RBZ assures gold miners they will be paid in US dollars, not bond notes

Canada-listed Caledonia Mining Corp (Caledonia) says the Reserve Bank of Zimbabwe has given assurances that it will pay for all gold deliveries in United States dollars, despite the introduction of a local ‘bond note’currency.

Caledonia operates the Blanket gold mine in Gwanda, southern Zimbabwe, a 50 000 ounce per year producer.

Zimbabwe introduced the bond notes into circulation on Monday, in what it says is a bid to address a biting shortage of US dollar bank notes, the country’s unofficial currency since 2009 when it dumped its own local unit after it was decimated by hyperinflation.

The currency move has stoked fears of a return of the old currency, and the hyperinflation it has come to be identified with.

“Caledonia confirms that, following the recent introduction of ‘bond notes’ by the Reserve Bank of Zimbabwe, there is no change to the settlement system in place for Blanket Mine in Zimbabwe for its gold sales,” Caledonia said in a statement.

All gold produced in Zimbabwe is required to be sold to Fidelity Printers and Refiners, a company wholly owned by the central bank.

“Since January 2014, Blanket has sold all of its gold production to Fidelity Printers and Refineries Limited, which is a subsidiary of the RBZ. Blanket has received all sale proceeds within 48 hours of delivery to Fidelity in US dollars at a price which is 98.75 percent of the London afternoon ‘fix’ on the day after delivery to Fidelity,” Caledonia said.

Gold is Zimbabwe’s main export and, along with tobacco and platinum, accounts for the bulk of the country’s foreign currency earnings.

Apart from providing liquidity, the central bank says the bond notes are designed to incentivise exports for a country which has shipped out $20 billion since 2009 in imports, a situation that has contributed to the dollar shortage.-The Source

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