Caledonia Mining Corporation posted a sharp rise in first-quarter profitability for 2026, as soaring global gold prices offset declining production volumes and rising operating costs, highlighting how international commodity price movements continue to shape the performance of Zimbabwe’s mining sector.

The company reported that revenue rose 18.3% to US$66.4 million during the quarter, while EBITDA surged 50.2% to US$33.9 million. Profit after tax climbed 69.4% to US$18.9 million, with free cash flow increasing 152.6% to US$12.3 million.

Caledonia also declared a quarterly dividend of US$0.14 per share, while earnings per share rose 77.8% to US$0.80.

The strong financial performance came despite weakening operational output at Blanket Mine, where gold production fell 20.9% to 14,767 ounces and gold sales declined 28.9% to 13,784 ounces.

According to the company, “the Group's financial performance in the Quarter benefited from a higher gold price, which offset the impact of lower production.”

Caledonia said the average realised gold price surged 66.3% to US$4,816 per ounce, cushioning the impact of weaker production volumes and helping preserve profitability despite deteriorating operating efficiency.

Chief Executive Officer Mark Learmonth said, “The financial performance in the Quarter benefited from a higher gold price, which offset the impact of lower production, with revenue increasing by 18.3% to US$66.43 million, EBITDA rising 50.2% to US$33.87 million and free cash flow of US$11.93 million, reflecting the benefit of higher gold prices.”

However, the results also exposed operational pressures within the company’s Zimbabwean mining operations. Caledonia said production was negatively affected by “constrained access to higher-grade areas,” which pushed ore grades down from 3.1g/t to 2.5g/t.

Learmonth acknowledged the operational strain, saying, “Production during the Quarter was adversely affected primarily by constrained access to higher-grade areas. This meant that although tonnes milled was slightly higher than the comparative quarter, the head grade reduced from 3.1g/t to 2.5g/t, resulting in a lower recovery.”

The lower production volumes significantly weakened operating leverage, driving all-in sustaining costs (AISC) sharply higher. AISC rose 53.9% to US$2,765 per ounce sold, while on-mine costs climbed to US$1,740 per ounce sold.

The results illustrate the increasingly delicate balance facing Zimbabwe’s gold producers, where high international gold prices are currently masking underlying production and cost pressures. While elevated bullion prices are boosting revenues and profitability across the sector, many mines continue grappling with declining ore grades, rising development costs, electricity constraints, and operational inefficiencies.

Caledonia’s performance also reflects broader structural trends in Zimbabwe’s mining economy, where production sustainability increasingly depends on continuous underground development and deeper-level extraction as mature mines exhaust easier-to-access ore bodies.

The company indicated that additional development work and operational changes are underway to stabilise output. Learmonth said, “Measures to improve the grade have already been implemented,” adding that production is expected to be “weighted towards the second half of the year.”

Caledonia maintained its full-year production guidance at Blanket Mine of between 72,000 and 76,500 ounces.

The company also pointed to encouraging deep-level drilling results, saying exploration continues to demonstrate “the continuity and quality of the Blanket, Eroica and Lima orebodies at depth,” supporting confidence in the long-term sustainability of the mine.

Beyond Blanket, investor focus is increasingly shifting toward the Bilboes Gold Project, which Caledonia views as its next major growth asset. The company confirmed that financing discussions are progressing following the successful completion of a US$150 million convertible senior notes raise in January 2026.

According to Caledonia, the Bilboes feasibility study projects a 10.8-year mine life with average annual production of 150,000 ounces and significantly lower projected operating costs than Blanket.