Budget Changes Put Caledonia’s Bilboes Gold Project Economics at Risk

Stephen Chifamba

HARARE – CALEDONIA Mining Corporation Plc has acknowledged the potential impact of new fiscal measures proposed in Zimbabwe’s 2026 National Budget, warning that the adjustments could affect profitability across its operations, including the much-anticipated Bilboes Gold Project.

In a statement released this week, the company said it had “noted the proposed changes announced to the royalty and tax regimes, as they apply to gold miners,” following the budget presentation by Finance Minister Professor Mthuli Ncube on November 27, 2025.

According to the budget, the government intends to introduce two key changes for the gold sector.

Caledonia highlighted these directly, saying they include “an increase in the royalty rate from 5% to 10% when the gold price exceeds US$2,500/oz, with the higher rate understood to apply to the full gold price, and a change to the tax treatment of capital expenditure whereby the current 100% upfront deduction would instead be spread over the life of the project.”

The company said it is evaluating what these measures mean for its operations and investment plans.

“The Company is assessing the implications of the proposed changes for its portfolio of assets, including in particular the potential effects on the recently announced economics of the Bilboes Gold Project,” the statement noted.

Caledonia also cautioned that its flagship Blanket Mine, which has operated in Zimbabwe for more than a decade, could see reduced financial performance if the royalty hike is implemented at current gold price levels.

“In respect of the Caledonia group’s operating mine in Zimbabwe, Blanket Mine, the change in royalty, if implemented, would be expected to result in a lower level of profitability and cash generation relative to current market expectations,” the company said.

Despite the potential headwinds, Caledonia stressed its commitment to long-term cooperation with authorities, adding that it “continues to engage constructively with the relevant authorities” and will issue further updates when “more clarity is available.”

In July 2025, Caledonia released the long-awaited feasibility and economic assessment for the Bilboes Gold Project, one of Zimbabwe’s largest undeveloped gold assets. The report projected strong returns based on favourable capital costs, a modern processing plant, and a multi-pit open-cast mining plan.

Bilboes was expected to significantly expand Caledonia’s production profile, potentially transforming the company from a single-mine operator to one of Zimbabwe’s largest gold producers. The report outlined robust cash flows and an attractive net present value under then-prevailing gold prices.

However, the project’s economics were highly sensitive to fiscal stability, particularly royalty rates and capital expenditure deductions. The newly proposed budget changes, especially the application of a 10% royalty across the full gold price, could materially alter project returns.

Analysts say the revised tax treatment for capital expenditure may also delay cost recovery during early production years, affecting project financing.

Caledonia’s ongoing assessment is therefore crucial in determining whether Bilboes will proceed on its original development timeline.