GEM ups RioZim stake

HARARE - RioZim's largest shareholder, Gem RioZim Investments Limited (GEM), has increased its shareholding in the listed mining group from 24,97 percent to 28,3 percent.

This follows shareholders’ approval to issue two million ordinary shares to GEM in settlement of a fee to underwrite RioZim’s $10 million rights issue.

Market analysts, however, said GEM is likely to further increase its shareholding in the miner if the rights issue is undersubscribed.

“Considering the prevailing liquidity crisis in the country, GEM will end up as the majority shareholder in RioZim as most shareholders will most likely fail to follow up on the rights issue,” said a local bank’s analyst who preferred anonymity.

Other RioZim shareholders include Old Mutual Life Assurance (22, 84 percent), RioZim Foundation company (11,85 percent) and private shareholders (40,94 percent).

In January, RioZim said “the commission payable to GEM will be settled by issue of additional shares in the company in order to conserve cash”.

This comes as GEM advanced RioZim $700 000 as part of its subscription towards the rights offer, whose funds are earmarked to fund the resuscitation of the group’s Cam and Motor gold mine.

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 said, adding that it would “use contract mining companies to drill, blast and haul ore to the plant and waste rock to the waste dump”.

 

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