Zimbabwe Eases Proposed Gold Royalties, Bolstering Caledonia Mining's Outlook
St Helier, Friday, 19 December 2025.
Zimbabwe revised its tax plan, limiting a 10% royalty hike to gold prices exceeding $5,000 per ounce, effectively shielding Caledonia Mining’s financial outlook from previously feared cost increases.
Fiscal Relief and Strategic Adjustments
On December 19, 2025, Caledonia Mining Corporation Plc (NYSE American: CMCL) confirmed that the Zimbabwean government significantly altered its stance on mining levies proposed earlier this month [1][5]. During the second reading of the 2026 National Budget on December 17, the Minister of Finance adjusted the trigger for increased royalties, a move that substantially mitigates the financial risk for gold producers [1]. Originally, the proposal sought to double the royalty rate from 5% to 10% if gold prices surpassed $2,500 per ounce [1]. Under the revised terms, this higher rate will now only apply if gold prices exceed $5,000 per ounce, a threshold currently well above market levels [1]. Additionally, the government withdrew two other contentious proposals: the changes to the tax treatment of capital expenditure and the introduction of a 15% withholding tax on interest payable on offshore loans [1].
Market Volatility and Legal Scrutiny
The initial announcement of fiscal tightening on December 1, 2025, had triggered immediate market volatility and investor concern [3]. Following the disclosure that the original measures could reduce profitability and cash flow at the Blanket Mine, Caledonia’s stock price fell 14.41%, dropping $4.44 to close at $26.37 on that day [3]. This indicates the stock was trading at 30.81 prior to the decline. As of December 18, 2025, the share price stood at $23.96 [2]. The sharp drop earlier in the month prompted Pomerantz LLP to announce an investigation on December 17, 2025, regarding potential securities fraud claims on behalf of investors, specifically questioning whether the company’s disclosures regarding the fiscal landscape were adequate [3].
Operational Stability for Major Projects
The regulatory pivot is particularly vital for Caledonia’s long-term strategy in Zimbabwe, where it holds 100% stakes in the Bilboes, Motapa, and Maligreen claims, alongside its 64% ownership of the Blanket Mine [2]. The withdrawal of the withholding tax on offshore loans specifically de-risks the development of the Bilboes Gold Project, a large, high-grade deposit located 75 km north of Bulawayo [2]. Caledonia intends to fund this project with a large proportion of offshore debt, making the tax exemption on interest payments a critical factor for financial viability [1]. CEO Mark Learmonth stated that these revised provisions demonstrate the government’s support for the mining sector and the development of future projects [1]. Assuming gold prices remain below the $5,000 per ounce threshold, the company expects no change to its financial outlook once the proposals are enacted before the end of 2025 [1].