The sovereign risk is NOT an issue. From what I have heard on the ground everything is as it was. People are really suffering in Zim, there is simply no cash - people are using very worn out dollar bills and South African Rand notes. You can only only draw $100 from the cash machine/day because the is very little to be had.
But mines and mining companies are not affected because its one of the few industries still bringing in Forex. I spoke the Caledonia Resources guys last week and they confirmed they get paid by the government for their gold always, sometimes its a little slow, bur they do get it. This is because all Zim gold produced is sold to the gov. at a 5-7% discount to the price by law (call it a royalty). If you want clean new cash bills you can get them from the Government controlled Fidelity Printers by giving a slightly larger discount. It sounds a little strange but it works and has always worked like this.
Companies like Caledonia mining bring much needed forex and as a result most mining companies enjoy special status despite what is happening.
Its been a one party state for a long time, and its people are relatively peaceful and very well educated, which we all hope will mean if push comes to shove any senseless violence would likely be very shortly lived. People in Zim just want to get on with their lives, and hope for an improving economic environment.
Anyway I am travelling up to Zim next week so I will let you know first hand.
What worries me more about this lithium thing that we have heard nothing about the market. Who is going to buy all this spodumene and how is it going to be processed? Its great that there is lithium but is it in a form that end users might need and want? This is not like gold which can be sold to basically any refinery around the world. While there may be demand for it it is my understanding that there are limited buyers, we have offtake agreements and terms to worry about, perhaps penalty elements etc. I would like to know the "how" and the "Who" in terms the company getting their product to market.
Does anyone know? Please: I am just asking for help here with my DD, not trying to shoot the stock down or anything like that. Hoping those in the know may be able to point me in the right direction.
PSC Price at posting:
4.8¢ Sentiment: Hold Disclosure: Not Held
