Caledonia Mining starts direct sale of gold produced from Zimbabwe

Caledonia Mining Corporation has announced that it has started directly selling gold produced from the Blanket Mine to a refiner located outside of Zimbabwe.

This development comes after Caledonia Mining’s listing on the Victoria Falls Stock Exchange and the completion of the Bilboes acquisition. The company has been exploring different avenues to enable the direct export of its gold.

Previously, unrefined gold from the Blanket Mine was processed at Fidelity Gold Refinery, a subsidiary of the Reserve Bank of Zimbabwe, on a toll-treatment basis. This was done to comply with the Zimbabwean government’s requirement for in-country refining, which allowed them to have oversight over the gold produced and exported by Caledonia Mining.

The agreement

Under the new arrangement, the exportation of gold is facilitated by Fidelity Gold Refinery, which holds a gold dealing license. The refined gold held by Fidelity Gold Refinery is then exported to a refinery located outside Zimbabwe. The foreign refinery undertakes the final refining process, and the gold is sold on behalf of Caledonia Mining. The proceeds from the gold sales are deposited directly into Caledonia’s bank account in Zimbabwe within a few days of delivery to the final refinery.

This arrangement aligns with the current requirements for Caledonia Mining to pay a 5% royalty, and it ensures that Blanket Mine continues to receive 75% of its revenues in US dollars, with the remaining balance in local currency.

Mark Learmonth, Chief Executive Officer of Caledonia Mining, expressed his satisfaction with this arrangement, highlighting the Zimbabwean authorities’ pragmatic approach in resolving commercial issues faced by gold producers. He also emphasized that this new marketing arrangement would facilitate Caledonia’s planned expansion in Zimbabwe, particularly at Bilboes, Motapa, and Maligreen. Furthermore, it would make it easier for the company to secure debt facilities from funders outside Zimbabwe to support the construction of new mines.