RBZ buys bonds from gold miners

THE Reserve Bank of Zimbabwe (RBZ) last week started buying bonds it had issued to gold miners in February this year after it failed to pay for deliveries made by miners.

This is a surprise move especially at a time when the RBZ governor, Gideon Gono, had confirmed that the central bank had not been receiving fiscal support since the beginning of the year.
One company, New Dawn Mining, confirmed selling bonds equivalent to US$2,2 million in lieu of gold produced and delivered to the Reserve Bank prior to the liberalisation of the gold marketing arrangements in Zimbabwe in early 2009.
Gold miners can now sell their produce to buyers other than Fidelity Printers which was the sole buyer of the metal prior to the liberalisation of the marketing of the yellow metal.
While New Dawn Mining confirmed that they had disposed of their bonds, the Zimbabwe Chamber of Mines said they were not aware that members had started selling their bonds.
“We are not aware of that (the selling of bonds) and as far as we are concerned it could be for individual members of the chamber who have started selling their bonds,” said Christopher Hokonya, the chief executive officer at the chamber of mines.
Many gold miners were faced with collapse when they failed to get payment for the gold they had delivered to Fidelity Printers as the central bank had used the money raised from the proceeds for other purposes.
RBZ has, since last year failed to pay for the deliveries made to Fidelity Printers and many gold producers have continued to highlight how this has affected efforts to resume full production.
At one time, the central bank chief suggested that part of the US$510 million which was extended to Zimbabwe by the International Monetary Fund be used to pay for the outstanding amounts that RBZ owed gold producers.
This was shot down as Finance Minister Tendai Biti, who said the money would only be used through a fiscal instrument such as a budget and he never mentioned the payment of outstanding monies for gold deliveries.
Selling off bonds held in lieu of gold produced would significantly improve the cash resources for miners who are struggling to raise financial resources to expand operations.
Many gold producers, like any other industry in the country, have failed to get requisite loans both locally and offshore.
Locally it has been difficult to get loans as the market is in a serious liquidity crisis.
New Dawn, for example, said the US$2,238 they received from RBZ had increased their cash resources by approximately 90%.
This amount would allow New Dawn to evaluate opportunities to accelerate development at its producing Turk gold mine, as well as to consider other development opportunities in Zimbabwe.

 

Leonard Makombe

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