Caledonia Mining Corporation Plc (“Caledonia” or the “Company”) declares that it has begun the direct trade of gold produced from the Blanket Mine to a refiner that is located outside Zimbabwe.
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Ever since listing on the Victoria Falls Stock Exchange and after the completion of the Bilboes purchase, Caledonia has been in search of different avenues to gain the direct sale of its gold. At Fidelity Gold Refinery (Private) Limited (“FGR”), which is a Reserve Bank of Zimbabwe’s (“RBZ”) subsidiary, unrefined gold continues to be processed on a toll-treatment basis, in agreement with the needs of the Zimbabwe government for in-country refining; and to provide the authorities of Zimbabwe complete transparency over the gold produced and exported by Caledonia.
Being the holder of a gold-dealing license, FGR enables gold exportation. The refined gold possessed by FGR is shipped to a refinery located outside Zimbabwe, the receiving foreign refinery accepts the ultimate refining process, and the gold is traded in the name of Caledonia.
In just a few days of delivery to the final refinery, Caledonia gets the gold sales proceeds straight into its Zimbabwean bank account. This preparation in accordance with the production from Blanket Mine fulfills the existing necessity to pay a 5% royalty and that Blanket continues to get 75% of its income in US dollars and the remaining in local currency.
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 10 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.
Mark Learmonth, Chief Executive Officer, Caledonia Mining Corp PLC