Caledonia optimistic of interbank exchange market

AIM-listed mining group, Caledonia Mining Corporation, is optimistic that the introduction of the inter-bank foreign currency exchange market in February will help stabilise business operations and assist the company to yield more profits.

The chief executive officer, Mr Steve Curtis, said this in a media update yesterday, while reflecting on the performance results for the fourth quarter period ended 31 December 2018.

Caledonia has local operations at Blanket Mine in Gwanda, Matabeleland South province.

Mr Curtis said the 2019 Monetary Policy statement issued last month by the Reserve Bank of Zimbabwe (RBZ), which dumped the previous 1:1 US$- RTGS dollar exchange rate, would restore investor confidence and assist business growth.

He said the fixed exchange rate had negatively affected the company’s operations.

“The monetary environment in Zimbabwe became more challenging following changes in policy although the general direction of policy development appears to be positive. Policy changes disrupted the commercial banking system in October 2018 and February 2019, which adversely affected procurement. Delays in procuring critical items meant capital equipment suffered from a lack of maintenance, which increased the frequency of breakdowns,” he said.

“We are optimistic that the introduction of a market exchange rate in February 2019 will in time allow a return to normal operating conditions.”

The Caledonia boss expressed hope that the new inter-bank trading mechanism would address the most pressing challenges that hampered implementation of programmes to expand the business.

“Provided the RTGS/US Dollar exchange rate used to calculate Blanket’s RTGS-denominated gold receipts is at an inter-bank rate that recognises economic fundamentals and Blanket continues to receive its gold proceeds promptly and in full, management is optimistic the revised policy may create a more stable economic environment,” said Mr Curtis.

In the 12 months to December 31, 2018, Caledonia produced 54 511 ounces of gold, which was lower compared to the relative period in 2017, when 56 113 ounces of gold were produced.

The miner said production was low primarily due to lower grade. Gross profit for the period was also down by US$4 744, from US$26 321 in 2017.

Mr Curtis said in the report that production for the year was lower than 2017 due to an unplanned lower recovered grade and the prevailing economic challenges in the country.

Caledonia recently cried foul after the RBZ withdrew the export credit incentive scheme for gold producers stating that their earnings per share would decline by approximately US$5, 4 million._The Chronicle

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