HARARE (FinX) – Caledonia Mining announced on Monday that it is currently evaluating the potential impact of upcoming fiscal policy changes in Zimbabwe, which could lead to higher royalty and tax costs for gold producers.
The firm cautioned that these measures, if implemented, could adversely affect the profitability of its Blanket mine. The updates, part of Zimbabwe’s 2026 National Budget proposals, include increasing the royalty rate on gold from 5% to 10% when the market price exceeds US$2,500 per ounce.
Caledonia indicated that the higher rate would apply to the entire gold price, not just the incremental portion above the threshold. Additionally, the government has proposed revisions to the tax treatment of capital expenditure, moving from an immediate 100% deduction to a depreciation schedule over the lifespan of a project.
The company noted that while this change would not alter the total tax liability, it would defer deductions, impacting the timing of tax payments. Caledonia is actively reviewing the implications of these fiscal adjustments on its current and future operations, with particular attention to the recent developments concerning the economics of the Bilboes Gold Project.
The firm warned that the proposed royalty hike is likely to result in reduced profitability and cash flow at Blanket compared to current market expectations.
Despite these uncertainties, Caledonia reaffirmed its longstanding presence in Zimbabwe and stated it remains engaged in discussions with government officials, promising to provide updates once further details are available.
