Caledonia starts selling its own gold to an offshore refiner

Caledonia Mining has started directly exporting its gold, winning a key concession that it says will help it raise offshore capital for expansion in Zimbabwe.

The company says it has been seeking a way to export its gold directly since it listed on the Victoria Falls Stock Exchange (VFEX) in 2021.

Caledonia says unrefined gold continues to be processed at RBZ’s Fidelity Gold Refinery (FGR). This is meant to comply with government rules for in-country refining and to allow RBZ to monitor all local gold output.

“The refined gold held by FGR is exported to a refinery outside Zimbabwe, the receiving foreign refinery undertakes the final refining process and the gold is sold on behalf of Caledonia. Caledonia receives the proceeds of the gold sales directly into its bank account in Zimbabwe within a few days of delivery to the final refinery,” Caledonia says in a statement.

Currently, exporters get 75% of their gold sales in US dollars and the rest in Zimbabwe dollars.

“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 CEO Mark Learmonth.

In 2020, Canada’s B2Gold abandoned a plan to buy Shamva Mine after government refused its demand to exempt it from selling its gold to Fidelity.

Many miners face delays in payments from Fidelity, but Learmonth says this has not significantly affected Caledonia.

He says: “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.”

Caledonia has acquired three mining assets since 2021 and is raising capital to develop them. The largest of the transactions was the US$65.7 million acquisition of Bilboes Mine, potentially one of the largest gold producers in the country. Caledonia plans to spend US$250 million over three years to bring Bilboes to full production. Selling its own gold will help it raise money offshore, Caledonia says.

“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.”  – NewZwire

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