• Caledonia’s Q3 net profit surges 467% to US$18.7 million, driven by 52% revenue growth and higher gold prices
• Blanket Mine produces 19,106 oz in Q3, only 16,216–20,216 oz required in Q4 to achieve upper-end 2025 guidance of 79,500 oz
• US$5.9 million free cash flow generated, cash position strengthened to US$44.3 million with zero debt and full US$41 million capex self-funded

Gold output in kgs

Harare- Caledonia Mining Corporation has indeed delivered a robust third quarter in 2025, solidifying Blanket Mine's status as Zimbabwe's third-largest gold producer and keeping the company firmly on track, or potentially ahead for its full-year guidance.

Q3 production at Blanket reached 19,106 ounces (up slightly from 18,992 ounces in Q3 2024), with an additional 437 ounces from the Bilboes oxide project, bringing nine-month totals to 59,284 ounces.

This leaves just 16,216–20,216 ounces needed in Q4 to hit the maintained 2025 guidance of 75,500–79,500 ounces, a feasible target given Blanket's recent quarterly run-rate of 19,000–21,000 ounces and operational improvements like enhanced underground supervision, reduced equipment downtime, and stockpiling of 34,968 tonnes of ore (equivalent to 15 days of mill throughput) to buffer against disruptions.

 “We continue to deliver solid operational and financial results at Blanket, producing 19,106 ounces of gold during the Quarter and maintaining our focus on stable production and disciplined capital investment as we seek to modernise operations and improve mining efficiency at Blanket,”Mark Learmonth, the company’s CEO, commented.

Financially, the quarter was transformative. Revenue jumped 52.4% year-on-year to US$71.4 million, driven by a 40% higher average realised gold price and an 8.7% increase in ounces sold (20,792 ounces vs. 19,104 in Q3 2024, sales included a net drawdown from work-in-progress and excluded 2,861 ounces of bullion held at quarter-end but sold early in Q4).

Gross profit nearly doubled to US$36.9 million, EBITDA soared 162% to US$33.5 million, and net profit after tax surged 467% to US$18.7 million.

These gains stem from structural enhancements, including better plant recoveries, mill upgrades achieving 86.6 tonnes per hour (above the 85 tph target), and disciplined operations despite challenges like narrower orebody widths and higher waste dilution leading to lower grades.

On costs, the on-mine figure came in at US$1,203 per ounce for Q3, above the original 2025 guidance of US$1,050–1,150/oz but within the revised full-year range of US$1,150–1,250/oz, reflecting higher labour and consumables from increased tonnes processed (212,504 milled, up from 206,000 in Q3 2024) to offset grade shortfalls.

All-in sustaining costs (AISC) were US$1,937 per ounce, up 29% year-on-year due to elevated on-mine costs, higher administrative expenses, increased royalties (at a steady 5% rate but impacted by gold prices), and sustaining capex focused on underground development, IT enhancements for resource planning, and electrical/surface engineering.

This aligns with the revised 2025 AISC guidance of US$1,850–1,950/oz (up from US$1,690–1,790/oz), incorporating these pressures alongside heavy investments aimed at modernising operations, boosting efficiency, extending mine life, and ultimately lowering long-term costs, without drawing on debt or affecting the quarterly dividend.

Cash flow turned decisively positive, with US$5.9 million in free cash flow (vs. a US$2.4 million outflow in Q3 2024), lifting liquidity to US$44.3 million. This supports the US$41.0 million 2025 capex guidance of US$34.1 million at Blanket (US$29.3 million sustaining, US$4.8 million non-sustaining), US$5.8 million on exploration (Bilboes and Motapa), and US$1.1 million on group IT/other initiatives.

Key projects advanced strongly, including 5,624 meters of underground development (ahead of plan), completion of the new tailings storage facility (with deposition starting October 30, 2024, and full switchover in 2025), and a second return water dam underway.

Exploration remains a highlight for upside. At Blanket, deep drilling below Level 34 continues to yield encouraging high-grade intercepts on zones like Eroica, Blanket, AR South, and now Lima, potentially upgrading inferred resources to indicated, with Q4 2025 results expected.

Surface trenching at "K-Pits" identified anomalous gold over 53,000 square meters, prompting a 5,000-meter RC drilling program (results in Q1 2026).

Motapa's US$2.8 million 2025 program (25,580 meters RC + 1,780 meters diamond drilling) is progressing well, with 17,787 meters RC and 1,763 meters diamond completed by quarter-end, a maiden resource for part of the property is slated for H1 2026, offering synergies with adjacent Bilboes.

Therefore, Caledonia has seldom been in better shape, production momentum (tracking to the upper end of 75,500–79,500 ounces), resilient operations in a challenging jurisdiction, positive cash generation funding value-accretive capex, and a fortified balance sheet. Short-term cost pressures from investments and grades are transitory, positioned to drive long-term efficiency and mine life extension.

With the Bilboes DFS as a near-term catalyst potentially re-rating the US$260 million market cap (against annualised 80,000-ounce production at >US$1,400/oz margins), plus Motapa/Blanket exploration upside, Caledonia looks materially undervalued for investors tolerant of jurisdictional risk.

Equity Axis News