Golden Sibanda : Senior Business Reporter
RIOZIM’s net loss fell 52 percent to $8,2 million in the year to December 2015 driven by profitability in gold mining operations, despite prevailing low bullion prices. Profitability was hit by a double whammy, a $9 million loss at its nickel refinery, which dragged down the bottom line, and a 14 percent dip in revenue at $56,6 million.But overall, RioZim appears to be making notable progress in turning around its fortunes, especially if taken in view of the generally low metal prices and difficult economy.
There has been tangible change in the group’s operations, starting to reflect in the numbers, giving RioZim confidence to declare a return to profitability this year.
The group’s operating loss has already come down from $11 million in 2014 to a mere $150 000 last year, thanks to a $5,3 million profit from the gold mining activities. This came against the backdrop where bullion prices, RioZim said, plunged to an all-time low in 2015, forcing the group to take interventions to raise output and cut costs.
RioZim said the stellar showing in gold mining, when prices had plummeted, was offset by $9 million loss at Empress Nickel refinery, otherwise a group profit of $8,9 million was well within reach.
“ENR posted a trading loss of $9 million. Excluding ENR, the group results would have been an operating profit of $8,9 million,” RioZim said in its 2015 year-end results.
The Zimbabwe Stock Exchange-listed company said ENR performed dismally as its sole matte supplier’s problems carried over to 2015 resulting in the supplier failing to provide material for processing.
“This led to the refinery being put under care and maintenance, which cost the group $9 million in care and maintenance expenses,” board chair Philip Chihota said.
However, the group said indications are that the supplies from the refinery’s sole matte supplier will resume in the second quarter of 2016, and RioZim is optimistic.
A lot has happened though at RioZim, giving hope the company has found a way out its financial quagmire, which has often threatened the going concern status of the group.
Two major developments come to mind; restructuring of the loans into a single long term instrument with interest of 9 percent from, the punitive 18 percent, and the pending commissioning of the Cam and Motor gold mining project in Kadoma.
RioZim started operations at Cam and Motor last year, with the ore processed at a nearby rented plant yielding 458 kilogrammes to significantly shore up total production to 1,2 million kg from 658kg achieved in the previous comparative period.
In terms of RioZim’s debilitating debt burden, loans and borrowings amounting to $33,7 million were restructured through the Zimbabwe Asset Management Company.
Subsequently, RioZim said that following approval by shareholders in January this year, 10 million unissued ordinary shares were converted to preference shares and issued to ZAMCO at a coupon rate of 9 percent per annum for tenure of 5 years.
Efforts to refinance its debts, a board and management priority since 2012, at a lower cost had been protracted and unfruitful due to liquidity constraints in the market.
Delivery of the 2 500 tonnes per day plant for Cam and Motor gold mining project, expected to be the game changer for RioZim, has commenced and the last shipment is anticipated to be complete by end of the first half of this year
Ground breaking ceremony was held in January and civil works which started thereafter are progressing well. Commissioning is anticipated in third quarter of this year.