Caledonia Mining has cut its 2026 gold production forecast for the Blanket mine in Zimbabwe and raised its cost outlook. Third-quarter output fell 11% as the mine ran short of compressed air in its deepest, richest areas.
At a glance
- Blanket is now expected to produce 69,000 to 72,500 ounces this year, down from 72,000 to 76,500.
- All-in sustaining costs are now guided at $2,650 to $2,850 an ounce, up $150.
- About 1,100 ounces of gold left trapped in the plant should be recovered from mid-October.
Background
Blanket is an underground gold mine in Zimbabwe and Caledonia Mining's main producing asset. Underground mines use compressed air to run drills and other equipment, so a shortage slows mining. All-in sustaining cost (AISC) is the industry's standard measure of what it costs to produce an ounce of gold and keep the mine running.
What happened
Caledonia Mining said on October 9 that Blanket produced 17,030 ounces of gold in the third quarter, down from 19,106 ounces a year earlier. Output for the first nine months was 49,158 ounces, against 58,846 ounces in the same period of 2025.
The company cut its full-year guidance to 69,000 to 72,500 ounces, from 72,000 to 76,500 ounces. It also raised its all-in sustaining cost guidance to $2,650 to $2,850 an ounce, from $2,500 to $2,700. On-mine costs are now expected at $1,700 to $1,900 an ounce.
What went wrong
"Production in the third quarter was below our expectations, principally due to insufficient compressed air capacity in deeper, higher-grade mining areas," said chief executive Mark Learmonth. New compressors needed at those depths were delayed.
Problems commissioning new equipment in the gravity circuit, the part of the plant that separates heavy gold particles, added to the shortfall. About 1,100 ounces of gold were left inside the plant. Caledonia expects to recover that gold from mid-October.
What it means
Caledonia trimmed its 2026 capital spending to $94.3 million from $103.3 million, mainly by moving a 132kV power line project into 2027. Growth spending on its Bilboes project falls to $43 million from $48 million.
The company said the revised guidance will not affect its ability to fund the group. Higher costs per ounce still squeeze margins, even with gold prices well above last year's levels.
Our read
Outlook: neutral. A shortfall of a few thousand ounces at one Zimbabwean mine is too small to affect gold prices. It matters for Caledonia's earnings, not the market.
What to watch
- Whether the delayed compressors restore output in Blanket's deeper levels in the fourth quarter.
- Recovery of the roughly 1,100 ounces left in the plant from mid-October.
- Progress and funding for the Bilboes project in 2027.
For information only, not investment advice.
Gold price in India
metalscost.com India reference price as of 2026-10-24.
Detailed analysis
Timeline
- 2026-10-09: Caledonia reports Q3 output of 17,030 ounces and cuts 2026 guidance.
Supply Drivers
Caledonia's full-year output will be about 3,000 to 4,000 ounces lower than first planned.
Mining Production
Delayed compressors limited mining in Blanket's deeper, higher-grade areas, cutting quarterly output 11%.
What could lift prices
- Operational setbacks at mines limit the growth of gold supply.
- Rising costs across the industry raise the price gold needs to stay profitable to mine.
What could weigh on prices
- The shortfall is small and partly temporary, with trapped gold due to be recovered.
- Blanket's output does not move global gold supply in a meaningful way.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Zimbabwe | Low | One of its gold mines will produce less than planned this year. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Gold Mining | Negative | Caledonia faces lower output and higher costs per ounce at Blanket. |
Who gains, who loses
- Caledonia's balance sheet, short term: Capital spending falls by $9 million as a power line project moves to 2027.
- Caledonia shareholders: Lower output and higher costs per ounce reduce expected profit for 2026.
Other ways this could play out
- If new compressors arrive quickly, Blanket could reach the top of its revised range.
- If the air shortage persists, output could fall toward the bottom of the new guidance.
Price risks
- Gold prices depend on global factors such as interest rates, not on one mine's output.
- A fall in gold prices would hit Caledonia harder now that its costs are higher.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
