• Zimbabwe limits 10% gold royalty to prices above $5,000/oz from 2026

• Caledonia says financial balance depends on gold staying below that level

• Banks forecast gold could cross $5,000/oz by end-2026

Zimbabwe has revised its gold royalty reform and clarified that the 10% rate will apply only when gold prices exceed $5,000 per ounce from 2026. In a note dated December 19, Caledonia Mining, operator of the Blanket mine, welcomed the adjustment but said it does not fully remove risks to its operations.

Gold prices have risen by about 65% this year and currently trade around $4,300/oz. In November, Zimbabwe introduced a new royalty framework based on a progressive scale, with a 5% rate applied to prices between $1,201 and $2,500/oz and a 10% rate applied above that level. This marked a shift from the previous system, under which producers paid a flat 5% royalty for any gold price above $1,200/oz.

The initial reform prompted strong reactions from gold producers, including Caledonia Mining. The company said the introduction of a 10% rate would reduce profitability and cash generation at its Blanket mine. The concern also extended to the Bilboes project, a planned $484 million mine that Caledonia aims to bring onstream in Zimbabwe by 2028.

Following these concerns, the government amended the framework. Under the revised structure, the 5% royalty applies to gold prices between $1,201 and $5,000/oz, while the 10% rate applies only above that threshold.

Caledonia said the revision reflects a pragmatic response by the authorities. However, the company stressed that the financial balance of its Zimbabwe portfolio remains dependent on gold prices staying below $5,000/oz. A move above that level would still trigger the higher royalty and weigh on operations.

“The revised proposals, which have not yet been ratified by parliament, but are expected to be enacted before the end of the year, should result in no change in the financial outlook for Caledonia’s portfolio of assets in Zimbabwe provided the gold price remains below $5,000 per ounce,” the company said.

Rising price risk

Caledonia has not quantified the potential impact of a 10% royalty on its operations. Its concerns come as analysts continue to point to strong upside risks for gold prices. JP Morgan expects the rally to extend into next year, with the average gold price projected to reach about $5,055/oz by the end of 2026. Bank of America and Metals Focus have issued similar forecasts, both pointing to a possible breach of the $5,000/oz threshold.

Market developments over the coming months will determine whether the revised royalty framework remains neutral for Caledonia or becomes a renewed source of pressure if gold prices rise further.

Aurel Sèdjro Houenou