Caledonia Mining Corporation (AIM:CMCL) told investors that gold production at its Blanket Mine fell to 17,030 ounces in the third quarter, down from 19,106 ounces a year earlier, and cut its full-year production guidance as a result.
The miner, which holds a 64% stake in the underground operation in Zimbabwe, now expects Blanket to produce between 69,000 and 72,500 ounces in 2026, down from a prior range of 72,000 to 76,500 ounces.
Nine-month production stood at 49,158 ounces, against 58,846 ounces in the same period of 2025, with the head grade slipping to 2.65 g/t from 3.16 g/t. The shortfall stemmed from a shortage of compressed air at high-grade, high-volume mining areas where four new compressors arrived later than planned.
Processing also encountered issues as the company noted that new equipment introduced in September to improve the gravity gold circuit, which recovers the roughly 45-50% of Blanket's output that is free-gold, encountered commissioning difficulties that left about 1,100 ounces trapped in the plant.
The company said that two of the four new compressors are now installed, with the remaining pair released from port and in transit to the mine, and Caledonia expects normalised production in the fourth quarter.
Recovery of the retained 1,100 ounces is due to begin in mid-October once increased elution capacity is commissioned, alongside processing of 58.04 tonnes of accumulated activated carbon containing an estimated 1,166 ounces of gold.
"Production in the third quarter was below our expectations, principally due to insufficient compressed air capacity in deeper, higher-grade mining areas and the temporary retention of gold within the processing circuit," said chief executive Mark Learmonth, adding that Blanket "remains a robust and cash-generative operation".
The revised guidance implies fourth-quarter Blanket production of between about 19,800 and 23,300 ounces, supported also by processing of additional ore at the Lima satellite plant arising from the seven-day shift system introduced in June, which had earlier helped lift second-quarter output 18% quarter-on-quarter to 17,360 ounces.
Cost guidance has moved higher alongside the lower volumes: on-mine cost per ounce sold is now guided at $1,700-$1,900, up from $1,600-$1,800, and all-in sustaining cost guidance rises to $2,650-$2,850 per ounce from $2,500-$2,700, which itself had already been raised from $2,100-$2,300 at the half-year stage.
Group capital expenditure guidance for the year has been trimmed to $94.3m from $103.3m, reflecting the deferral into 2027 of certain spending, primarily on the 132kV power line project, rather than any reduction in the scope of planned capital projects.
Management said the revised guidance would not adversely affect the group's ability to fund the Bilboes development from internal cash flows.
"These measures also support our plans for 2027 and are intended to support more consistent production, improved grade and lower unit costs," Learmonth said.