Gem advances RioZim $700k, as miner unveils $10m rights issue

HARARE - Gem RioZim Investments (Gem) has advanced RioZim Limited (RioZim) $700 000 as part of its subscription towards the miner’s proposed $10 million rights offer to fund the resuscitation of its Cam and Motor gold mine.

Gem holds a 24,97 percent stake in RioZim and will fully underwrite the capital raising exercise.

The Kadoma-based Cam and Motor mine — once Zimbabwe’s largest gold producer — was mothballed in 1968 after producing 5,3 million ounces of gold.

“The funds raised through the rights offer will be used to pay for capital…and to retire other obligations due to Gem as detailed in the underwriting agreement,” RioZim told shareholders in a circular yesterday.

Already, RioZim has placed an order for a 1 500 tonnes per day plant, which at full capacity is expected to produce more than 3 000 ounces of gold per month.

The new plant to replace the current out-dated one has reportedly been designed in China, according to sources close to the developments.

“Rio will use contract mining companies to drill, blast and haul ore to the plant and waste rock to the waste dump,” the group said.

“The commission payable to the underwriter will be settled by issue of additional shares in the company in order to conserve cash and separate shareholder approval will be sought in this regard,” said RioZim.

Early last year, trials were done on the mine’s waste, with impressive results while a deep drilling programme was commenced in April 2010 to determine resources between the 100 to 400-metre depth.

RioZim also plans to switch to open cast mining from the underground concept Cam & Motor used.

In June, the miner said it had secured $45 million targeted at settling its

$40 million bank debt.

About two years ago, RioZim owed $91 million, including $60 million in accrued interest.

Last year, the miner’s gold production declined due to heavy rains that affected its Masvingo-based Renco Mine.

This comes as the Zimbabwe Stock Exchange (ZSE)-listed miner recorded a net loss of $7,5 million in the half year to June 2014 due to high finance costs and unbudgeted for expenses.

Elisha Mushayakarara, the group chairperson said lower production at Empress Nickel Refinery and Renco Mine and effects of lower gold and copper prices compared to the prior year resulted in RioZim’s turnover declining by 31 percent to $39,9m from $56,8m that was recorded in the same period last year.

“As a result, for the first time since the implementation of the group’s turnaround in April 2012, the group made an operating loss of $4,6m compared to an operating profit of $2,2m in 2013,” he said.

The group’s diamond mine, Murowa reported a profit of $411 000, compared to a loss of $635 000 driven by improved throughput, processing of previously stockpiled gems and improved quality of the precious stones.

 

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