Gold miner Caledonia Mining started the direct sale of gold produced from its Blanket mine, in Zimbabwe, to a refiner outside of the country.
Since listing on the Victoria Falls Stock Exchange and following completion of the Bilboes acquisition, Caledonia has been considering various options to achieve the direct export of its gold.
Unrefined gold continues to be processed at Fidelity Gold Refinery (FGR), a subsidiary of the Reserve Bank of Zimbabwe (RBZ), on a toll-treatment basis, in accordance with the requirements of the government of Zimbabwe for in-country refining and to allow the Zimbabwean authorities full visibility over the gold produced and exported by Caledonia.
The export of the gold is facilitated by FGR as the holder of a gold dealing licence. The refined gold held by FGR is exported to a refinery outside Zimbabwe, the receiving foreign refinery undertakes the final refining process and the gold is sold on behalf of Caledonia.
Caledonia receives the proceeds of the gold sales directly into its bank account in Zimbabwe within a few days of delivery to the final refinery.
This arrangement in respect of production from Blanket mine complies with the current requirements to pay a 5% royalty and that Blanket continues to receive 75% of its revenues in dollars and the balance in local currency, the company points out.
“This arrangement is a big milestone for Caledonia and further demonstrates the pragmatic approach of the Zimbabwe authorities to resolve commercial issues facing gold producers. In the ten years or so during which Blanket mine has sold its gold in-country (initially to the RBZ, and more recently to FGR), we have experienced very few difficulties in receiving payment within the prescribed period. When difficulties have arisen, they have been resolved rapidly.
“This new arrangement should be seen in the context of Caledonia’s planned expansion in Zimbabwe, initially at Bilboes and thereafter at Motapa and Maligreen. This new marketing arrangement should make it easier for Caledonia to arrange debt facilities with funders outside Zimbabwe which may be used to support the construction of the new mines,” comments Caledonia CEO Mark Learmonth.