Caledonia Mining delivers an exceptional Q2
Caledonia Mining Corporation plc delivered an exceptional second quarter, setting new records for production, profitability, and cash generation at its flagship Blanket Mine in Zimbabwe.
The results, released on Monday 11th August 2025, show the company firing on all cylinders amid soaring gold prices, with Cavendish Capital Markets highlighting that second-quarter profitability actually exceeded entire full-year profits from recent years.
The 64%-owned Blanket Mine produced 21,100 ounces of gold in Q2 2025, the highest quarterly output ever recorded.
This jump was driven largely by improved processing efficiency, record recoveries of 94.4%, up from the usual 93.6%, which helped lift production despite relatively stable ore grades.
Cavendish credits a refreshed management team and tighter operational controls for this improvement, and Caledonia anticipates maintaining these enhanced recovery rates barring unforeseen ore changes.
Financially, the company benefited from an average realised gold price of US$3,188 per ounce in the quarter, up 38% from the same period last year.
This translated into revenues of US$65.3 million, gross profits of US$33.8 million, and EBITDA of US$39.5 million, all new highs for any half-year period.
Notably, net profit attributable to shareholders jumped to US$20.5 million, beating the total profits reported for the full years 2022 through 2024. Earnings per share surged to US$1.14, underscoring the scale of this operational and financial turnaround.
Cost discipline remains a focus. Unit production costs at Blanket came in at US$1,102 per ounce on-mine and an all-in sustaining cost (AISC) of US$1,793 per ounce.
These figures reflect increased labour and consumable costs due to bonuses, higher headcount, and maintenance work, but also ongoing initiatives aimed at cost reduction, including improved labour monitoring and energy efficiency.
The strong cash flow generated allowed Caledonia to return to a net cash position of US$26.2 million, a marked improvement from net debt of nearly US$5 million just three months earlier.
This cash strength reduces the need for external funding as the company prepares to finance the development of its Bilboes sulphide project, a key growth asset adjacent to Blanket.
The Bilboes’ feasibility study completion has been delayed to the first half of 2026, and Cavendish now forecasts higher capital expenditure for the project, reflecting inflationary pressures and a year-long timeline extension.
Caledonia continues to invest significantly in Blanket, with capital expenditure expected at US$34.1 million in 2025 aimed at modernising operations and boosting efficiency.
The company is also exploring upside from encouraging drill results at Blanket and its neighbouring deposits, which suggest resource expansion potential.
From a shareholder perspective, the company declared its customary quarterly dividend of US$0.14 per share, offering a yield of approximately 2.4%, which compares favourably to peers.
The stable dividend policy reflects Caledonia’s confidence in its Zimbabwe operations despite broader market uncertainties.
Cavendish has revised its valuation on Caledonia Mining, lifting the target price to £22.10 per share from £18.50.
This upgrade factors in improved gold price assumptions, stronger operational performance, and the anticipated growth from Bilboes.
Despite recent share price gains, Caledonia still trades at a lower multiple to its peer averages, partly due to a persistent “Zimbabwe discount”.
Cavendish believes this undervalues the company’s solid governance and track record in a challenging jurisdiction.
