• Caledonia’s realised gold price increased 48% to US$4,502 per ounce in the first half of 2026, adding about US$46 million to revenue on the ounces sold
  • Blanket Mine production fell 19% to 32,127 ounces as average feed grade declined 18% to 2.6 grams per tonne
  • Blanket must produce at least 39,873 ounces in the second half, about 24% above first half output, to reach the bottom of Caledonia’s unchanged 72,000 to 76,500 ounce full year guidance

Harare - Caledonia Mining Corporation’s first half earnings were carried by stronger gold prices after weaker ore grades reduced output at Blanket Mine and pushed production costs sharply higher. Revenue increased 17% to US$142.3 million and profit after tax rose 41% to US$48.9 million during the six months to June 2026.

Blanket produced 32,127 ounces of gold, down 19%, while the broader cost of sustaining production increased 51% to US$2,715 per ounce. Caledonia absorbed the deterioration because its average realised gold price increased 48% to US$4,502 per ounce.

The price contribution was substantial as Caledonia’s 31,594 ounces sold during the first half would have generated about US$96.2 million at the US$3,045 average realised price achieved a year earlier. Pricing the same volume at US$4,502 produces approximately US$142.2 million. Higher gold prices therefore added about US$46 million to revenue on the actual volume sold. Lower sales volumes removed roughly US$25 million of potential revenue when measured at the previous year’s price.

Gold provided that protection during an exceptional period for the global market. The London Bullion Market Association afternoon benchmark averaged a record US$4,873 per ounce in the first quarter and reached US$5,405 in January. Gold gained 6% during the quarter before retreating from the peak. Investment demand, geopolitical uncertainty and central bank purchases supported prices. Physical bar and coin investment reached 474 tonnes during the first quarter, its second highest quarterly level on record.

Demand remained strong enough to keep prices historically elevated through June. Total first half gold demand reached 2,522 tonnes, up 2% year on year, with the value of demand reaching a record US$380 billion. Investment funds backed by gold recorded selling pressure during the second quarter as inflation and interest rate expectations increased and the United States dollar strengthened. Central bank demand strengthened to 289 tonnes during Q2.

Caledonia therefore benefited from a high average gold price even after the January peak faded. Its realised price declined 12% from the first quarter to US$4,259 per ounce during Q2 and remained 34% above the corresponding period in 2025. Revenue increased 16% to US$75.9 million during the quarter.

Blanket’s operating weakness came mainly from lower ore quality. The mine processed 410,300 tonnes during the first half, 1% above the previous year. Average gold content declined 18% to 2.6 grams per tonne from 3.2 grams. Gold recovery remained close to prior levels at 92.4%. Production consequently fell 19% to 32,127 ounces. The plant processed slightly more ore and received less gold from every tonne.

Lower grades increased the cost attached to each ounce produced. Direct mine cost rose 47% to US$1,704 per ounce and the broader sustaining cost increased 51% to US$2,715. The gap between Caledonia’s selling price and sustaining cost still increased from about US$1,244 per ounce in H1 2025 to approximately US$1,787 in H1 2026. Higher gold prices therefore created about US$543 more financial headroom per ounce.

Part of the cost increase came from expenses outside normal production. Caledonia identified about US$3.2 million in payments to Blanket employees through their 10% ownership trust, roughly US$4 million in fundraising and advisory expenses and another US$3.2 million in higher royalties. Management attributed the remaining increase in cost per ounce to lower grade.

Blanket began recovering during the second quarter with production increasing 18% from Q1 to 17,360 ounces as average gold content improved from 2.5 grams per tonne to 2.9 grams. Management said access to higher grade mining areas continued improving into July. A seven day operating schedule began in June and Caledonia expects an additional 200 tonnes of ore per day to enter processing from September.

Caledonia retained 2026 Blanket production guidance of 72,000 to 76,500 ounces. First half production of 32,127 ounces leaves another 39,873 ounces required to reach the bottom of guidance and 44,373 ounces to reach the upper end. H2 production therefore needs to increase by approximately 24% to 38% from H1.

Repeating Q2 production of 17,360 ounces in each remaining quarter would produce only about 34,720 ounces during the second half and leave the annual result below guidance. Blanket therefore needs a further improvement from the level already achieved in Q2. Higher grades, the seven day schedule and additional September throughput become essential to reaching the full year target.

Cost guidance has already moved higher the mining company increased expected direct mine costs to US$1,600 to US$1,800 per ounce and increased expected sustaining costs to US$2,500 to US$2,700 per ounce. This leaves the second half dependent on two conditions. Gold prices need to remain high enough to preserve margins and Blanket needs to produce enough ounces to improve cost absorption.

Caledonia enters that test with greater financial flexibility. Net cash increased to US$167.8 million from US$8.2 million a year earlier, supported by operating cash generation and money raised through convertible debt. The stronger balance sheet gives management room to fund mine improvements and its wider Zimbabwe growth programme.

The second half can now be measured against four markers. Blanket needs at least 39,873 ounces to achieve the bottom of annual guidance. Gold content needs to continue improving from the 2.9 grams per tonne achieved in Q2. Sustaining costs need to move towards the revised US$2,500 to US$2,700 range. September’s additional ore throughput needs to lift quarterly production beyond the 17,360 ounces recorded in Q2.

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