Caledonia Mining says Zimbabwe's incoming gold royalty changes will tank profits at its Blanket Mine operation and mess with returns from the Bilboes project that could pump out five tonnes yearly. The Jersey-based miner warned that the new three-tier system starting next year hits harder when gold prices stay elevated, and it comes right when the company wants to pour capital into developing Bilboes over the next three years.
Finance officials plan to jack up royalties to 10 percent when gold trades above 2,500 dollars per ounce, while also spreading out tax deductions for capital spending instead of taking them upfront. The company posted a 243 percent profit jump to 53 million dollars through September on strong gold prices, but executives say the new rules will siphon earnings away from operations and shareholder payouts.
Caledonia holds 1.7 million ounces in proven reserves at Bilboes, worth over 7 billion dollars at current prices, and management expects to shift focus from Blanket to make Bilboes the flagship mine within three years.
Finance officials plan to jack up royalties to 10 percent when gold trades above 2,500 dollars per ounce, while also spreading out tax deductions for capital spending instead of taking them upfront. The company posted a 243 percent profit jump to 53 million dollars through September on strong gold prices, but executives say the new rules will siphon earnings away from operations and shareholder payouts.
Caledonia holds 1.7 million ounces in proven reserves at Bilboes, worth over 7 billion dollars at current prices, and management expects to shift focus from Blanket to make Bilboes the flagship mine within three years.
