JERSEY miner, Caledonia Mining Corporation (Caledonia) has set capital expenditure at US$162,5 million for the year, with the majority going towards developing its highly lucrative Bilboes Gold Project.
As previously reported, the Bilboes Gold project hosts 1,749 million ounces of proven and probable gold reserves, which will require a total of US$584 million in development capital.
At current gold prices, the revenue potential is nearly US$8 billion.
Caledonia is working to make this project its flagship in three years, from its current Blanket Mine, and it is projected to produce five tonnes annually.
“Projected capital expenditure in 2026 mainly relates to sustaining capital at Blanket and the planned commencement of the Bilboes development project,” Caledonia said in a statement.
“Total group capital expenditure is projected to be US$162,5 million.”
Caledonia said the Bilboes development project will receive US$132 million, while US$3,8 million will go towards the Motapa exploration.
In terms of sustaining capital, capex of US$26,6 million has been set aside, with US$26,1 million going towards Blanket mining operations.
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“The capital expenditure plan continues to prioritise operational reliability, safety, and long-term value, with significant allocations for both sustaining and growth projects, ensuring Blanket remains well-positioned for consistent production and future growth,” Caledonia said.
“Funding initiatives in respect of the capital requirements for the Bilboes project are well progressed.
“Sustaining capital expenditure may increase by approximately US$11 million to implement a long-term solution to the recurring power interruptions and poor power quality which Blanket has experienced over several years.
“These factors have resulted in interruptions to production and elevated operating costs due to the requirement to use stand-by diesel generators to supplement shortfalls in power provided by the grid and the existing solar facility.”
Caledonia added that this further capital expenditure was subject to the finalisation of technical studies and financial evaluations and will be subject to approval by the miner’s board.
“Cost guidance for FY2026 reflects higher direct operating costs at Blanket compared with the first nine months of 2025, primarily due to inflation and increased costs in the following departments:
“Mining, where higher headcount and increased underground development have raised costs; milling and processing department, which faces higher consumable prices and additional maintenance; and engineering department, which is investing in equipment upgrades and infrastructure reliability,” Caledonia said.
The miner noted that general and administrative expenses have increased, driven by inflation-related salary adjustments and rising compliance requirements.
At the same time, the group continues to invest strategically in mineral resource management, safety initiatives and risk management programmes to support ongoing exploration, enhance operational safety, and strengthen long-term mine planning.
“The capital expenditure plan continues to prioritise operational reliability, safety, and long-term value, with significant allocations for both sustaining and growth projects, ensuring Blanket remains well-positioned for consistent production and future growth.”
In 2025, Blanket Mine achieved gold production of 76 213 ounces, in line with the guidance of 75 500 to 79 500 ounces, and expects a target of between 72 000 and 76 500 ounces this year.
“Our FY 2026 budget reflects our commitment to sustained investment in both our core operations and future growth,” chief executive officer Mark Learmonth said.
“The planned capital expenditure will support ongoing production at Blanket and advance the development of the Bilboes project and exploration at Motapa, where we see long-term, value-enhancing synergies with Bilboes.
“We remain focused on investing in safety and delivering long-term value for all our stakeholders.”
