Blanket Mine operator seen expanding on bullish targets
Caledonia Mining Corporation, which controls Blanket Mine — one of Zimbabwe’s largest gold producers — along with the Bilboes and Motapa assets, is trading at a premium valuation, underscoring strong investor confidence in its growth trajectory.
The company’s price to earnings (P/E) ratio stands at 11,8 times, slightly above the industry average of 11. Market watchers say this signals greater confidence in Caledonia’s future earnings compared to peers.
In its latest review of Caledonia’s financials for the quarter ended June 30, 2025, brokerage firm IH Securities said the miner was “poised for growth,” after revising its 2025 gold production target upwards to between 75 500 and 79 500 ounces, from an earlier range of 74 000 to 78 000 ounces.
“The gold rally has persisted into 2025, with the consensus price for the year hovering around the US$3 500 (per ounce) mark,” IH noted.
“Possible catalysts include sustained geopolitical tensions and a potential cut in the (US) federal funds rate, which could further boost gold’s appeal. Against this backdrop, Caledonia has opted not to engage in further hedging.”
The bullish outlook mirrors confidence from Zimbabwean authorities, who have highlighted gold’s strong performance in the broader mining sector.
“The mining sector has been bullish, driven by gold deliveries which rose to 20,1 tonnes as at end June 2025, up from 13,85 tonnes during the same period in 2024,” the central bank said in its mid-term monetary policy statement two weeks ago.
At Blanket Mine, management is banking on sustaining record recovery rates achieved during the quarter to June. IH Securities also flagged notable cost savings after Caledonia installed power factor correction equipment in November, trimming US$18 per ounce in costs.
Operational efficiencies are also being targeted. “During the second quarter of 2025, a new clocking system was implemented to improve labour management and reduce inefficient labour allocation going forward,” IH said.
Guidance for all in sustaining costs remains at US$1 690 to US$1 790 per ounce, with capital expenditure for the year expected at US$41 million.
“Overall, Blanket Mine appears well positioned for further positive developments in the short term,” IH noted.
“In the group’s pipeline are continued feasibility studies at Bilboes and surface exploration at Motapa. Caledonia is currently trading at a PER of 11,8x compared to peers at 11x.”
A stronger balance sheet also underpinned the quarter, boosted by proceeds from the sale of Caledonia’s solar business for US$22,35 million. After transaction costs, the miner realised US$21,97 million in net cash, pushing total assets to US$389,16 million from US$348,36 million a year earlier.
Gold production at Blanket Mine hit a new quarterly record of 21 070 ounces, thanks to a recovery rate of 94,4%. This helped offset a 1,8% year on year decline in tonnes milled, resulting in a 4,9% increase in first half output to 40 458 ounces.
At Bilboes, the oxide mine remains under care and maintenance, but leaching of heap pads added 807 ounces to the group’s tally.
The strong operational performance drove a 37,1% surge in revenue for the half year to US$121,49 million, compared to last year, while profit after tax more than doubled to US$34,75 million.
https://www.theindependent.co.zw/business-digest/article/200045259/blanket-mine-operator-seen-expanding-on-bullish-targets