Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) has started the direct sale of gold produced from the Blanket Mine to a refiner outside Zimbabwe.
Under the new arrangement, refined gold held by Fidelity Gold Refinery (FGR) is now exported to a refinery outside Zimbabwe with the receiving foreign refinery undertaking the final refining process and selling the gold on behalf of Caledonia.
Caledonia added that it receives the proceeds of the gold sales directly into its bank account in Zimbabwe within a few days of delivery to the final refinery.
Blanket pays a royalty of 5% of its production while 75% of its revenues are received in US dollars and the balance in local currency.
Unrefined gold from Blanket continues to be processed at FGR, a subsidiary of the Reserve Bank of Zimbabwe, on a toll-treatment basis under the country’s requirements for in-country refining and to allow full visibility over gold produced and exported.
Mark Learmonth, Caledonia’s chief executive, said: “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.”