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Caledonia Mining welcomes new pricing arrangements from Fidelity

Last updated: 12:25 06 Feb 2015 GMT, First published: 13:25 06 Feb 2015 GMT

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Caledonia Mining (LON:CMCL, TSX:CAL) has welcomed new pricing terms from Fidelity for the Blanket Mine in Zimbabwe, which, the miner says, will improve its cost efficiency on future gold sales.

Around a year ago, new rules were introduced by the Zimbabwe Ministry of Finance stating all gold produced in the country must be sold to Fidelity - the state controlled marketing and refinery firm.

On February 3 this year, Fidelity amended its pricing and payment terms for Blanket, 49% owned by Caledonia, by reducing the discount on gold sales to 1.25% from 1.5% previously.

It comes on top of a reduction in the royalty rate from to 5% from 7% announced last October.

Caledonia chief executive Steve Curtis told investors: "The company welcomes all encouraging movements from the Zimbabwean government towards further supporting the nation's mining industry, and, Fidelity's announcement on Tuesday will also improve Caledonia's cost efficiency in future gold sales."

Caledonia has announced a US$70mln expansion to double output at the historic mine to 80,000 ounces by 2018.

Output last year beat its production guidance but was lower than in 2013. It came in at 41,836 ounces - 4.6% higher than its guidance of 40,000 ounces. The company is targeting production for 2015 of around 42,000 ounces of the yellow metal.

Caledonia shares are unchanged at 42p.

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