same period last year. That headline volume figure requires careful reading because the trading update immediately qualifies it, the increase was mainly attributable to the sale of excess skins carried over from the prior year harvest arising from a right-sizing exercise, and these were sold at a discount to move volumes.

The 172% volume increase on distressed terms is therefore not a signal of strong agribusiness demand or improved market positioning. It is the clearing of an inventory overhang from a prior period's right-sizing exercise at whatever price the market would bear. The per-unit revenue realised on these sales was below normal market rates, which means the volume increase significantly overstates the revenue and margin improvement in the agribusiness division during the period.

The natural diamond market faces structural pressure from the growing competitiveness of lab-grown diamonds globally, a dynamic that has direct parallels in the luxury goods sector where crocodile leather products compete. The agribusiness division operates in a market where end-consumer demand for luxury leather goods, including Hermès Birkin bags and other high-end products that use Nile crocodile leather, determines the price and volume that can be achieved for skins. That market has been under pressure from macroeconomic factors affecting luxury spending in key markets, including China, which represents a significant share of luxury goods demand globally.

The division is described as continuing its efforts to maximise returns on reduced volumes under depressed market conditions and forecasting a return to positive returns in the short to medium term. The forecast is presented without specific timeline or financial detail, which is appropriate for a trading update but leaves the agribusiness recovery trajectory as the primary uncertainty in Padenga's near-term financial picture.

Padenga Holdings presented investors with a genuinely bifurcated investment proposition. The mining division is performing well operationally, is executing a credible capital investment programme, and is benefiting from an extraordinary gold price environment that is amplifying the financial return on that performance. The agribusiness division is navigating a structurally challenging luxury goods demand environment with an inventory overhang from a prior period working its way through the system.

The degree to which the gold price environment is masking the agribusiness drag on consolidated group performance is an important analytical question that the trading update, by design, does not answer with sufficient financial granularity. A company generating substantial gold revenues at US$4,875 per ounce can absorb agribusiness losses and discount skin sales without those costs being visible in headline performance metrics. The risk is that when the gold price normalises, or when the royalty structure change bites more materially at prices above US$5,000, the agribusiness drag becomes more visible in consolidated results.

The group's near-term financial performance will be shaped primarily by three variables: the continuation of the elevated gold price environment through Q2 and beyond, the successful commissioning of the Gravity Upgrade Project at Eureka in Q2 on budget and on schedule, and the pace of the agribusiness division's return to positive returns. The first variable is outside management's control. The second is within it. The third is partially within it, depending on the recovery of luxury goods demand in key markets that Padenga cannot influence directly.

The Q1 2026 trading update describes a company whose mining operations are in the best shape they have been in for some time, executing a capital programme that positions production and cost efficiency for improvement through the rest of the financial year, against a gold price backdrop that makes every kilogram of production significantly more valuable than it was twelve months ago.

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