The chief executive of Caledonia Mining (CMCL:AIM) has warnedinvestors that they may need to 'revise' expectations for the miner's future financial performance if the gold price doesn't improve from current $1,120 per ounce levels.

Steve Curtis' comments are made on the back of the Zimbabwe-based miner's latest results where rising costs and lower gold output sees second-quarter profit more than halve.

Pre-tax profit falls to $1.8 million versus $3.8 million a year earlier. Gold production in three month period falls to 10,401 ounces versus 11,223 ounces in the 2014's second quarter.

Exacerbating the cost and output issue is a lower gold price. Caledonia average selling price was $1,174 per ounce in Q2, down from $1,265 per ounce in the comparative 2014 period. Net cash also falls from $8.1 million to $1.3 million.

Stockbroker Numis comments: 'Despite the lower numbers, still very profitable here. Should see some pick-up next year as the revised investment plan starts to take effect.'

The news shouldn't come as too much of a shock to investors given that Caledonia had already flagged output levels in July. Indeed, the shares actually move up 1.2% to 42p on the Q2 financial results.

Caledonia is self-financing expansion of its flagship Blanket mine with the aim of increasing production from 2016.

Northland Capital believes the third quarter of 2015 will be another difficult period for the miner. Yet it adds: 'On a positive note, the expansion in 2016 is not only likely to increase production levels but also decrease all-in sustaining costs increasing the company’s profitability and allowing it to better weather a lower gold price environment.'

WH Ireland lowers its price target for the stock from 100p to 95p on the back of new, lower gold price forecasts for this year ($1,150 per ounce) and next year ($1,250 per ounce).

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Issue Date: 13 Aug 2015