Caledonia earmarks $132m for Bilboes as Zimbabwe drops royalty hike

Caledonia Mining Corporation plans to spend $132 million this year to start developing the Bilboes gold project, which would become Zimbabwe's largest gold mine once in production, the company said in a production update on 14 January 2026.

The Bilboes allocation forms part of a total capital expenditure programme of $162.5 million for 2026. Caledonia said the spending remained subject to board approval and to funding being available, a caveat that reflects the scale of the project relative to the company's existing business.

A mine several times Blanket's size

Caledonia currently operates Blanket, an underground mine producing around 80,000 ounces a year. Bilboes is planned at a much larger scale: the company expects production to start in late 2028 and to reach a steady-state rate of about 200,000 ounces a year from 2029 for an initial 10 years. The total projected capital cost is $584 million.

To fund it, Caledonia intends to combine non-recourse senior debt with cash contributions from its existing operations. It has also said it is open to specialised instruments such as streaming, in which an investor pays upfront in exchange for a share of future metal output.

Policy tailwind

The announcement followed a significant policy reversal in Harare. In December, Zimbabwe's government abandoned plans to double the gold royalty rate and to change the tax treatment of capital expenditure, according to Reuters reporting carried by TimesLIVE. For a company about to commit hundreds of millions of dollars, the royalty rate and the ability to deduct capital spending are central to the project's economics, so the climbdown removed a major source of uncertainty.

The timing also coincided with exceptional market conditions. Spot gold set another record of $4,639.48 an ounce on the day of the announcement, driven by geopolitical tension involving Iran, questions over the US Federal Reserve's independence and softer inflation data that boosted expectations of interest-rate cuts.

Why it matters

Miners across the region are using record prices to accelerate growth, and Bilboes is among the largest builds being attempted in Zimbabwe. If Caledonia can secure the debt and move into construction during 2026, Bilboes would be a test of whether international lenders are prepared to back large mining projects in the country. The company's ability to keep Blanket running strongly while the build proceeds will be closely watched, since Blanket's cash flow is part of the funding plan.

Sources

• TimesLIVE (Reuters): Caledonia to spend R2bn on Zimbabwe gold expansion, 14 Jan 2026