Harare – Dual-listed Caledonia Mining on Thursday announced that, as a result of the revised monetary policy adopted by the Reserve Bank of Zimbabwe (RBZ), the export credit incentive (ECI) programme for Zimbabwean gold producers will be withdrawn.

This will likely reduce Caledonia’s earnings a share for 2019 and thereafter by about $5.4-million, or by $0.40 to $0.46 a share.

For several years, the RBZ had operated the ECI programme, providing Zimbabwean gold producers a premium to the international gold price.

This premium was initially 2.5 percent of gold revenues, but later increased to 10 percent.

The ECI revenues were received into Caledonia’s real time gross settlement bank account and were therefore not eligible for remittance outside Zimbabwe with a specific allocation of foreign exchange by the RBZ.

The ECI revenues were not subject to Zimbabwean income tax.

The removal of the ECI programme comes as part of a monetary policy statement which permits bank trading of currency held in local banking system (known as RTGS dollars) and currency held in foreign currency accounts (FCA) which is capable of being used for payments outside Zimbabwe.

Caledonia said that, at this stage, it is unclear whether this policy will address the increasing inflationary pressure in Zimbabwe by creating a transparent and efficient market exchange rate between RTGS dollars and dollars held in FCAs.

The miner said the effect on Caledonia’s earnings per share for 2019 is calculated assuming a gold price of $1,300 for the remainder of the year, that Blanket achieves the production guidance for 2019 as announced on January 14, 2019 of between 53,000 and 56,000 ounces of gold and that there are no changes in Blanket’s operating costs.

Caledonia is an exploration, development and mining company focused on Southern Africa. Caledonia's primary asset is a 49 percent interest in the Blanket Mine in Zimbabwe.

 The Blanket Mine re-started production in April 2009 after a temporary shut-down due to the economic difficulties in Zimbabwe. In late 2010, Blanket successfully completed an expansion project which increased production capacity from 24,000 ounces of gold per annum to 40,000 ounces of gold per annum.

Caledonia’s shares are listed on the Toronto Stock Exchange (CAL) and on the NYSE American (CMCL) and depositary interests in the shares are traded on London’s AIM (CMCL)"

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