Home » Business » ZIMBABWEAN CENTRAL BANK CONTINUES BUYING GOLD FROM LOCAL MINERS WITH USD

Caledonia Mining Corporation says the Reserve Bank of Zimbabwe (RBZ) has guaranteed that local miners will continue receiving United States dollars for gold they deliver to the government's Fidelity Printers and Refiners despite the introduction of "bond notes" as currency last week.

One of Zimbabwe's main exports, gold, is required by law to be delivered to Fidelity Printers and Refiners.

The RBZ introduced the bond notes last week to alleviate cash shortages the country is facing, which have been attributed to falling exports, hoarding and externalization. The bond notes are also aimed at encouraging exports, Zimbabwe's main source of foreign currency.

An incentive of up to five per cent of the value of export earnings will be given to companies which sell their goods outside Zimbabwe, which will be paid in bond notes.

The bond notes, pegged at par with the United States dollar, are backed by a 200 million USD Afrexim Bank facility and will operate alongside a basket of foreign currencies which Zimbabwe adopted in 2009.

In a notice to shareholders, Caledonia, which operates the Blanket gold mine in Gwanda in Matabeleland South Province, said the mode of payment had not changed.

"Caledonia Mining Corporation Plc 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," the company said over the weekend.

"Since January 2014, Blanket has sold all of its gold production to Fidelity Printers and Refiner 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."

The RBZ introduced into the market, through normal banking channels, bond notes in small denominations of two and five USD amounting to 10 million USD and set at a maximum withdrawal of 50 USD per day and 150 USD per week.

The RBZ has rolled out massive campaigns to raise public awareness on the reasons for introducing the surrogate currency as well as warning against counterfeits. The central bank has said it will not be negligent to flood the market with bond notes to avoid fueling inflation.

About 75 million USD worth of in bond notes is expected to be in circulation by the end of this year.

Source: NAM NEWS NETWORK

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