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Business Reporter
GOLD and diamond miner RioZim Limited sunk deeper into the red after its third straight loss almost tripled to $18,5 million on low nickel matte supply and high debt interest.

RioZim hinted a few weeks back it would report a bigger loss and its December 2014 results show that the net loss worsened from $4,7 million in 2013 and $5,5 million in 2012.

Its statement of financial position for the period under review also graphically depicts the group’s mounting woes with current liabilities now exceeding current assets by $50,8 million.

RioZim said the loss was essentially a result of two main factors. The first was its unit, Empress Nickel Refinery, which saw sole matte supplier declare a series of force majeure.

The situation reportedly resulted in the refinery receiving less than 30 percent of the contractual supplies of matte and the facility operating at below 25 percent of capacity.

As a result, the refinery posted a loss of $10 million at the operating level, RioZim said.

Secondly, it was the interest cost arising from the debt of the group, which accounted for $9,4 million of the total net loss recorded by the group in the period to December 2014.

RioZim advised in its December 2014 year end accounts that this scenario indicated existence of material uncertainty on the group’s ability to continue as a going concern.

RioZim has now rested its hope of rescuing the situation on the $10 million rights issue that shareholders of the company approved for reopening of Cam and Motor Mine.

Chairman Mr Lovemore Chihota said he was convinced that the rights issue would progress according to plan and that Cam and Motor Mine would be commissioned by year end.

It is not clear, however, if the $10 million right issue will be enough to turnaround its fortunes, considering management said in 2010 that Cam and Motor required $50-$100 million.

At the time, in 2013, RioZim owed banks over $60 million and creditors about $31 million.

Like its situation today, it was also burdened by inexhaustible high interest charges.

Its precarious situation, which once saw banks threaten liquidation, seemed to be on the mend when revenue rose 33 percent to $72 million, while EBITDA grew 317 percent to $7 million.

Then chief executive, Mr Ashton Ndlovu, said $17,8 million had been paid towards settling liabilities, with a staggering $11,8 million going towards clearing accumulated interest.

The multi-commodity miner, however, seems to have gone back in time and appears to be facing exactly similar problems to the ones that almost saw it going under around 2011.

Apart from its loss making position, RioZim is saddled by interest bearing loans amounting to $41,7 million from $30,8 million last year and trade payables of $60 million.

Operationally, RioZim said base metal production decreased by 52 percent in volume terms to 2 915 tonnes, which pulled down ENR revenue by 49 percent to $40 million last year.

Gold production at Renco increased by 69 percent to 648 kilogramme’s in 2014.

The increase was a result of improved ore milled and plant recoveries.

However, the increased production was neutralised by the weakening gold price, resulting in a fall in revenue.

RioZim’s associate, Murowa Diamond’s performance was also affected by low productivity and low prices, resulting in lower profitability compared to the previous year.