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Business Reporter
RIOZIM Limited has assured shareholders that its status as a going concern remains secure despite the value of current liabilities exceeding current assets and persisting loss making in the interim period. The resources group made the remarks in its financial statements for the half-year period to June 2013 while the group’s net loss was 53 percent better at US$2,3 million.
The Zimbabwe Stock Exchange listed mining group contends it remains a going concern despite the value of current liabilities exceeding current assets at June 30 2013.

While revenue rose 83 percent to US$56,8 million its loss position persisted due to the fall in metal prices, which RioZim asserts negatively affected revenue of about US$7 million.

Gold prices plunged from around US$1 651 per ounce in the first half of 2012 to an average of US$1 196/oz by June 30, 2013 in what threatens the viability of operations.

“The group continues to incur losses as a result of high finance costs and for the interim period ending June 30, 2013 a loss before tax of US$2,9 million. At June 30, 2013 the group’s current liabilities exceeded its current assets by US$13,4 million.

RioZim also cited the effect of interest charges and the loss from its associate for its US$2,3 million loss
“These factors ordinarily point to a material uncertainty on the group’s ability to continue as a going concern.

“Directors assess the ability of the group to continue as a going concern at each reporting date and believe the group is a going concern,” RioZim said.
Some of the factors the group has cited for its assertions include cancellation of the loss making toll refining contract with Centametall in July, which has started bearing fruit. RioZim said in the interim its Empress Nickel Refinery recorded a US$5,5 million operating profit while a contract had been signed with supplier to guarantee matte supply.

The ENR operation is also expected to further improve when a new 20 tonne per day oxygen plant is commissioned. Cost savings of US$300 000 per month are expected.

RioZim said its bank debt position had decreased from US$45,6 million in December 2012 to US$41,1 million and would be cut further by US$5,1 million using proceeds of reverts expected to be received during the second half of the year.

During the period, RioZim said the average cost of debt decreased from 21 percent to 19 percent through restructuring with US$10 million having been restructured by June 30.

Meanwhile, RioZim said its Rio Tinto 78 percent co-shareholder in Murowa Diamond Mine has suspended plans to dispose of its stake after failing to get a good price.
When Rio Tinto announced plans to sell the Murowa stake in the first half, 22 percent shareholder RioZim was set to exercise its pre-emptive rights to acquire the stake.