Zimbabwe Halves Gold Royalty Tax Trigger to $5,000/oz, Easing Burden on Caledonia Mining and Gold Producers

Zimbabwe Amends Gold Royalty Threshold for 2026 Budget

The government of Zimbabwe has revised a key component of its proposed 2026 National Budget concerning the royalty and tax regimes for gold miners, a move that significantly benefits companies operating in the region, including Caledonia Mining Corporation Plc (CMCL).

The most material change involves the threshold at which the gold royalty rate doubles. Initially, the proposal outlined an increase in the royalty rate from 5% to 10% when the price of gold exceeded $2,500 per ounce. Following amendments, the higher 10% royalty rate will now only apply if the gold price surpasses $5,000 per ounce.

Impact on Gold Miners and Financial Predictability

This adjustment provides considerable financial relief and predictability for gold producers. Given that current gold prices are well below the new $5,000 threshold, miners can benefit from higher gold prices without immediately incurring the increased tax liability. The original $2,500 trigger was much closer to prevailing market prices, posing a more immediate risk to margins.

Caledonia Mining Corporation Plc, which operates the Blanket Mine in Zimbabwe, issued an announcement on December 1, 2025, detailing the initial proposed changes to the 2026 National Budget. These changes related to royalties and the tax deductibility of capital expenditure.

Details of the Royalty Rate Revision

The revised structure effectively creates a much wider buffer for gold price appreciation before the punitive 10% royalty rate is enacted. This decision by the Zimbabwean government signals a willingness to balance fiscal needs with the need to maintain a competitive environment for mining investment.

• Original Proposal Trigger: Royalty rate increases from 5% to 10% when gold price exceeds $2,500 per ounce.
• Amended Trigger: Royalty rate increases from 5% to 10% only when gold price exceeds $5,000 per ounce.
• Affected Entity: The changes apply to gold miners operating in the Republic of Zimbabwe, including Caledonia Mining Corporation Plc.

Forward-Looking Implications

While the initial proposals included other changes related to the tax deductibility of capital expenditure, the revision of the royalty trigger is the most financially significant for operational cash flow. By setting the trigger at $5,000, the government has effectively deferred the impact of the higher tax rate, assuming gold prices remain below that level in the near to medium term. This move is expected to be viewed positively by investors in CMCL and other gold mining companies with significant exposure to Zimbabwean assets, as it reduces regulatory risk associated with potential tax hikes.