Huge milestone as Calendonia commences direct gold experts

GIANT global investor Caledonia Mining Corporation has been granted the green light to directly export gold produced from its flagship Blanket Mine in Gwanda, Matabeleland South.

The exportation of gold will be facilitated by Fidelity Gold Refinery (Private) Limited (FGR), a subsidiary of the Reserve Bank of Zimbabwe (RBZ), as the holder of a gold dealing licence, said the company in a media update yesterday.

It noted that the development would boost its debt facilities with funders outside Zimbabwe, which cements its expansion drive in Zimbabwe in line with its multi-asset gold producer targets.

Recently, Caledonia acquired Motapa Mining Company UK Limited and Bilboes Gold Limited as part of its expansion drive. Bilboes Gold is a gold mining entity that owns three major gold mines in Matabeleland North, 75km north of Bulawayo, and was once ranked among the country’s 10 biggest gold producers.

Since listing on the Victoria Falls Stock Exchange (VFEX) and following the completion of the Bilboes acquisition, Caledonia said it had been exploring various avenues to achieve the direct export of its gold.

Caledonia chief executive officer, Mr Mark Learmonth, has applauded the new scheme saying it buttresses Government commitment to resolve commercial issues facing gold producers.

“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,” said Mr Learmonth.

“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.”

Under the new arrangement, unrefined gold will continue to be processed at FGR on a toll-treatment basis in accordance with the requirements of the law for in-country refining, said the company. This is meant to allow Zimbabwean authorities full visibility over the gold produced and exported by Caledonia, it added.

The refined gold held by FGR will be exported to a refinery outside Zimbabwe, which will undertake the final refining process, and the gold is sold on behalf of Caledonia, said the company.

Caledonia will then receive the proceeds of the gold sales directly into its bank account in Zimbabwe within a few days of delivery to the final refinery.

The arrangement in respect of production from Blanket Mine complies with the obligation to pay a five percent royalty to the Government while continuing to receive 75 percent of its revenues in US dollars with the balance payable in local currency, it noted.

Last year in November, President Mnangagwa officially commissioned a US$64 million Central Shaft investment project, one of the flagship gold investments and deepest shafts in Zimbabwe, with a depth of 1 200 metres from the surface.

Blanket mine recorded gold production in 2022 of 80,775 ounces, which exceeded the top end of the company’s guidance and achieved its long-standing production target.

In February, the mining giant said not only has the mineral resources estimate increased by 52 percent to over one million ounces, but also increased mineral reserves by one percent to 395,000 ounces, thus securing the long-term future of Blanket Mine.