Fidelity Printers adequately capitalised

08 Jun, 2014 - 00:06 0 Views
Fidelity Printers adequately capitalised

The Sunday Mail

goldAfrica Moyo
FIDELITY Printers and Refiners (FPR) presently has the ability to purchase more than a tonne of gold worth US$38 million every month and has made strategic arrangements with financial institutions to get bridging finance in the event that it receives gold deliveries that are more than forecast.

Last year gold producers fretted over the announcement that FPR, a unit of the Reserve Bank of Zimbabwe, would be the sole gold buyer.
There were fears that the company would not be able to pay for gold deliveries because of its weak financial health.

By the end of 2008, FPR was failing to pay gold producers as it battled to secure funds from a market that was starved of foreign currency.

As part of a broad neo-liberalisation programme, Goverment in 2009 liberalised the trade of the yellow metal, a decision that has since been reversed in order to try and bring artisanal miners into the mainstream economy.

“FPR is adequately capitalised to buy all gold amounting to about 1 000 kg per month and has standby facilities with financial institutions in case of a surge in quantities for sale.

“FPR is paying for all the gold it gets from miners on the spot for small-scale miners and within 48 hours for large-scale miners,” said the FPR, adding that no additional funds are required to capitalise it.

However, Government has since indicated its preparedness to intervene should the unit need financial assistance.

Freda Rebecca Mine, a subsidiary of nickel producer Bindura Nickel Mine, recently commended FPR for timeously paying for deliveries.
In the four months to April 2014, FPR has managed to buy more than 3,93 tonnes of gold with big mining companies contributing 81 percent and small-scale miners accounting for 19 percent.

It is forecast that the gold haul will breach the 10-tonne mark by year-end, making the country eligible to rejoin the London Bullion Market Association (LBMA) by June 2015.

FPR added: “At the rate at which we are buying and refining gold, we should be able to meet the minimum refined 10 tonnes necessary for our application to be considered by end of 2014.

“Verification of other pertinent information by the LBMA may take up to six months, implying possibly by June 2015 dependent on LBMA being satisfied with our compliance level.”

Verifications are mainly on FPR’s assaying abilities, net worth and the directors of the companies as well as compliance with the Responsible Gold Scheme guidelines of not dealing in gold whose sources are not verifiable.

The minimum 10-tonne threshold stipulated by LBMA pertains to refined gold and not gold ore; it is a refinery that is accredited and not the country.

Government is optimistic that it will be able to favourably compete as a gold buyer in the market as accreditation will naturally eliminate the costs that are associated with trading through other refiners as is the current arrangement.

Artisanal miners have been complaining that the FPR is offering low prices which threaten their viability.

The FPR claims its pricing model for primary producers (big mining companies producing at least 5kg per month) is 1,5 percent less than the LBMA price and 85 percent of the money is paid within 48 hours of delivery and the balance is paid based on actual sale value.

“The 1,5 percent margin factors for costs including, but not limited to insurance, freight, security, and the overheads related to the mobilisation of gold.

“However, the net amount paid to the miner is also subjected to royalties and taxes. These fiscal charges have been wrongly perceived as accruing to FPR.”

Also, small-scale miners are usually laden by an additional charge of withdrawing cash as well as a factor to cater for the gold determination process (specific gravity method) as miners want to be paid cash on the spot.

This method, which is used in the field, does not yield a refined result as does the fire assay method used at the refinery; hence, the variation from the primary producers.

Again, the net amount is paid to the miner minus the fiscal charges of royalties and taxes.

Miners can also opt for the fire assay method and be paid less a 3 percent margin or for cash on the spot, less 5 percent.

“Once accredited (by the LBMA), we can compete favourably with an international refinery on price and can as well sell the gold ex-Harare as opposed to ex-Other Refinery, which is the position currently.

“It is imperative that the authorities, legislators and other opinion leaders, including the media, should educate the mining public on the need to pay royalties and taxes to the State so as to enable Government to be adequately resourced to provide services to the generality of Zimbabweans,” said FPR.

Zimbabwe dropped out of the LBMA in 2008 after production plummeted due to electricity and chemical shortages, including delayed payments from the central bank. Since its suspension from the LBMA, Zimbabwe has been exporting its gold through South Africa for refining.
The country’s gold output has been steadily increasing since 2010 and rose to 14 742kg in 2012 from 12 992kg a year earlier.

The LBMA — which was established in 1987 by the Bank of England, the bullion market’s regulator at the time – is a world-wide trade group representing wholesale gold and silver bullion, over-the-counter market members.

Its membership currently stands at 140 companies in 24 countries — all admitted as either members or associates. Members are engaged in activities closely related to London’s Gold and Silver Bullion markets, including trading, brokering, shipping and storage, mining and refining, inspection, assaying and research.

 

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