Caledonia Mining has $150 million in convertible notes behind the early work on its Bilboes project in Zimbabwe, and it is still paying a dividend. The question for shareholders is whether that can last through a year of falling output and rising costs. The stock, at $20.25 on October 30, is down 28% over twelve months.
A strong 2025 and a stumble
The 2025 numbers were good. Revenue rose 39% to $254 million, operating cash flow climbed 82% to $76 million, and the operating margin was 46%. Then came the Blanket Mine problem. In October the company cut Blanket’s full-year production guidance to 69,000 to 72,500 ounces after third-quarter output fell 11%. New compressors had arrived late, so the deepest, highest-grade levels were short of compressed air.
The company said two of the four new compressors are running and the others are on their way. About 1,100 ounces held up in the plant should be recovered from mid-October. Deep drilling keeps confirming that Blanket’s orebodies continue, and management expects 2027 production to exceed the old guidance range.
Costs are moving the wrong way. All-in sustaining cost guidance for 2026 now stands at $2,650 to $2,850 per ounce, with inflation and planned infrastructure spending cited.
Bilboes
The Bilboes feasibility study was completed in November 2025. The $150 million note funds early development, and $43 million of growth capital is still going into the project this year. Management says the guidance cut does not impair its ability to fund Bilboes from internal cash flow. The balance sheet gives some support: debt-to-equity is 0.34 and the current ratio is 5.73.
Dividend and recent results
Caledonia pays $0.14 per share each quarter, an annualized yield of 2.6%. The payout ratio is 116.67%, so the dividend leans on cash flow, not just earnings. Quarterly earnings came in at $1.36 a share against a consensus of $0.54, but revenue of $75.91 million missed analysts’ $82.00 million. Director July Ndlovu bought 21,400 shares on August 13 at an average $23.03, for $492,842.
The Zimbabwe discount
The stock trades at a trailing price-to-earnings ratio of 7.69, below 8, and the discount reflects where the mine sits. After a government-mandated indigenization plan completed on September 5, 2012, Caledonia kept 49% of Blanket. The National Indigenisation and Economic Empowerment Fund holds 16%, identified indigenous Zimbabweans 15%, a management and employee trust 10%, and the Blanket Gwanda Community Trust 10%.
Caledonia bought the mine from Kinross Gold in April 2006. Mining there began in 1904. Between 2010 and 2017 the company raised capacity from around 24,000 ounces a year to around 40,000. Whether the compressors restore Blanket’s pace is the next thing to watch.
Sources
- Caledonia Mining’s 2027 Outlook: $150 Million Raised for Bilboes and a Dividend That Keeps Paying Through the Turbulence
- Blanket Mine
- Caledonia Mining’s 2027 Outlook: $150 Million Raised for Bilboes and a Dividend That Keeps Paying Through the Turbulence | The Motley Fool
- Caledonia Mining (NYSEAMERICAN:CMCL) Shares Climb 0.5% – Time to Buy?
Photo: Logan Voss / Unsplash (Unsplash License)
