RioZim remains in the red

HARARE - Listed mining concern RioZim Limited (RioZim) narrowed its losses by 53 percent to $2,3 million in the half year to June 2013.

The group, which incurred a $4,9 million loss in previous comparable period, has been weighed down by high interest charges — amounting to a staggering $4,4 million during the six months under review.

“Despite debt rescheduling interest costs continues to be an enormous burden,” said Elisha Mushayakarara, RioZim’s chairperson.

The miner paid $6,3 million in interest charges in the half year to June 2012.

Mushayakarara said although the group succeeded in restructuring some of its debt — estimated at around $90 million — to slightly longer maturities while further negotiations are in progress, the arrears decreased at a slower rate than planned.

Overall, the group registered a 47 percent increase in operating profit to $2,2 million from $1,5 million in prior comparable period despite the disruptions and falling metal prices.

Revenue went up 83 percent to $57 million on the back of its subsidiary Empress Nickel Refinery (ENR)’s revenue growth of 204 percent.

“Growth in ENR revenue was largely due to the change in the business model from toll refining to matte purchase and sale of own production,” said Mushayakarara.

ENR achieved a turnover of $43,5 million from the sale of reverts, surpassing  $14,3 million registered in same period last year by 67 percent.

The operation managed to record an operating profit of $5,5 million despite being dogged by intermittent liquid oxygen supplies and high electricity tariffs.

RioZim’s gold producer Renco Mine improved its average monthly production in the operational months by 4,2 percent compared to the monthly average in the first half of 2012.

This comes amid projections that Renco could have lost a staggering $4,5 million due to labour unrest disruptions experienced in January and February which adversely affected operations.

“As a result less gold was produced than expected. However the fundamentals of the business remain strong with the operation recording increases in grade and gold recovery,” said Mushayakarara.

lthough the group said it will continue successfully pursuing cost reduction measures, the drop in gold prices remain a major concern.

RioZim’s plan to dispose its 22 percent stake in Murowa Diamonds has not yielded the desired price although the group was set to exercise its pre-emptive rights at the right price.

This comes as global resources group Rio Tinto’s remaining 78 percent disposal was put on hold “as they had been unable to find the right buyers at the right price.”

“Whilst Murowa contributed a loss to the group in the first half, it is forecast that the associate will contribute positive results by the end of the current financial year,” said Mushayakarara.

In its outlook, the group said it will continue pursuing cost containment measures as well as streamlining its staff to achieve substantial reduction in costs.

Plans are already underway to acquire and install its own 20 tonne per day oxygen plant with the shipment having arrived in Beira.

“The installation of the new plant is expected to result in monthly savings of approximately $300 000 as well as eliminate the plant stoppages that were occurring when the liquid oxygen supplier was struggling to cope with demand,” said Mushayakarara.

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