Securing an exemption may open the way for further investment by gold producers in the Southern African nation, where a number of companies have closed mines because of the sales requirements and Zimbabwe’s economic crisis.
Sunday 26, May 2019
(Bloomberg) --Canada-based B2Gold Corporation is considering buying an idled Zimbabwean gold mine if it can be exempted from a law that requires producers to sell all the metal to the country’s central bank.
If a transaction with owner Metallon Corporation is concluded, B2Gold will invest $150 million to $200 million developing the Shamva gold mine. The Vancouver-based company will pay about a third of the book value for the mine, which was last assessed at about $167 million seven years ago.
The purchase would be an unusual investment in Zimbabwe’s struggling gold sector, with the two biggest producers, Metallon and RioZim, suing the central bank over its payment arrangements.
By law, gold miners in the country must sell their gold to a unit of the Reserve Bank of Zimbabwe, which then pays them back partly in dollars and partly in a local quasi-currency that cannot be traded outside Zimbabwe.
Earlier this year RioZim suspended its gold mines temporarily because it wasn’t getting paid and Metallon shuttered three operations last year for the same reason, leaving it with a single mine.
A large portion of Zimbabwe gold is produced by artisanal miners and much of it is smuggled out the country. Zimbabwe is in the midst of an economic crisis with shortages of fuel, medicine and foreign currency being commonplace.