RBZ assures gold miners on USD payments after bond note launch

Source: RBZ assures gold miners on USD payments after bond note launch | The Financial Gazette December 8, 2016

THE Reserve Bank of Zimbabwe (RBZ) has given assurance to Canada-listed Caledonia Mining Corporation (Caledonia) that it will pay for all gold deliveries in United States dollars, despite the introduction of bond notes last Monday.

Bond notes, a token currency which is circulating within a basket of multiple currencies, was introduced with an initial rollout of US$12 million.

The Zimbabwe government hopes the bond notes, which will trade at par with the greenback, will help ease a shortage of bank notes blamed on a widening trade deficit and the smuggling out of physical US dollars, its adopted currency since January 2009.

“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.

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

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

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