In a statement, the AIM-listed firm said approximately 14,389 ounces of gold were produced during the quarter, 15% higher than the previous quarter and 7% higher than the corresponding quarter of 2016.
The group added that the improvement in production in the third quarter is expected to continue into the fourth quarter.
As a result, the company has narrowed the range of its 2017 production guidance from 52,000 to 57,000 ounces to a range of between 54,000 and 56,000 ounces.
Caledonia said it remains on track to achieve its production target of 80,000 ounces in 2021.
Commenting on the production report, Steve Curtis, Caledonia’s chief executive officer, said: "The first half of 2017 presented Caledonia with some significant operating challenges which adversely affected production.
“In May 2017 it was announced that our technical team was implementing various remedial measures aimed at alleviating the operating challenges and improving the reliability of our underground infrastructure.”
He added: “I am pleased to confirm that these measures implemented in the last three months have had the desired effect and have resulted in an improvement in both tonnage and grade at Blanket with associated higher production for the Quarter.”