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(Sharecast News) - Caledonia Mining said in an update on Monday that it is assessing the impact of proposed fiscal changes in Zimbabwe that could increase royalty and tax costs for gold producers, warning that profitability at its Blanket mine would be negatively affected if the measures are enacted.
The AIM-traded firm said the proposals, set out in the country's 2026 National Budget, included lifting the royalty rate on gold from 5% to 10% when prices exceed $2,500 an ounce.
It said it understood the higher rate would apply to the full gold price rather than only to incremental production above the threshold.
The government also proposed altering the tax treatment of capital expenditure, replacing the current 100% upfront deduction with a depreciation schedule over the life of a project.
Caledonia said the move would not change the total tax payable but would defer deductions, affecting the timing of tax payments.
The company said it is analysing the consequences of the revised fiscal regime for its operations and projects, with a particular focus on the recently announced economics of the Bilboes Gold Project.
It warned that the proposed royalty increase "would be expected to result in a lower level of profitability and cash generation relative to current market expectations" at Blanket.
Caledonia added that it has a long-standing presence in Zimbabwe and remains in discussions with government officials.
It said it would update the market once more information becomes available.
At 1237 GMT, shares in Caledonia Mining Corporation were down 4.35% at 2,200p.
Reporting by Josh White for Sharecast.com.
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