HomeNewsRioZim need cash injection

RioZim need cash injection

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Cash-trapped RioZim Limited is in dire need of working capital to increase its output and plans to restructure its debt owed to banks.

Last week, the mining company postponed its annual general meeting (AGM) as a result of the chaotic state of its financial accounts.

According to a report titled Getting Back On Track, the groups immediate action plan requires a cash inflow of $11,6 million from a rights offer and private placement.

RioZim also plans to improve cost savings at Renco and Empress Nickel Refinery.

To sustain production levels, Renco requires an immediate inflow of cash to address critical capital expenditure and working capital, reads the report in part.

A key issue is the lack of exploration and development ahead of production.

Renco mine currently produces 55kg of gold per month.

The group expects additional capital contribution of 100kg in 2012, 105kg in 2013, 140kg in 2012 and 160kg in 2015.

RioZim Limited, with debts estimated at over $50 million said it would oppose applications for judicial management and renegotiate terms and conditions with key creditors.

The group is negotiating the restructuring of the major portion of the bank debt, the group said, arranging a syndicated facility within six months to refinance all bilateral agreements under a common loan agreement.

RioZim Limited said in a statement shareholders will be advised on the rescheduled AGM within the statutory and regulatory timeframe applicable.

The postponement is due to the late finalisation of the annual report and possible adjustments and or reclassification resulting from information that has recently come to light, said RioZim in a statement.

Sources said the mining company had problems with its auditors PriceWaterHouse Coopers over reconciliation of some funds. PriceWaterHouse Coopers referred the issue to their South Africa office for advice on what to do on the issue, the source said.

The accounts are questionable and the company had to play with the figures.

But the auditors are likely to stand on their ground.

The sources indicated that the company cannot hold an AGM without an annual report with audited financial results.

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