$CMCL earnings report

Caledonia's Q3 2026 results combine a weaker operating quarter with a much higher gold price. Blanket produced 17,030 oz, down 11% from 19,106 oz in Q3 2025, and consolidated gold sold fell 8% to 19,082 oz. The company attributes the shortfall to a compressed-air shortage in high-grade underground areas and a temporary build-up of gold in the metallurgical plant, and states that both issues have been resolved. Against this, the average realised gold price rose 20% to US$4,134/oz, which the company says drove revenue up 10.5% to US$78,932 thousand and gross profit up 13.6% to US$41,853 thousand.

Unit costs moved the other way. On-mine costs rose to US$1,514/oz sold (Q3 2025: US$1,228/oz) and AISC to US$2,344/oz (Q3 2025: US$1,937/oz). The filing states that largely fixed or semi-fixed costs, including certain employee benefits, were spread over fewer ounces. Nine-month AISC per ounce sold reached US$2,575/oz against US$1,848/oz, and the revised full-year AISC guidance of US$2,650-US$2,850/oz sold reflects that trend.

Below gross profit, the result was dominated by non-cash items. The company reported a net fair value loss of US$12,915 thousand on derivatives in Q3 2026, against a US$11.5 million gain in the previous quarter as stated in the release. Profit after tax fell 39.3% to US$11,328 thousand and basic EPS to US$0.11 from US$0.77. Operating profit before non-cash fair value adjustments to derivatives was US$36.7m against US$29.5m. The filing states that the effective tax rate rose because no tax benefit was recognised on the derivative losses. Nine-month profit after tax still rose 13% to US$60,261 thousand, while nine-month basic EPS fell 9% to US$2.06.

Cash generation was steady but the balance sheet changed. Net cash from operating activities was US$13,634 thousand, close to the prior year's US$13,690 thousand, as higher operating inflows were offset by higher tax paid and US$4,284 thousand of Convertible Senior Notes finance costs. Cash and cash equivalents rose to US$161,866 thousand at September 30, 2026 from US$35,738 thousand at December 31, 2025, reflecting the convertible notes proceeds of US$145,100 thousand net received during the nine months. Dividends paid in Q3 were US$9,208 thousand. Quarter-end net cash and cash equivalents fell to US$157.9 million from US$167.8 million, which the company attributes to the timing of gold sales around quarter end.

Guidance was revised. Blanket production guidance is now 69,000-72,500 oz, on-mine cost US$1,700-US$1,900/oz sold, AISC US$2,650-US$2,850/oz sold, and Group capex US$94.3 million, reduced from US$103.3 million. The release also reports growth milestones: K-Pits heap-leach trial irrigation is planned for mid-November, an EIA certificate for K-Pits has been received, a US$150 million facilities agreement for Bilboes was signed on November 5, 2026, and a maiden Motapa resource was declared. The company's focus for the next quarter is recovering the locked-up gold and ramping Lima throughput, and the filing's October production figure of 6,940 oz is the first datapoint toward that goal.

Caledonia reported a recovery from Q1 at Blanket. Gold production rose 18% to 17,360 ounces as access to higher-grade mining areas improved, and feed grade increased to 2.9g/t from 2.5 g/t in the preceding quarter. Revenue increased 14% from US$66.4 million in Q1 to US$75.9 million, while gross profit increased 22% from US$32.1 million to US$39.2 million. The realised gold price was US$4,259/oz, 12% below the preceding quarter but 34% above Q2 2025.

Year-over-year financial growth was driven by price rather than volumes. Q2 revenue increased 16%, gross profit increased 16%, EBITDA increased 16% and profit after tax increased 27%. However, production was 18% below Q2 2025, gold sold was 13% below, feed grade was 15% below and recovery was 2% below. Q2 EBITDA included an US$11.5 million fair value gain on derivative financial instruments. Profit after tax excluding that gain and the US$8.5 million gain on the sale of the solar plant in the comparative quarter increased 23% from US$15.0 million to US$18.5 million.

Costs remain the principal operational issue. On-mine cost was US$1,675/oz sold, 49% above Q2 2025, although 3.7% below US$1,740/oz sold in Q1. AISC was US$2,678/oz sold, down 3% sequentially but 48% above Q2 2025. Management attributed elevated costs to lower grade, employee-benefit costs including US$3.2 million of dividend payments to Blanket employees, US$4 million of advisory fees associated with the convertible bonds and other fundraising initiatives, US$3.2 million of higher royalty payments, and higher sustaining capital expenditure. Free cash-flow declined 54% to 17,387 (US$ 000).

Liquidity increased materially. Cash and cash equivalents were 171,784 (in thousands of United States Dollars) at June 30, 2026, while net cash and cash equivalents were US$167.8 million. The balance sheet included 98,296 (in thousands of United States Dollars) of convertible senior notes, and six-month proceeds from convertible senior notes net of transaction costs were 145,100 (in thousands of United States Dollars). The Board approved a quarterly dividend of US$0.14 per share. Bilboes funding remains incomplete, although the company reported progress on both the US$150 million interim bank facility and the US$300 million limited recourse project finance facility.

Management reaffirmed 2026 Blanket production guidance of 72,000-76,500 ounces but increased on-mine cost guidance to US$1,600-US$1,800/oz sold and AISC guidance to US$2,500-US$2,700/oz sold. Revised Group capex guidance was reduced to US$103.3 million from US$178.9 million, reflecting timing of deposits for Bilboes long-lead equipment rather than a change in project scope, timetable or cost. Management expects stronger second-half operating performance, supported by the seven-day schedule, higher-grade access, an elution plant upgrade and intended processing of an additional 200 tonnes per day from September 2026. It expects Blanket production in 2027 to exceed the previous guidance of 72,000-76,500 ounces, but firm 2027 guidance is not expected until after the end-of-2026 budgeting process.