Caledonia Mining Corporation announced on Thursday that it has started selling gold produced from its Blanket Mine in Zimbabwe directly to a refiner outside the country.
The AIM-traded firm said it had been exploring various avenues to achieve the direct export of its gold since listing on the Victoria Falls Stock Exchange, and completing the Bilboes acquisition.
While unrefined gold continued to be processed at Fidelity Gold Refinery (FGR), a subsidiary of the Reserve Bank of Zimbabwe, on a toll-treatment basis in accordance with the requirements of the Zimbabwean government for in-country refining, Caledonia said it had found a way to sell refined gold outside the country.
The export of the refined gold was facilitated by FGR, which holds a gold dealing licence.
It said the receiving foreign refinery would undertake the final refining process, and the gold was sold on behalf of Caledonia.
The proceeds from the gold sales were then received by Caledonia directly into its bank account in Zimbabwe within a few days of delivery to the final refinery.
Caledonia said the arrangement complied with the current requirements to pay a 5% royalty, and ensured that Blanket Mine received 75% of its revenues in US dollars and the remaining balance 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,” said chief executive officer Mark Learmonth.
“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.”
Learmonth said the 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.”
At 1232 BST, shares in Caledonia Mining Corporation were up 3.29% at 1,213.6p.
Reporting by Josh White for Sharecast.com.